On October 1, 2019, Executive Order 883 decided to liberalize the price of fuel to reduce the country’s fiscal gap. In response, the transport union suspended its activities and Conaie began mass mobilization across the country. The radicalization of the protest has been announced and they are demanding that the Armed Forces stop supporting the President of the Republic. There was damage to private property and serious incidents at the headquarters of Teleamazonas, El Comercio and the Office of the Chief State Inspector. After that, Lenín Moreno imposed a curfew and announced that he would review Decree 883. We had to retreat.

Today, four years after that government’s attempt to suddenly turn the rudder to change the course of the economy, we continue to subsidize fossil fuel with the aggravating circumstance that the Ecuadorians have expressed their desire to leave the raw material of that fuel underground. Inexplicable.

If we look from the outside and coldly, this means that Ecuador spent almost 50 years of the Republic borrowing money to pay a regressive subsidy; In other words, the sectors that could survive with the freed fuel price benefit the most, as all Latin American countries do, except for Venezuela. This is why we live in a cost bubble while benefiting a privileged few and many drug dealers and smugglers.

It is unfeasible to sustain a subsidy that amounts to more than 80,000 million dollars, more than the entire public debt of Ecuador. That’s like blowing a caliche balloon for almost 50 years.

(…) this country that produces oil, but is an “environmentalist”, whose public debt is growing while subsidizing the unbelievable.

As the history of Ecuador has told us in these almost 200 years of the republic, politicizing the economy is always a bad idea., and the fuel subsidy is the best example of how a populist initiative from the 1970s serves to widen the fiscal gap today. The abolition of this subsidy, or at least better and more accurate targeting, would mark a turning point in the country’s economy. However, as we saw four years ago, it has become so politicized that the same “environmentalists” who are calling for an end to extractivism are the same ones who are calling for subsidies to be maintained. We settled and continue to blow the same caliche bubble.

The release of fuel prices does not mean that they will skyrocket, which may be the general fear. There is a significant difference in these prices between different countries. As a general rule, the richest countries have the highest prices, while the countries with the fewest resources, plus countries that produce and export oil, have significantly lower prices.

Another October passes with a distorted and irrational political subsidy. A subsidy that does not allow the financial and fiscal sustainability of the country. And when we had the chance, the minority chose the majority with violence. Another October passes in this oil-producing but “ecological” country, whose public debt is growing while subsidizing the incredible. (OR)