Indigenous communities lead protests in Ecuador over IMF-prescribed austerity and fuel extraction
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Article summary
- IMF approved a 48-month loan programme for Ecuador in May 2024 that requires strict austerity measures to keep debt “sustainable”.
- These measures, including diesel subsidy cuts and increased fuel extraction, triggered mass protests and were met with violent repression.
On 18 September, Ecuador’s largest Indigenous organisation, the Confederation of Indigenous Nationalities of Ecuador (CONAIE), launched a month-long strike against President Daniel Noboa’s far-right austerity programme, which is being implemented as part of a $5 billion 48-month Extended Fund Facility (EFF) IMF loan approved in May 2024 – the country’s third IMF programme since 2019.
The IMF is providing the loan under its Exceptional Access Policy (EAP), which allows borrowing above normal limits (see Observer Spring 2025), using the justification that Ecuador’s debt – 53.8 per cent of GDP in 2024 – is sustainable but “not with high probability”. The IMF noted that this assessment is “finely balanced”, depending on the “implementation of the proposed fiscal consolidation path and reforms” under the current EFF arrangement, which aims to reduce debt to 40 per cent of GDP by 2031.
The Fund’s Independent Evaluation Office highlighted in April that EAP programmes often involve overly optimistic debt and macroeconomic projections, where “Fund access effectively becomes a substitute for necessary [debt] restructuring” (see Observer Spring 2025). In practice, this pushes countries toward deeper austerity – with civil society organisations (CSOs) criticising the Fund for avoiding “unsustainable” debt labels that could trigger restructuring, and instead rely on fiscal consolidation to generate short-term revenue (see Observer Autumn 2022).
In its July review, the Fund noted that Noboa’s government had pursued austerity more intensely than anticipated, arguing that “the authorities were able to mobilize non-oil revenue and implement significant reforms, including a landmark three-percentage-point increase in the VAT rate [from 12 to 15 percent] and the alignment of domestic gasoline prices with international prices.”
Diesel subsidy removal triggers mass protests
The elimination of the diesel subsidy was also a precondition for accessing a $900 million Development Policy Financing (DPF) loan from the World Bank, approved in late November (see Inside the Institutions, What is Development Policy Financing?). Implemented on 12 September, this measure directly triggered the protests, as diesel prices rose by 55 per cent.
The IMF argued in its third review of the EFF in October that subsidies “disproportionately benefit many who do not need the support, encourage over-consumption of fossil fuels, undermine the energy transition, [and] damage the environment.” However, according to a 16 September piece in the People’s Dispatch, CONAIE argued that “the elimination of the diesel subsidy will affect millions of families, peasant production, and community transportation, making the basic basket more expensive and further precarizing [sic] the lives of popular sectors.”
Compounding concerns, the EFF arrangement also calls for measures to “boost oil production, enhance the oil refinery system, and promote the gas sector,” as well as for mining expansion, which Indigenous organisations warn would take place on their ancestral lands without consent. On 17 October, Indigenous organisations delivered a letter to IMF Managing Director Kristalina Georgieva, stating, “Now your IMF loans demand Ecuador extract more oil to repay debt, so the government must silence us first,” highlighting that the government had frozen the bank accounts of Indigenous organisations that have historically defended these territories in an effort to suppress resistance.
In response to the protests, Noboa’s government declared a ‘state of emergency’ and deployed militarised repression that ultimately forced protestors to retreat, with UN experts expressing concerns on 24 October about a serious deterioration of fundamental freedoms and civic space, and the rights of Indigenous Peoples.
Oscar Soria, co-founder and co-director of The Common Initiative, a think tank focused on environmental and economic justice, argues that, “The IMF’s Ecuador programme perfectly illustrates how debt sustainability assessments become tools for extractive intensification. By labelling debt ‘sustainable but not with high probability,’ the Fund forces governments into a bind: implement harsh austerity and expand oil extraction, or face default. Indigenous communities pay the price for this financial engineering.”
