Ecuador's Arauz says Congress allies will block central bank reform

QUITO, Feb 9 (Reuters) – Ecuadorean presidential candidate Andres Arauz said on Tuesday that his allies will become the largest force in Congress after winning 50 seats in elections held on Sunday, and said they would block efforts to bolster the central bank’s independence.

Arauz, a 36-year-old economist backed by former leftist President Rafael Correa, won the first round of presidential elections held on Sunday by a wide margin. On Monday, President Lenin Moreno’s government sent the central bank reform, which is backed by the International Monetary Fund (IMF), to Congress.

“We request that the current Assembly and the next one to remain firm and alert about that bill,” Arauz said, expressing his opposition to what he called the “central bank privatization law.”

Arauz has said the proposed central bank reform would leave the incoming government without effective tools to alleviate local households’ and businesses’ “enormous” debts.

Moreno, who has favored orthodox economic policies to try to attract foreign investment, has criticized the central bank for lending money to the central government to finance spending under Correa. Cash-strapped Ecuador in 2020 reached a $6.5 billion deal with the IMF, pledging to make pro-market reforms.

Correa has argued that the central bank’s role is different in Ecuador than other countries since the South American country is dollarized.

While Arauz came in first in Sunday’s vote, he will face an April 11 runoff against either anti-mining indigenous candidate Yaku Perez or conservative banker Guillermo Lasso.

Arauz said his allies had won 50 spots in the 137-seat National Assembly. Official data was not yet available for all of the congressional races.

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