Panel Vows Ecuador Dollar Plan Aid

By GONZALO SOLANO Associated Press Writer

QUITO, Ecuador (AP) - A U.S. delegation on Monday pledged Washington's support for a plan to make the U.S. dollar the official currency of Ecuador.

Arturo Valenzuela, President Clinton's special assistant for Inter-American affairs, praised Ecuador's Congress for swift action in approving a series of laws to enable the currency switch.

He said the United States would use its pull with the International Monetary Fund and other international lending institutions to ``achieve the level of financial support necessary for the Ecuadorean government's economic program to succeed.''

Polls have showed that more than 60 percent of Ecuadoreans reject the dollar plan. It was one of the issues that prompted hundreds of Indians and young army officers to seize the country's empty Congress building in January, leading to the ouster of then-President Jamil Mahuad.

Valenzuela's comments came after a meeting with the country's new president, Gustavo Noboa. Accompanying Valenzuela were Peter Romero, U.S. assistant secretary of state for Latin American affairs, and Edwin Truman, assistant secretary for international affairs in the U.S. Treasury.

Noboa hopes the move to the dollar will spur investment and bring down interest rates.

The IMF has not yet endorsed Ecuador's plan to abandon the national currency, the sucre, and replace it with the greenback. By adopting the dollar, Ecuador would join Panama and nine other countries in which the U.S. dollar is legal tender.

Michel Camdessus, outgoing IMF chief, expressed doubts about the plan three weeks ago, saying Ecuador should instead focus on structural reforms, including strengthening its ailing banking system.

In theory, the move to the dollar would hold down inflation by preventing Ecuador from printing more money to meet its budgetary needs after years of deficit spending. Inflation topped 60 percent last year, the highest in Latin America.

Congress on Friday passed 49 of 85 reforms necessary to make the currency changeover, including a law prohibiting the Central Bank from printing new sucres.

Mahuad, the former president, introduced the currency plan 12 days before top military leaders forced him from power on Jan. 21.

His ouster was prompted by a military-backed uprising by thousands of Indians angry at his inability to halt Ecuador's economic slide and curb corruption.

Indian leaders have said the dollar plan is an affront to national sovereignty and would benefit only the rich.

But Antonio Vargas, the Indian leader who led the Congress takeover, has said the issue is negotiable, so long as Noboa's government gives Ecuador's 4 million Indians a greater voice in policy decisions.

Hours after Mahuad's ouster, Ecuador's military chief, Gen. Carlos Mendoza, dissolved a three-man junta that had seized power. Mendoza resigned his post, ceding government control to Noboa, the democratically elected vice-president.

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