Lasso appoints a new Economy Minister after reducing fuel prices

First modification: 07/06/2022 – 11:31

The president of Ecuador, Guillermo Lasso, appointed businessman Pablo Arosemena as the new economy minister on Tuesday after the indigenous protests that led the president to commit to compensation that will demand more than 700 million dollars a year.

Arosemena, who held the post of governor (representative of Lasso) in the coastal province of Guayas, replaced Simón Cueva, who resigned along with three other ministers from the cabinet of right-wing President Guillermo Lasso.

The heads of Health, Ximena Garzón, of Transport and Public Works, Marcelo Cabrera, and of Higher Education, Alejandro Ribadeneira, also resigned. Lasso, a former right-wing banker who took office 13 months ago, faced a recent protest from the powerful Confederation of Indigenous Nationalities (Conaie), which participated in revolts that toppled three presidents between 1997 and 2005.

A spokesman for the Ministry of the Economy told AFP that the Economy Minister’s departure was due to his “own decision”, which was taken a “couple of months” ago.

“Some changes were necessary after the protest movement, while others are not explained” by the indigenous strike, he tells RFI Simón Pachano, political scientist, professor at Flacso Ecuador.

“The Minister of Finance is accused of not having delivered the necessary resources not only for these days of mobilizations, but in general for the attention to the national health system, for Education, for Public Works. Actually, I don’t know if it is that or if the ministers themselves were incapable of managing in those areas,” said Pachano, interviewed by RFI.

Diesel went from 1.90 to 1.75 dollars a gallon

With roadblocks nationwide and marches in several cities, including Quito, indigenous organizations rejected the high cost of living, raising a series of demands such as reducing the prices of the most widely used fuels in the country by up to 21%.

The demonstrations, which left six dead and more than 600 injured, ceased after the signing, last Thursday with the mediation of the Catholic Church, of a “peace act” in which the Executive promised to lower by up to 8% the fuels.

With this reduction, which took effect on Friday, a gallon of diesel went from 1.90 to 1.75 dollars and that of regular gasoline from 2.55 to 2.40 dollars.

Subsidies to the rural sector

In the midst of an economic crisis, due to times of low oil prices – the main export item – and aggravated by the covid-19 pandemic, the conservative government approved other compensation for peasants and the poor, which in total will require more than 700 million dollars a year.

The measures include an increase in an assistance bonus for the poorest, subsidies for urea and the cancellation of debts of up to 3,000 dollars of peasants with public banks.

Among the commitments, the Lasso administration must also define the targeting of more fuel subsidies for the rural sector. Negotiations on this and other issues will begin next Thursday.

“The crisis is partially over, in the sense that it quells the protests. But this opens a hole in the economy because it means an increase in subsidies because that is going to mean sacrifices in other places, which could be in Education, Health or Infrastructure where the problems really are”, warns the political scientist Simón Pachano.

Regarding Lasso’s management, Pachano observes that “the government had a very good rating in its initial months when it carried out a very successful vaccination campaign. Practically 80% of the population has been vaccinated with 3 doses. But it has very low marks in all other aspects. Except in the management of the macroeconomic that has a stabilization of the economy. But it has very poor results in health, apart from vaccination, in education and infrastructure.

Alejo Schapire interviewed Simón Pachano.