Ever since Moreno’s presidency, the unemployment rate in Ecuador has shot up with 11,820 employees fired from the public sector. This number was announced by the country’s Labor Minister Andres Madero to a meeting on March 13 of the Workers commission of the National Assembly.
A recent update on the interventions of the IMF on Ecuador’s fiscal problems was about an agreement that is set to reform the Ecuadorian Government. Its effects are said to be an increase in taxes, readjustments, a reduction of public spending and federal employment, and reduction of fuel subsidies. There were six key points pointed out about the agreement to which both entities will be fit to work with, namely:
1. To strengthen the financial system
2. To restore a prudential fiscal policy
3. To promote transparency and good governance
4. To support job creation and competitiveness
5. To promote the poor and vulnerable segments of the population and;
6. To strengthen the institutional framework of the Central Bank from Ecuador.
However, despite the goals of the agreement, there are no improvements envisioned. In fact, upon further analysis, the agreement instead will have a negative effect in South America in general such as a decrease in the economy in Ecuador, the strengthening of dollarization, an increase in taxes. It is also deliberately indicated in the agreement that among the public contracts, only half will be renewed upon expiry which will expectedly increase unemployment. This was emphasized by former president of Ecuador Rafael Correa.
Correa expressed on his official Twitter account that Ecuador’s agreement with the IMF obliges the country to remove almost all subsidies. “…the rich will be exonerated from foreign exchange taxes, while the poor do not send money abroad. Poverty, Inequality and 0 growth.”
The IMF, on the other hand, assured that Ecuador’s economic growth will be measured from the next year, 2020, although it will experience a decrease of -0.5 percent this year.
With the recent issues faced by the Government of Ecuador and IMF, it is expected to see the poor people of Ecuador being oppressed more strongly, and the rich being fed with more money.