QUITO, June 2 Ecuador will invest gold held as monetary reserves in financial instruments in an operation with Goldman Sachs meant to boost the available cash without affecting the value of reserves, the central bank said on Monday.
The three-year operation will commit 466,000 ounces and will generate between $16 million and $20 million in profits, depending on the international price of gold, the bank said.
"This operation will allow the (Ecuadorean Central Bank) to take advantage of its excess liquidity in gold without any loss in the value of its reserves," a bank official wrote in an email.
The country's gold reserves as of May 16 stood at $1.098 billion but dropped on May 23 to $493 million, according to central bank data. The difference between the two amounts is similar to the dollar value of the gold to be used in the operation, based on the current market price.
The bank declined to provide additional details.
Ecuador had $4.1 billion in reserves as of May 23, with around $493 million of that in gold, according to official figures.
President Rafael Correa has said the country will need financial resources to pay for hydroelectric generation projects and has warned that 2015 will be a financially difficult year for the government.
The popular socialist leader has said Ecuador is studying a return to debt markets with a $700 million issue following a default in 2008. (Reporting by Alexandra Valencia, writing by Brian Ellsworth; Editing by Lisa Shumaker)