IADB to lend Ecuador $1.2 bln up to 2011

QUITO, May 9 (Reuters) - The Inter-American Development Bank will lend Ecuador around $1.2 billion between this year and 2011 to improve the country's infrastructure and crucial oil sector, the bank's chief said on Friday.

The IADB is one of Ecuador's largest creditors. But in recent years the oil-producing country has reduced demands for loans due to higher tax revenues for the state.

"We expect activity from this year to 2011 of about $1.2 billion mostly (used) for infrastructure," IADB President Luis Moreno told reporters in Quito.

President Rafael Correa, a leftist former economy minister, has said all multilateral credits will be used in projects that generate profits for the state.

Moreno said the bank was analyzing a loan to Ecuador's state oil company, Petroecuador, which produces half of the country's 500,00 barrels-per-day output. (Reporting by Jose Llagari; writing by Alonso Soto; editing by Dan Grebler)