Source: Reuters


Ecuador’s President Lenin Moreno declared a state of emergency on Thursday as nationwide protests broke out over the end of decades-old fuel subsidies in a government fiscal reform package worth more than $2 billion a year.

Ecuador declares state of emergency as fuel protesters block roads - oil and gas 360

A man stands wrapped in the national flag as an armoured personnel carrier is seen during protests after Ecuadorian President Lenin Moreno’s government ended four-decade-old fuel subsidies, in Quito, Ecuador October 3, 2019. REUTERS/Daniel Tapia

“Down with the package!” some protesters shouted, referring to measures that Moreno enacted this week which also included tax reforms, as he sets the Andean oil producer on a centrist path after years of leftist rule.

As the fuel measure came into effect on Thursday, taxi, bus and truck drivers blocked streets in the highland capital Quito and the second city Guayaquil on the Pacific coast, while bus stations were closed. Indigenous groups, students and unions joined the protest, blocking roads with rocks and burning tires.

“It’s an indefinite action until the government overturns the decree on subsidies. We’re paralyzing the nation,” one bus transport leader Abel Gomez told Reuters.

Officials say the elimination of fuel subsidies was necessary to lift the economy and stop smuggling.

Moreno, who won election in 2017 to replace Rafael Correa, told reporters the “perverse” fuel subsidy, in place for 40 years, had distorted the economy and protests would not be allowed to paralyze Ecuador.

“To ensure citizens’ security and avoid chaos, I have ordered a national state of emergency,” he said of the measure that suspends some rights and empowers the military to keep order.

ARRESTS AND SCUFFLES

Some groups of protesters trying to reach the government palace in downtown Quito scuffled with police.

Interior Minister Maria Romo said 19 people were arrested for blocking roads and other crimes.

“The lack of transport affects us all, but equally the rise in gasoline prices will affect us,” said Cesar Lopez, 39, walking to his business in Quito.

“I don’t know what will happen.”

With a population of more than 17 million people, Ecuador has a long history of political instability. Street protests toppled three presidents during economic turmoil in the decade before Correa took power in 2007.

Economy Minister Richard Martinez said on Wednesday that Ecuador hoped to save about $1.5 billion a year from eliminating fuel subsidies. With tax reforms also, the government would benefit by about $2.27 billion, he said.

On Tuesday, Ecuador announced it was leaving the Organization of the Petroleum Exporting Countries (OPEC) to pump more oil and raise revenues.

The government wants to reduce the fiscal deficit from an estimated $3.6 billion this year to under $1 billion in 2020.

Ecuador’s debt grew under Correa, who endorsed Moreno in the 2017 election but has since become a critic of his successor’s turn toward more market-friendly economic policies.

Moreno’s government reached a $4.2 billion deal with the International Monetary Fund (IMF) in February. But skepticism of the IMF runs strong in Ecuador and throughout Latin America, where many blame austerity policies for economic hardship.

 


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