Political instability has reared its head in another South American nation this week. On Tuesday, Ecuadorian President Lenin Moreno announced a multi-billion dollar fiscal reform package which would eliminate fuel subsidies. This would raise the price of gasoline and diesel dramatically, perhaps even doubling it in some instances. Yesterday, as soon as the new fuel prices went into effect, the protests began in Ecuador’s capital city Quito, and its largest city of Guayaquil. A nationwide transportation strike was also called. Protesters blocked streets, burned tires and fought with police through the day. Moreno declared a state of emergency to ‘avoid chaos,’ and it went into effect last night.
He added that there is no chance his government will change policies now, “especially those related to a perverse subsidy that was causing harm to the country.” Government sources claim 275 protesters were arrested and 28 police officers suffered injuries.
Ecuador is currently struggling with a high level of public debt. The fiscal reform package is part of Moreno’s austerity policies. Many Ecuadorians believe the policies are the result of a $4 Billion loan agreement with the International Monetary Fund. Moreno has also announced that Ecuador will be leaving OPEC in January, 2020. This move allows the nation to increase its oil production and exports beyond the cartel’s imposed limits. Ecuador’s exit will not cause a shakeup in the world oil market given that it is OPEC’s smallest member in terms of oil production.