Chinese government pledges 40 million USD loan in MOU with Bank of China for bridge materials for natural disaster recovery

On March 21, 2002, the Bank of China and the Ministry of Foreign Relations of Ecuador signed a Memorandum of Understanding (MOU) that pledged a 40 million USD loan, assumed to be an export credit, to Ecuador's Ministry of Economy and Finances. The loan was to be used to pay for the purchase of metal structures for bridges from China. These materials were intended to help reconstruct infrastructure following severe flooding. The MOU replaced an earlier MOU signed August 30, 1999. The loan terms described in the MOU are as follows: floating interest rate of 6M LIBOR + 140 bp (recorded using the average six month LIBOR in March 2002, 2.235% + 1.400% = 3.635%), a 0.25% management fee, a 0.15% commitment fee, a 13 year maturity period, and a 3 year grace period during which the borrower would only pay interest. A loan contract would be signed, per the MOU, only after commercial contracts to be financed through the loan were signed and export credit insurance was issued by the China Export & Credit Insurance Corporation (SINOSURE). Business News Americas reported that on November 4, 2002, the government of Ecuador signed a contract with China's National Construction Import & Export Corp. for a 40 million USD for a project to build 15 bridges along the Bahia-San Vicente highway in Ecuador's western Manabi province, likely this project. While Business News Americas also reported that, as of November 4, 2002, the Chinese government was still intending to fund the project, it is unclear if a formal loan agreement was eventually signed. One article from La Hora indicated the bridge project may have instead been funded by two companies based in Korea, but there is significant ambiguity in the article.

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