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Ecuador's Congress resumes dollarization debate

QUITO, Ecuador, Feb 29 (Reuters) - Ecuador on Tuesday resumed debate on a bill aimed at stabilizing the chaotic economy by using the U.S. dollar as the national currency after approving 80 of the bill's 85 articles the night before.

``The deputies are aiming at finishing the approval of the legal framework this afternoon or this evening,'' said a spokesman for the single-chamber Congress of 123 members.

Most of the dollarization bill was approved Monday, when members of Congress passed amendments to financial, banking and labor laws to make them conform with the adoption of the dollar.

So far, the dollarization proposal is virtually unchanged from the original bill sent to Congress by the government. Analysts consider the dollarization bill to be President Gustavo Noboa's best chance to rescue the country from its worst socioeconomic crisis 50 years. The government hopes using the dollar to virtually replace the sucre will put an end to out-of-control inflation and restore a measure of confidence to the economy.

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

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

Inflation hit 90.8 percent in the 12 months to the end of February, the government said Tuesday.

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 almost a century ago and Argentina passed a convertibility law in 1991 that guarantees one dollar for every peso in circulation.

Dollarization was first proposed on Jan. 9 by 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.