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Ecuador Congress passes most of dollarization bill

By Gustavo Oviedo

QUITO, Ecuador, Feb 28 (Reuters) - Ecuador's Congress had passed most of a bill to adopt the U.S. dollar as the South American nation's main currency by late on Monday night in the government's attempt to pull the Andean country out of crisis.

Legislators approved 80 of the bill's 85 articles and put the remainder up for debate at a Tuesday session because of the lack of a quorum.

Ecuador declared a moratorium on its foreign debt payments last year as total public foreign debt reached more than $13 billion, equal to its gross domestic product. Inflation ran up to 60.7 percent, the economy contracted 7.5 percent, and the national currency, the sucre, lost two-thirds of its value.

So far the dollarization proposal has gone virtually unchanged from the original sent to Congress by the government, a congressional source told Reuters.

``This will be finished Tuesday,'' the source said, adding that the clauses already approved had been passed by a margin of at least 40 votes in the 123-member chamber.

The ratification of most of the bill came hours after U.S. government officials pledged to back Ecuador's efforts to obtain credit after it dollarized its economy.

With $1.26 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 that guarantees one dollar for every peso in circulation.

Analysts consider the dollarization bill to be President Gustavo Noboa's best chance to rescue the nation of 12.4 million people from its worst socioeconomic crisis in five decades.

Members of Congress passed amendments to financial, banking and labor laws to make them conform to the adoption of the dollar.

They also voted to open up the electricity, oil and telecommunications sectors to more private-sector investment, the text of the bill shows.

Dollarization was first proposed on Jan. 9 by then President Jamil Mahuad, who was ousted in a bloodless coup, and was pursued by his vice president, Noboa, after he succeeded to the presidency on Jan. 22.