Ecuador Indians give new leader 6 months' grace

Thousands of pensioners have been queueing from early morning outside banks in Quito to withdraw monthly benefit payments which have lost half their value in the past month alone, in line with the declining value of the sucre, Ecuador's currency.

"If I eat once a day the pension lasts a week," said Rosa Duran, a retired nurse, who waited three hours to receive her 500,000 sucre payment.

A year ago her pension was worth £46 dollars, today it is worth £11. An estimated four million Ecuadoreans survive on £28 a month, while the average food basket costs four times that amount.

There was little sign of support for the new president, Gustavo Noboa, who has pledged to continue the economic policy of his predecessor Jamil Mahuad, who was ousted after Indian protests and a military coup last weekend.

"I hope they come back and finish the job," said Ms Duran, referring to the frustrated efforts of the Indian population to replace the country's discredited congress with a "government of national reconstruction", which would include Indian, labour, army and religious representatives. Last year Mr Mahuad reacted to the deepening economic crisis by freezing bank accounts, but paid $700m to one bank to keep it afloat, causing public outrage.

Two weeks ago the former president drew up the "Law of Stabilisation", which would replace the sucre with the US dollar in the hope of curbing inflation and allowing the country to borrow money at US interest rates.

Indian and labour leaders denounced the plan as little more than a lifeline to corrupt bankers and big business, while the poor watched food items double in price over the past fortnight.

The dollarisation of the economy would also wipe out much of the value of frozen savings accounts, which were deposited at 7,000 sucres to the dollar, but will be withdrawn at 25,000 to the dollar, according to the current exchange rate.

The mishandling of the economic crisis cost Mr Mahuad his job last Saturday. Mr Noboa, who was his vice president, is the fourth president to take office in two years.

Antonio Vargas, leader of the powerful Indian confederation, Conaie, announced that his organisation would give the new administration six months to reverse the economic decline or face renewed mass protest.

In the past century Ecuador has relied on single cash crops to support its economy, first textiles, then cocoa, then bananas and finally oil - much of which backfired when world prices collapsed.

Thousands of small account holders, many of them pensioners, fear they may die before they ever see the small nest eggs they deposited in banks when a degree of faith still existed in local financial institutions.

Ecuador suffered a 60% inflation rate last year, while unemployment has risen to 20% and the cost of the foreign debt is equal to the country's GNP, approximately $15bn.

"We must all have faith in Ecuador and work together to overcome this difficult situation" Mr Noboa said yesterday

But he faces an uphill task as he relies on support from a deeply-divided congress, where deputies face elections for a new parliament in two months.