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  • President Lenin Moreno in the Government Palace in Quito, Ecuador, Oct. 1, 2019.

    President Lenin Moreno in the Government Palace in Quito, Ecuador, Oct. 1, 2019. | Photo: EFE

Published 2 October 2019

Social movements, trade unions and political organizations are getting ready to demonstrate against the neoliberal adjustment.

Ecuador's President Lenin Moreno announced Tuesday the elimination of gasoline subsidies, labor reforms, tax changes and other economic measures aimed at complying with the conditions of the loans granted by the International Monetary Fund (IMF).

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"I have signed the decree that releases the price of diesel and extra gasoline," Moreno said and justified his decision by saying that the Ecuadorean state allocates more than US$1.3 billion a year in fuel subsidies.

As a way to compensate those who could be most affected by fuel price liberalization, President Moreno said his government will increase the number of citizens who will be able to receive money transfers destined to the poor people.

This means that the official number of poor Ecuadoreans will increase from 1 million to 1.3 million people, who will be given an additional US$15 per month.

"The Confederation of Indigenous Nationalities of Ecuador (CONAIE), the Unitary Front of Workers (FUT) and the National Unitary Collective of Workers, Indigenous and Popular Social Organizations meet to prepare a national mobilization against neoliberal policies and extractivism."

In March multilateral financial institutions granted the Ecuadorean government a credit line for about US$10 billion so that it can increase the liquidity of a state whose income depends on the dynamics of a dollarized economy, which has been decelerating since Lenin Moreno assumed Office in 2017.

In exchange for US$4.2 billion, the IMF "proposed" to Moreno administration a set of measures aimed at reducing the fiscal budget.

In addition to the contraction of public investments and the abolition of subsidies, the IMF policy package recommends reducing the number of public officials and increasing private participation in state-owned companies​​​​​​, among other neoliberal conventional policies.

Moreno also said his administration will not raise the Value Added Tax (VAT) from 12 to 15 percent and held that austerity seeks to create more jobs.

The occasion is propitious to ask all Ecuadorians: Where is the money from the loans acquired by this administration? I invite you to discuss the issue. I ask: Does anyone know where the money from the IMF loan is?

"We will not raise VAT, it will remain at the current level of 12 percent," the Ecuadorean president said and added that "all this, I insist, contributes to energizing the economy and employment." The country's economy will only grow by 0.5 percent in 2019, according to optimistic official forecasts.

Among the solutions to the imbalances of an open small economy that depends mostly on imports, Moreno also announced that he will abolish import taxes on mobile phones, computers and tablets because they "are tools for doing business."

Regarding labor market regulations, the Ecuadorean president proposed legal changes and new models of flexibilization that supposedly would be aimed at facilitating the hiring of workers.

Moreno finished his speech by pointing out that "a good leader does not think of the next elections but of the next generations."​​​​​​​ His ​​​​​​​motto, however, did not convince most citizens.

Immediately after the presidential announcement, social movements, trade unions and political organizations began to call for demonstrations against the neoliberal adjustment package.

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