Global Policy Forum

The social costs of IMF policies in Ecuador

IMFProtests on the streets of the Ecuadorian capital Quito erupted in the beginning of October 2019 following the abandonment of state subsidies on the price of gasoline and diesel. The cutbacks are part of structural reform conditionalities that secured the government of Lenín Moreno a loan of US$ 4.2 billion by the International Monetary Fund (IMF). These conditionalities are very likely to contribute to the worsening of the social situation in the country. The uprisings should therefore also steer the view towards the role of the IMF, its loan policies and subsequent social effects thereof.




October 14, 2019 | Global Policy Forum

The social costs of IMF policies in Ecuador

Article


by Hanna Kieschnick

Protests on the streets of the Ecuadorian capital Quito erupted in the beginning of October 2019 following the abandonment of state subsidies on the price of gasoline and diesel. The cutbacks are part of structural reform conditionalities that secured the government of Lenín Moreno a loan of US$ 4.2 billion under the Extended Fund Facility (EFF) of the International Monetary Fund (IMF) in March 2019.

The structural adjustment conditions imposed by the IMF on Ecuador are very likely to contribute to the current worsening of the social situation in the country. The uprisings should therefore also steer the view towards the role of the IMF, its loan policies and subsequent social effects thereof. Conditionality clauses of credit arrangements between the IMF and debtor countries especially have long been criticized in that context.

Instead of demanding austerity measures, the IMF should thus take on a different approach to loan agreements. It should redirect the scope of credit arrangements, putting focus not only on fiscal consolidation but also on taking into prioritized consideration the likely impacts of reform programs on a country´s social constitution and human rights situation.

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