Ecuador's Government Fails To Pass Monetary Law
First Published Wednesday, 21 July 2010 03:43 pm - © 2010 Dow Jones
QUITO -(Dow Jones)- Members of Ecuador President Rafael Correa's party in the legislature failed to pass a controversial monetary reform bill Tuesday aimed at using Central Bank deposits to fund investment projects.
Alianza Pais, Correa's party, won only 59 of the 63 votes it needed to pass the law. The failure is the second defeat for Correa's party in the legislature. In May Correa's party failed to secure enough votes for a bill to overhaul water usage.
According to Ramiro Crespo of Analytica Securities, an investment bank based in Quito, the proposed monetary law reform would not provide transparency and would give more discretionary power to the central bank's officials, particularly its board of directors.
Among other changes, the bill reduces limits on Central Bank investments and suggests the bank could invest directly in state-owned banks. It would also allow the Central Bank to provide liquidity to institutions "with some questionable lending policies and high non-performing loan ratios," Crespo said.
President Correa's administration has been rattled by the recent protests against its proposed laws. Others facing opposition include proposals on hydrocarbons reform, communications and university education. Correa's party plans to present the monetary policy reform bill again next week for another vote.
Political analysts say Ecuador might have returned to a long-standing political pattern, where the president is powerful in central government but politically weak in Congress.
-By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653; mercedes.alvaro@dowjones.com
