Ecuadorian President Guillermo Lasso speaks during the second plenary session of leaders during the ninth Summit of the Americas in Los Angeles, California, U.S., June 10, 2022. REUTERS/Lauren Justice/File Photo/File Photo

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Sept 19 (Reuters) – Ecuador has reached an agreement to restructure its debt with Chinese banks, the government said in a statement on Monday, providing around $1.4 billion in debt relief until 2025 .

Ecuadorian President Guillermo Lasso announced in February that he was seeking to restructure the country’s debt and improve the terms of long-term oil sales contracts with Beijing.

China has become Ecuador’s main financial partner over the past decade.

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Agreements have been reached with China Development Bank (CHDB.UL) and Export-Import Bank of China (Eximbank) (2544.HK) for loans worth $1.4 billion and $1. $8 billion, extending loan maturities and reducing amortization.

“As a result of these agreements, maturities are extended to 2027 for China Development Bank and 2032 for Eximbank, allowing cash flow relief to support government priorities,” the team said. President’s press in the press release.

Ecuador also managed to cut some applicable interest rates and suspend all amortizations with China Eximbank for a six-month grace period, the government said.

The loans were agreed under the government of former President Rafael Correa, while several were linked to long-term oil sales contracts with Chinese companies.

The agreements also involve the release of certain quantities of exports to Chinese oil company CNPC under oil-backed contracts, allowing Ecuador to sell an indefinite amount of oil at market prices, according to the statement.

State-owned energy company Petroecuador reached an agreement with Petrochina (601857.SS) last week on a number of crude oil deliveries.

Since taking office last May, Lasso has turned to multilateral organizations for funding to revive Ecuador’s economy, which has been battered by the coronavirus pandemic, and has renegotiated a 6-year credit agreement. $5 billion with the International Monetary Fund, which ends this year.

The Wall Street Journal first reported Monday that Lasso announced a deal with China to restructure $4.4 billion in debt.

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Reporting by Alexandra Valencia in Quito and Jahnavi Nidumolu in Bengaluru Writing by Oliver Griffin Editing by Lincoln Feast.

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