Ecuadorian President Rafael Correa announced that his country would not pay back the remaining balance on it’s external debt, saying that the debt is immoral and illegitimate.

The decision of defaulting on the global bonds (2012, 2015 and 2030) was taken by Correa after the official presentation of the final report from the Public Credit Audit Commission (Comision para la Auditoria Integral del Crédito Público, CAIC [es]) audit regarding Ecuador’s foreign debt. Ecuador’s decision to stop payments on the interest on its national debt is it’s second in two decades, the other coming in 1999, when it defaulted on $10 billion. In 2008, the figure stands at $3.9 billion.

Correa and others supporting the move within Ecuador say that the non-payment will allow the money to go towards social programs inside the South American country.

However it is expected that the decision will also negatively impact the average Ecuadorian.

…banks will have to charge higher interest rates because they have no lines of international funding and that the small manufacturing in Ecuador will disappear because no supplier will be lending to a company in a country where the President has said that raising rate by the creditors is illegal.

Via / Global Voices