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US officials to assess Ecuador dollarization bill

QUITO, Ecuador, Feb 25 (Reuters) - High ranking U.S. government officials are expected in Quito on Sunday to study Ecuador's dollarization bill aimed at pulling the debt-ridden Andean nation out of its worst crisis in five decades.

Finance Minister Jorge Guzman said on Friday the U.S. mission will include U.S. Acting Assistant Secretary of State for Western Hemisphere Affairs Peter Romero and Assistant Treasury Secretary for International Affairs Edwin Truman.

Arturo Valenzuela, U.S. special assistant to President Bill Clinton will also be part of the mission, Guzman said.

``They're coming to analyze the country's situation, to assess what we're doing, the dollarization process and determine how the United States and the international community can assist this country,'' Guzman told reporters.

With some $1.3 billion in reserves, Ecuador would not be the first Latin American nation to adopt the greenback as its currency. Panama did so years ago and Argentina passed a convertibility law in 1991 guaranteeing as many U.S. dollars in central bank reserves as there are pesos in circulation.

Ecuador has more than $13 billion in foreign debt, roughly the equivalent of its gross domestic product, and defaulted on part of its $6.5 billion in Brady and Eurobond debt in 1999.

Ecuador is in the midst of its worst social and economic crisis in five decades. The national currency, the sucre, shed two-thirds of its value last year while inflation accelerated to 60.7 percent and the economy contracted 7.5 percent.

President Gustavo Noboa hopes dollarizing his debt-ridden country's economy will help pull the nation of 12.4 million people out of social and economic crisis.

Unemployment stands at 17 percent and 62.5 percent of citizens live in poverty.

The U.S. mission is scheduled to meet with Noboa on Monday, the same day Ecuador's Congress is slated to vote on the dollarization and other bills.

The ``Economic Transformation Law'' package includes bills which would allow greater job flexibility, open up the oil, electricity and telecommunications sectors to more foreign investment as well as a plan which would make the dollar Ecuador's principle currency.

The government says the laws will slash inflation and lure foreign investment, spurring growth in an economy which contracted 7.5 percent last year and saw inflation of 60.7 percent.

The legislative proposal has met stiff criticism from all sides of society, with polls showing 74 percent of Ecuador's 12.4 million people are opposed to dollarization.

Opposition to the dollar plan also played a role in ousting President Jamil Mahuad last month by an Indian uprising which gained military support.

Noboa, who served as Mahuad's vice president, was installed as president shortly after the bloodless coup and maintains the dollar plan is key toward modernizing and bolstering the economy.

He sent the bills as ``urgent,'' giving Congress until March 14 to modify and pass the proposals. If not, the bills will go into force as sent by Noboa.