Ecuadoreans Wary on U.S. Dollars

By CARLOS CISTERNAS Associated Press Writer

QUITO, Ecuador (AP) - Dario Vergara's eyes aren't lighting up with dollar signs at the prospect of making the U.S. greenback this nation's official currency.

``It's only going to favor the rich and be a disaster for poor people,'' said the middle-aged barber as he clipped away at a customer's hair. ``You do not have to be a fortune teller to know that when we adopt the dollar the country's situation will get worse.''

Congress on Tuesday passed a reform package to usher in the controversial currency switch, which new President Gustavo Noboa's government describes as Ecuador's only hope to stabilize its shattered economy and halt rising inflation.

Vergara's doubts about the dollar plan reflect the growing skepticism of Ecuadoreans.

A new poll released Thursday by the private public opinion firm Cedatos showed that 70 percent of Ecuadoreans believe the switch will benefit the wealthy and that 53 percent are doubtful it will resolve Ecuador's deep economic problems. The poll surveyed 1,300 people in Quito and Guayaquil and had a margin of error of plus or minus 3 percentage points.

Before the vote, polls showed that more than 60 percent of Ecuadoreans rejected the dollar plan - one of the issues that led to hundreds of Indians and young army officers seizing the empty Congress building on Jan. 21, leading to President Jamil Mahuad's ouster.

``This new system doesn't frighten me because it can't be any worse than what we had before,'' said Victor Aguirre, a telephone technician. ``We hope that things will change with the dollar.''

Scrapping the national currency means the government can no longer print extra money to meet its budget after years of deficit spending, thus eliminating a major cause of inflation.

Noboa has 10 days to ratify the dollar reform package, which lays out a 180-day schedule to withdraw the local currency, the sucre, from circulation and replace it with the dollar, joining Panama and nine other developing nations where the U.S. dollar is legal tender.

``All Ecuadoreans should go to the teller windows of the Central Bank and cash in their sucres, the local currency, for dollars,'' said Marco Naranjo, one of the Central Bank's architects for the currency changeover. ``Once that's done there won't be any sucre bills, just dollars circulating in all commercial transactions, prices, salaries, rents, contracts, etc.''

Ecuador turned to the dollar plan in early January when the value of the sucre went into virtual freefall after the near collapse of the country's corruption-ridden banking system.

Many economists predicted that speculation against the sucre would quickly send Ecuador into hyperinflation this year if the government did not act.

Prices in this nation of 12 million people have risen more than 25 percent since January and annual inflation for the last 12 months topped 90 percent, the highest in Latin America.

The green dollar is to replace bills such as Ecuador's dark-orange 50,000 sucre note which bears the national seal and a portrait of former President Eloy Alfaro.

The Central Bank is still undecided about the fate of sucre coins that have practically no value to the dollar, but could serve for transactions like bus fare, which currently costs the equivalent of 6 cents.