Ecuador crisis leads to indigenous peoples’ uprising

News|Bretton Woods Project|15 April 2000|update 16|url
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In January, the Confederation of Indigenous Nationalities of Ecuador (CONAIE), and other social movements led an uprising in protest at the worsening economic situation which resulted in the resignation of the president, Jamil Mahuad. The uprising was sparked by government plans to dollarise the economy to try to reverse the financial collapse which has caused a rapid devaluation of the currency and spiralling inflation. The economic turmoil in the country, which has been used as an US-IMF guinea pig to test how the private sector will react to an "informal" debt standstill, has impacted harshly on the poor as higher import costs have caused living costs to rise dramatically.

Average monthly wages are about $40- 50 whilst the cost of living is estimated to have risen to $250. Farmers are no longer able to afford imported fertilisers and other inputs. Social spending on health and education has fallen from 12 percent of gross national product in 1980 to 7 percent in 1990 to just 3.3 percent last year. Most free services have been eliminated and drugs are prohibitively expensive for most people. Children have been forced to drop out of school as transportation and equipment costs have risen and some parents have been forced to send their children to work.

New president, Gustavo Naboa, has signed a law on economic reforms which will clear the way for dollarisation and a deal with the IMF, World Bank, InterAmerican Development Bank and the Andean Development Corporation worth $2bn. The deal is likely to clear the way for restarting negotiations with creditors on its $13bn foreign debt.

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Published: 15 April 2000 , last edited: 12 August 2003

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