Latin America Advisor

Latin America Advisor

A Publication of The Dialogue

Can Ecuador’s Noboa Successfully Cut Fuel Subsidies?

The government of Ecuadorean President Daniel Noboa announced last month that it is cutting longstanding fuel subsidies. // File Photo: Ecuadorean Government.

Ecuador’s government announced on June 18 that it was reducing longstanding fuel subsidies, which led to a nearly 11 percent increase in the price of gasoline. Previous governments attempted but failed to reduce government-funded fuel subsidies following massive protests. Why have fuel subsidies been an important policy target for successive Ecuadorean administrations, and what motivates President Daniel Noboa to reduce them now? How will this policy affect Noboa’s popularity ahead of next year’s presidential election?

Jose L. Valera, partner at Mayer Brown in Houston: “Subsidies for premium-grade gasoline were eliminated during the administration of former President Moreno, and since taking office in January, President Noboa has announced his intention to eliminate the remaining gasoline subsidies. They cost $3.3 billion, about the same amount as the state spends on health services for the country. Subsidies for medium and regular grades were eliminated as of July. As of August, the government will implement a price band to stabilize market price fluctuations. Monthly price increases will not exceed 5 percent, and decreases will not exceed 10 percent. The announcement was made two weeks after…”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.


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Gene Kuleta

Editor
P. 202.463.2920
E. gkuleta@thedialogue.org

Carl David Goette-Luciak

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Nili Blanck

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