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LatinNews Daily - 14 June 2024

In brief: Ecuador’s gov’t planning to eliminate fuel subsidies

*Ecuador’s economy and finance minister, Juan Carlos Vega, has confirmed the phase-out of fuel subsidies. In an interview with local radio station Radio Democracia, Vega said that there will be two phases to the elimination of subsidies. The first phase will see the price of Extra petrol rise by US$0.25 from its current fixed price, to US$2.72 per gallon, roughly in line with international market rates. From there, fuel prices will rise or fall in line with international prices, with a maximum permitted monthly rise of 5% and a maximum monthly fall of 10%. Vega previously said in an interview with local television station Teleamazonas that there will be a compensation system for truck, taxi, and tuk-tuk drivers. Cutting fuel subsidies is a key demand of the International Monetary Fund (IMF), which signed off on a new four-year, US$4bn arrangement with Ecuador under its Extended Fund Facility (EFF) last month. Vega has said that fuel subsidies cost the government US$644m last year, and that these resources could be better spent on social programmes, given that fuel subsidies disproportionately benefit the wealthy. However, previous attempts in 2019 and 2022 to eliminate fuel subsidies were reversed after massive protests. Protests against Daniel Noboa’s government took place in Quito on 12 June, but were limited in size. The government will be nervously waiting to see whether more protests are called by Ecuador’s umbrella indigenous organisation Confederación de Nacionalidades Indígenas del Ecuador (Conaie), which coordinated the unrest in 2019 and 2022.

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