Ecuador President Rafael Correa has refused to make an interest payment of $US30.6 million coupon payment on its 2012 global bonds by December 15, triggering the first sovereign default since the credit crisis started.
“Ecuador’s credit ratings will be slashed to default, its overseas borrowing costs will soar and foreign investment is likely to decline. Complicating matters, the price of oil, Ecuador’s main source of revenue, has plunged in the last few months from historic highs.
“Moreover, the Government could be cut off from multi-lateral lenders such as the World Bank and the Inter-American Development Bank, though in recent months it has been seeking alternative financing from countries such as China, Iran, Russia and Venezuela.”
So what does this mean for tourism in Ecuador? I don’t think anybody knows at the moment. I guess we will have to wait and see, but I won’t be surprised to see some local tour operators go out of business. Fortunately, the providers that Detour works with are some of the most stable, best funded tour operators in Ecuador.