For an integral audit of public indebtedness

Ecuador at the cross-roads

15 August 2007 by Eric Toussaint , Virginie de Romanet , Cécile Lamarque , Benoît Bouchat , Stéphanie Jacquemont

This collective work was carried out in July 2007 at the request of AFRODAD by a team at the CADTM composed of Benoît Bouchat, Virginie de Romanet, Stéphanie Jacquemont, Cécile Lamarque and Eric Toussaint.

It was revised by Myriam Bourgy, Damien Millet and Renaud Vivien.

The English translation was done by Elizabeth Anne, Vicki Briault, Judith Harris and Christine Pagnoulle.


 Chapter 1: Ecuador’s Illegitimate Debt

- A. Financial and economic crime against human development
- B. Rafael correa’s government: towards a sovereign debt Sovereign debt Government debts or debts guaranteed by the government. policy
- C. The doctrine of illegitimate debt

- D. The origins of Ecuador’s debts

  • 1. The process of indebtedness in Ecuador
  • 2. The illegitimacy of debts and payments in Ecuador

- A. The context
- B. Ecuador’s illegitimate debt
- C. The non-respect of legal provisions
- D. Textbook cases

  • Odious loans to the dictatorship
  • Unacceptable loans
  • Inappropriate loans
  • Unacceptable conditions
  • Conditions violating internal law

 Chapter 3: Information and statistics in Ecuador

- A. Debts and creditors

  • Loans from other Countries
  • Loans from private credit organisations
  • Loans from multilateral credit organisations

- B. Objectives and results

 Chapter 4: The socio-economic impact of the debt

- A. An unsustainable debt burden imposed by the creditors
- B. Economic policies imposed by the creditors
- C. The social and economic consequences

  • Increasing poverty, rising inequalities and worsening living conditions
  • Mass emigration
  • Destruction of the environment
  • Non respect of commitments

 Chapter 5: Renegotiating the debt

- A. Moratoria: wasted opportunities
- B. Exchanges and rescheduling

- C. Debt cancellations

 Chapter 6: Conclusions and recommendations

- A.Identifying Ecuador’s illegitimate debt as a prelude to political sovereignty
- B. The right of governments to determine the illegitimacy of a debt
- C. The World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

and the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
are legally responsible!

- D. Actions by creditors of the North
- E. Actions by the United Nations
- F. Alternatives defended by social movements and some Latin-American governments against the debt


- CADTM, 2004. Le droit international, un instrument de lutte? Pour une justice au service des peuples, CADTM/Syllepse, Liège/Paris,.
- Center for Economic and Social Rights,2000. Un continente contra la deuda: perspectivas y enfoques para la acción. Quito: CDES.
- HANLON Joseph, 1998. Dictators and debt ; june 2002, Defining Illegitimate Debt and linking its cancellation to economic justice, Open University for Norwegian Church Aid.
- KHALFAN, KING & THOMAS, 2003. Advancing the Odious Debt Doctrine, Centre for International Sustainable Development Law, Montréal.
- RAMOS Laura, Los Crímenes de la Deuda. La Deuda Ilegítima, Observatory on Debt and Globalization(ODG), Icaria, mars 2006
- SACK A.N., 1927. Les effets des transformations des Etats sur leurs dettes publiques et autres obligations financières, Recueil Sirey, Paris.
- TOUSSAINT Éric, 2006. Banque mondiale, Le Coup d’Etat permanent, CADTM/SYLLEPSE.
- Let’s launch an enquiry into the debt! A manual on how to organise Audits on Third World Debts, CETIM/CADTM,


- ACOSTA Alberto, « Deuda externa y migración: una relación incestuosa (I) », 09/09/2002,
- ACOSTA Alberto, « Deuda externa y migración: una relación incestuosa (II) », 16/09/2002,
- ACOSTA Alberto, 11/02/2005. « Al servicio de la deuda, en contra del país »,
- ACOSTA Alberto, « El canje de los bonos Brady por bonos Globales Ecuador: detalles de un atraco maravilloso »,
- ARIAS Hugo, september 2006. « Auditoría ciudadana de la deuda ecuatoriana »
- MILLET Damien, november, 23, 2004. « La dette de l’Irak n’a jamais existé », Le Monde.
- RUIZ DIAZ Hugo, TOUSSAINT Eric, 2004. « Donde esta lo que prestaron? Deuda externa, deudas ilegitimas y auditoria », Centro de Derechos economicos y sociales, Quito.
- RUIZ DIAZ Hugo, , 29 septembre 2004. « Le traitement de la dette par l’ONU »,
- SERRANO Alberto, décember1998. « El plan Brady ¿Solución para prestmistas o prestatarios? » , Ecuador Debate, n°45.
- 05/07/2007,« Ecuador insiste en que no pagará la ‘deuda ilegítima ».
- 15/07/2007, « El FMI deja sus oficinas del Banco central », Argenpress,

CEIDEX’s documents

- Informe final de la investigación de la deuda externa ecuatoriana/Resumen
- ARIAS PALACIO Hugo, « Impacto éconómico, social y ambiental de la deuda soberana del Ecuador y estrategias de desendeudamiento »
- BENALCAZAR Eduardo, « Deuda externa privada con la banca privada internacionalizada »
- BENALCAZAR Eduardo, « Deuda externa privada con la banca privada internacionalizada »
- DONOSO Aurora, « Acción ecológica frente a la deuda externa »
- HERDOIZA Marcelo y Almeida Cumandá, « De los creditos contratados por el Estado ecuatoriano »
- NORMA Mena, « Endeudamiento, ajuste estructural, calidad de vida y migración »
- PINTO F., « Evolución de la normativa jurídica aplicable al endeudamiento público y su correspondencia con el marco constitucional, convenios y tratados internacionales y más estipulaciones legales »
PINTO F., «Evolución de la normativa jurídica aplicable al endeudamiento público y su correspondencia con el marco constitucional, convenios y tratados internacionales y más estipulaciones legales »
- SALGADO Wilma, « Acerca de la crisis financiera en el Ecuador »
- TORRES Rosa Maria, « Planes internacionales para la educación »
- VICUÑA Izquierdo Leonardo, « Endeudamiento externo y política económica »
- VICUÑA Izquierdo Leonardo, « Apéndice estadístico »

Documents and official texts

- International Covenant on Economic, Social and Cultural Rights (1966)
- Declaration on the Right to Development, United Nations General Assembly,1986
- Statistics charts from the Unesco
- Informe sobre los progresos en la aplicación del plan de acción de la cumbre mundial sobre la alimentación, FAO(consultable à l’adresse
- Cuenta ahorro inversión financiamiento – Gobierno central 2006, Ministry of Economy and Finance of Ecuador,
- Boletín Estadístico Mensual, Central Bank of Ecuador, february 2007,

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

Virginie de Romanet

est membre du CADTM Belgique

Other articles in English by Virginie de Romanet (4)

Other articles in English by Cécile Lamarque (4)

Other articles in English by Benoît Bouchat (2)

Other articles in English by Stéphanie Jacquemont (8)



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