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1 [1] (May 2, 2023)

handle is hein.crs/govelmr0001 and id is 1 raw text is: Congressional Research Servia Informing the legisi itive debate since 1914 Updated May 2, 2023 Ecuador: An Overview Ecuador is a small, ethnically and geographically diverse country of 18 million inhabitants located in South America between Colombia and Peru, the world's two largest cocaine-producing countries (see map, Fig. 1). President Guillermo Lasso of the conservative Creating Opportunities (CREO) party took office for a four-year term in May 2021. He has sought to build on the accomplishments of his predecessor, President Lenin Moreno (2017-2021), who enacted liberal political and economic reforms and pursued closer ties with the United States. Lasso faces some resistance, including from the country's powerful Indigenous leadership and a divided legislature. Issues of interest to Congress include U.S. trade and investment ties with Ecuador, counternarcotics and environmental cooperation, and Ecuador's relations with China. Politkal and Economic Background During a decade in power (2007-2017), leftist populist President Rafael Correa-Moreno's predecessor-brought some stability to Ecuador's previously tumultuous political scene. He presided over a public investment-driven economic expansion, with growth averaging 5% annually between 2010 and 2014. Correa used that economic growth to increase social expenditures and reduce poverty; however, his policies left Ecuador with significant debt to China and more dependent on petroleum. Correa also governed in an increasingly authoritarian manner, limiting civic freedoms and restricting judicial independence. Moreno, of Correa's Alianza Pais (AP) party, was elected president in 2017. Although he had served as one of Correa's vice presidents, President Moreno quickly distanced himself from Correa in style and substance. His efforts to reduce corruption and liberalize trade led to backlash from his AP party and some sectors of Ecuadorian society. The fallout of the Coronavirus Disease 2019 (COVID-19) pandemic further eroded Moreno's popularity. In April 2021, Lasso defeated Andres Arauz, a loyalist of former President Correa, in a second-round presidential runoff. However, Lasso's CREO party won only 12 of 137 seats in the 2021 unicameral National Assembly elections. Inaugurated in May 2021, Lasso had campaigned on tax reforms intended to promote growth, import duty reduction, and eliminate a 2% income tax for small- and medium- sized businesses. He also promised to double oil production and mining concessions. Lasso enjoyed widespread popular approval in his first 100 days in office for achieving a notable increase in COVID-19 vaccination rates. Ecuador suffered one of the most severe outbreaks regionally but attained a full vaccination rate of nearly 80% by August 2022, up from 4% in mid-2021. Ecuador continues to contend with destabilizing consequences of the COVID-19 pandemic, which resulted in 36,000 deaths and a mortality rate of 204 deaths per 100,000, as of May 2023. Fig. 1. Ecuador at a Glance Sources: CRS, International Monetary Fund (IMF); Ecuador's National Institute of Statistics and Censuses (NISC); Trade Data Monitor (TDM). The harsh impact of the pandemic and a crash in global oil prices drove Ecuador into a deep recession in 2020, when the economy contracted by nearly 8% and the poverty rate climbed to an estimated 33%. The economy began to recover in 2021, with 4.2% growth, followed by an estimated 3% growth in 2022, driven in part by rising oil prices. The International Monetary Fund (IMF) projects 2.9% growth for 2023. Fiscal stability has improved under Lasso, following efforts to reduce public spending and improve tax collection. In December 2022, Ecuador concluded for the first time in two decades a $6.5 billion extended fund facility agreement with the IMF. Lasso, however, has struggled to move some aspects of his pro-business and fiscal stabilization agenda through the divided National Assembly. The 24-seat pro-government voting bloc, consisting of CREO and some independent legislators, has struggled to overcome opposition from the 47-seat Unity for Hope (UNES) coalition linked to former President Correa. The Pachakutik party-the political party of the country's main Indigenous organization, the Confederation of Indigenous Nationalities (CONAIE)-has at times acted as a swing voting bloc with 27 seats. Rising inflation and government-imposed fuel price increases prompted nearly three weeks of protests (led by CONAIE) in June 2022. The protests, at times violent, propelled the UNES coalition to attempt, unsuccessfully, to impeach Lasso in mid-2022. The protests ended when the Lasso government withdrew fuel price increases and suspended new oil and resource extraction projects in Indigenous territories, among other guarantees. In March 2023, some protesters returned to the streets. Among their concerns was a lack of progress on the post-June 2023 commitments agreed to by the government.

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