Ecuador's president-elect Lucio Gutierrez and incumbent Gustavo Noboa have agreed to restart talks with the International Monetary Fund for a stand-by loan.

Two months ago, the Noboa administration broke off negotiations with the IMF, complaining the loan conditions were too stringent.

Gutierrez led protests in 2000

"It was decided that we will jointly continue... negotiations with the IMF to reach an agreement," said Mr Gutierrez after meeting with Mr Noboa on Tuesday.

"We hope this can be completed as soon as possible, and if not, then it will be signed in my government," he added.

Mr Gutierrez, a left-leaning, retired army colonel, won presidential elections on Sunday against banana tycoon Alvaro Noboa, Ecuador's richest man and no relation to the president.

He was backed by indigenous groups, unions and many of the 60% of Ecuadoreans who live in poverty, against the three traditional political parties who control the legislature and have sworn to oppose him.

Tough conditions

Mr Gutierrez has said the IMF might demand tough and unpopular measures, like fuel price rises and public spending cuts, but that he would not agree to policies which would harm Ecuadoreans.

Lucio Gutierrez (left) and incumbent Gustavo Noboa agree to talks

Similar austerity measures by President Jamil Mahuad - as well as dollarisation of the currency - were introduced during the 1999 economic crisis when Ecuador defaulted on its foreign debt.

That sparked social unrest and in 2000 Mr Gutierrez led the army alongside Indian groups in protests which overthrew the government.

He has pledged to fight corruption and to provide cheap housing and free health care, but he must also generate a budget surplus to pay off $14bn of public debt.

Debts due

About $750m of debt is due to be repaid next year, but it is unlikely the country will raise enough money without turning to other sources.

Ecuador began talks for a $240m IMF stand-by loan in January, but a number of factors - including the raising of public sector wages and a corruption scandal at the finance ministry - meant no deal was reached.

If Ecuador could get the IMF's stamp of approval, it could open the door to other multilateral lenders.

Mr Gutierrez did not give a date for talks or how much he would be asking for.

Ecuador's economy grew by 5.6% last year, faster than any other in Latin America and met its debt obligations on a $287m IMF standby loan, which had been extended from a year earlier.

Mr Gutierrez takes office on 15 January.