Stephan Kueffner and Jonathan Gilbert, Bloomberg News
QUITO
EnergiesNet.com 06 28 2022
Ecuador’s congress postponed a vote on whether to impeach market-friendly President Guillermo Lasso until Tuesday after he announced fuel price cuts in a bid to appease protesters.
The legislature ended a second consecutive night of debate over Lasso’s future in office without voting. The conservative former banker’s political struggles come on the back of two weeks of violent protests across the country over fuel prices and the high cost of living.
Leftist opposition party Revolucion Ciudadana, which is close to ex-President Rafael Correa, is seeking to remove Lasso on grounds that the country is facing a severe crisis, a constitutional provision that allows for the president’s impeachment. While the group leads Ecuador’s fractured congress with 47 seats, it’s unclear the motion will reach the 92 votes needed to oust Lasso.
Lasso, who took office a year ago, is grappling with unrest as protesters led by indigenous groups have paralyzed parts of the country and threaten to further disrupt oil production. The protesters are demanding a reduction in fuel prices, a moratorium on new oil and mining projects, and halting plans to privatize government assets.
Across Latin America rising costs are threatening governments and prompting an uptick in subsidies to soften the blow on a population that is emerging from the pandemic more unequal and with greater poverty and hunger levels. The indigenous groups leading the Ecuador protest paralyzed the country in 2019 with similar actions against then president Lenin Moreno.
The president on Sunday night moved to try to appease demonstrators by announcing a reduction in gasoline and diesel prices by 10 cents on the gallon. Low-octane gasoline will be cut by 4% to $2.45 per gallon while diesel will drop by 5.3% to $1.8 per gallon, partially fulfilling their demands.
“Everybody considers that fuel prices have become the cornerstone of the conflict,” Lasso said in a short address to the nation from Quito. “Despite we as government knowing very clearly that this factor isn’t the origin of the problems of Ecuadorians, we need to think of the common good and the peace of our citizens.” He repeated a vow to lawfully restore order.
Ecuador’s dollar bonds, which have tumbled more than 16% this month alone, were little changed in Monday trading. The extra yield investors demand to hold the nation’s sovereign debt over US Treasuries narrowed by 12 basis points to 10.44 percentage points, JPMorgan Chase & Co. data show.
“We think prices are close to fair value and we do not expect a large rebound from these levels,” Citigroup strategists, including Dirk Willer and Donato Guarino, wrote in a note. “Even if the votes to remove him are unlikely to be reached, the Asamblea Nacional will remain highly obstructive.”
The opposition move to impeach the president kicked off Saturday evening before resuming Sunday. Several parties across the political spectrum have so far rejected the removal attempt. If Lasso is impeached, he’d be replaced by Vice President Alfredo Borrero, while elections to replace him are organized.
The Andean nation is following a program with the International Monetary Fund, which on June 24 said it will immediately disburse the equivalent of $1 billion to Ecuador after concluding reviews of the country’s extended fund facility.
bloomberg.com 06 27 2022
