Due to the fall in oil prices, the Ecuadorian government is considering once again to remove fuel subsidies. Subsidies on gasoline and diesel were introduced in the 1970s and are estimated at around US$1.4bn, burdening the budget, in a context where the country is facing one the worst coronavirus outbreak in Latin America. The government expects record low oil prices to offset lifting subsidies.
In October 2019, the government of Ecuador decided to end fuel subsidies and to liberalise fuel prices, as agreed under a US$4.2bn deal with the International Monetary Fund (IMF). The announced removal of subsidies led to a nearly 30% increase in gasoline prices and to a 123% surge in diesel prices, prompting nationwide protests, and the declaration of the state of emergency. The government thus repealed the law ending fuel subsidies and announced upcoming discussions with indigenous leaders on a new law to ensure fuel subsidies are not used by fuel smugglers.
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