Crisis in Ecuador: what is the origin of the demonstrations against Lenin Moreno

Grants established in the 1970s to reduce the price of fuel, they have become the bone of contention between the government and several Ecuador. The government of Lenin Moreno take a step further to reduce the public debt?

Ecuadorian President Lenin Moreno signed with the International Monetary Fund on the grounds that his predecessor, Rafael Correa, had left him as an indebted country. an agreement for a loan of 4203 million dollars. In return, Ecuador has launched an ambitious adjustment plan including 20,000 layoffs in the public administration, a reduction of 30 to 15 days of annual leave for state employees and a relaxation of labor legislation.

But the measure that threw sectors such as transporters and indigenous peoples into unprecedented mobilizations for a decade was the elimination of subsidies that kept fuels at a relatively cheap price. The cost generated by the Ecuadorian State It was $ 3 billion a year.

"Since Ecuador was an oil exporting country in the early 1970s, fuel subsidies have been maintained for a long time. And each time, they tried to extract or increase the essence, which provoked popular and social reactions, "recalls Alberto Acosta, economist and former Minister of Energy under the chairmanship of Rafael Correa in 2007. And although these subsidies "benefit more the richest sectors than the popular sectors are considered a social conquest," notes Acosta.

The former minister believes that Moreno should have reviewed the subsidies "with social or ecological criteria". To justify the series of austerity measures, Moreno accused Rafael Correa of ​​indebting the country. In Belgium, former President Correa rejected the accusations and felt that he did not need it set up a "pack".

"The government of President Moreno has received from the former government of Rafael Correa a very hard economy. Without transformation of the productive matrix and without structural change deserving the name of "revolution" and less of "socialism" ", emphasizes the economist Alberto Acosta, critic of the balance of the Correa administration, then that he was minister of start your mandate.

"But Lenin Moreno's government, instead of making adjustments that could have solved problems quickly, was spending time improvising and was finally falling under the control of the International Monetary Fund. And we know very well what it means: austerity, undermining popular sectors and paralysis of the productive apparatus. All with a view to establishing budgetary and external balancesand regain its competitiveness, "denounces Acosta.

Marcos Romero agrees on this point. The Andean University economist, Simón Bolívar, believes that the Moreno government has very poorly negotiated with the International Monetary Fund: "Ecuador has committed to negotiating with the IMF to reduce the budget deficit, which is around 6% of GDP. turn it into surplus twice as fast as the commitment made by Argentina, for example, vis-à-vis the IMF, "said Romero. In a telephone interview with RFI, Romero denounces a plan that "this implies a very sharp reduction in public spending ". In addition, he blames the government for making several mistakes.

First, the government of Lenin Moreno underestimated the impact of the rise in the price of gasoline on the purchasing power of the population. "The economic stagnation, combined with the decline in the price of oil, cuts in public staff, at least 20,000 people in the last two yearshas led to an increase in the level of poverty, "says Romero.

"The second mistake was to minimize compensation measures. The only government compensation measure is a $ 15 increase in development bonus recipients and an increase in the number of beneficiaries of 300,000 people. But the only thing the government has done is reinstate those who have left the system in the last two years! ", Laments the economist of the Andean University.

Third, Romero denounces the imbalance of a plan that "includes attacks on the most vulnerable sectors of Ecuadorian society and the elimination of a fraction of the tax at the exit of the currencies, the elimination of customs duties for a series of raw materials. Measures that clearly benefit the business sector ". "This is the first part of the adjustment process that aims to implement in Ecuador a craziest neoliberalism"Romero concluded.