Ecuador has $65 billion in public debt and the IMF says it’s economy will shrink by 6.3% in 2020. ©AFP/File RODRIGO BUENDIA

Quito (AFP) – Ecuador’s creditors have voted in favor of a restructuring plan for $17.4 billion of debt that will see the South American country’s capital and interest payments reduced, the government of President Lenin Moreno said on Monday.

The deal means the debt will be reduced by more than £1.5 billion with the interest rate falling from 9.2 to 5.3 percent.

Moreno wrote on Twitter that “the required majority” of votes had been secured to finalize the renegotiation.

Last month Ecuador announced that it had secured the support of 53 percent of creditors and formally presented its restructure plan on July 20.

The new deal gives Ecuador a five-year grace period for the capital and two years for the interest repayments, while the repayment period has been extended from six to 12 and a half years.

There’s also a stipulation that more than one billion dollars in interest that went unpaid between March and August due to Ecuador’s precarious financial situation during the coronavirus pandemic be reimbursed between 2026 and 2030 with no interest.

The IMF lent Ecuador $643 million to help face its health emergency. The country has $65 billion in public debt.

The IMF expects Ecuador’s economy to shrink by 6.3 percent in 2020.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.