Several analysts deplored the government decision because with it the process of eliminating the fuel subsidy is left unsubstantiated
From Today at 00:00 the new prices for extra gasoline and eco-country began to take effect: $ 2.55 and diesel: $ 1.90. The price increase was accompanied by the announcement that the monthly increases in fuels that were carried out in accordance with the band system established in an executive decree are being suspended. 1054 of the government of Lenín Moreno.
The decision was announced yesterday around noon by the president Guillermo Lasso, in the midst of an unstable political environment, due to the risk that the dialogue with the transporters would break down and that he was focused on obtaining an agreement to target the subsidies. Additionally, yesterday the Conaie discussed in Colta measures to take with respect to the increase in fuel prices.
The president justified his decision by stating that he seeks to “provide stability to the pockets of Ecuadorians, executing actions that continue with the reactivation and creation of employment, especially for the poorest.”
Nevertheless, several analysts consider the measure a setback, since the path towards the elimination of fuel subsidies is left unsubstantiated, which is considered regressive and anti-technical.
For Alberto Acosta Burneo, editor of Weekly Analysis, the measure means turning back. “A huge setback in something that had already been achieved ”. In the first instance removes a pedagogical effect It was created as a result of the gangs, in front of the population, which was already getting used to paying prices based on the variation of the international market. Further, the harmful burden that represented for a ruler to be the one who decides or not the increase in prices had been ended. Now, the responsibility returns to the Executive. With gangs, it was a formula-based decision, he said.
According to Acosta Burneo, the Government did have other alternatives, such as, for example, reducing the percentage of variation of the bands, which now stood at 5% for gasoline and 3% for diesel to 1%; or even lower prices, but always keep those bands.
Luis Espinosa Goded, university professor, indicated that fuel subsidies are one of the most dire policies because they increase inequality and are unfair. However, the gang system had begun to solve the problem, but now, unfortunately, the government of Guillermo Lasso is taking a measure to reactivate the problem.
He further explained that a government must reach agreements, but said that this measure has not been accompanied by any announcement of an agreement to, for example, approve the tax reform. Rather, it would seem that it is in exchange for avoiding a violent uprising. For Espinosa Goded, a government cannot give in to give in, and worse when faced with violence.
Additionally, he criticized that these measures do not advance in a policy of economic freedom and rather are inclined towards the interventionism of the State that wants to control the prices of rice, chicken, fuel … For the expert, the Government would be falling into a kind of pragmatism in the that what can be done is done.
Agree with Oswaldo Erazo, executive director of the Chamber of Petroleum Derivatives Distributors (Camddepe), yesterday his sector was awaiting the corresponding executive decree. For Erazo, the theme of the suspension of the bands does not support the liberation of prices or free competition, which was what his sector expected. He recalled that the subsidies have generated many distortions and that they have affected public finances, which is why he considers the measure a setback.
Meanwhile, the marketers have already begun to send communications to its members to explain the procedure for the new price increase. For example, the marketer Petróleos & Servicios informed them that the current price is the one currently established between October 12 and November 11 and that this cannot be changed until a new decree is in force.
The Ministry of Energy and Natural Resources indicated that through of Petroecuador, the State guarantees the normal supply of fuels in the country. The terminals work regularly to guarantee the supply to the trading companies in Ecuador. Additionally, it was reported that the Agency for the Regulation and Control of Energy and Non-Renewable Natural Resources (ARC) has immediately activated control operations in service stations to verify the sale at the current official price.
Fuel figures
1
Dollar cost diesel in June 2020, and after a year and five months it will reach $ 1.90.
1,75
Dollars was the initial price of the extra gasoline and ecopaís, now it will cost $ 2.55
5
It was the percentage that the price of gasoline could increase each month. Diesel could do it at 3%. (I)
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