Key highways are paralyzed across Ecuador after a night of clashes triggered by fuel price hikes, as a state of emergency enters its second day.
Hundreds have been arrested amid outbreaks of looting, while Ecuador’s Red Cross said that demonstrators in Quito pelted ambulances with rocks.
Security forces have have lifted more than 100 blockades and restored access to Quito’s airport, Defense Minister Oswaldo Jarrin said Friday. The authorities aim to completely restore order by the end of the day, he added.
The fuel price increases took effect at midnight on Wednesday and were welcomed by the International Monetary Fund and Moody’s Investors Service. Drivers of buses, taxis and trucks, responded by blocking highways with vehicles and burning tires.
President Lenin Moreno reiterated on Friday morning that the subsidy won’t be restored.
Prices for low-octane gasoline jumped to $2.40 per gallon from $1.85, while diesel prices more than doubled to $2.30 per gallon from $1.03.
Moreno’s “bold decision” is likely to strengthen the nation’s sovereign bonds, said Siobhan Morden, the head of Latin America fixed income strategy at Amherst Pierpont Securities in New York.
“There is now a clear path towards fiscal consolidation,” Morden wrote in a report. Bond rallied, sending the yield on Ecuador’s dollar bonds maturing in 2030 down eleven basis points to 9.29%.
Ecuador will submit a package of fast-track economic reforms to meet terms of a $4.2 billion financing agreement with the International Monetary Fund, Interior Minister Maria Paula Romo said, speaking alongside Jarrin from the presidential palace in Quito.
This year, Ecuador had to budget close to $1.4 billion to keep gasoline and diesel prices below market prices.
To mitigate the impact of the reforms on the poor, Moreno pledged to increase a social safety net so that it would protect close to 5 million Ecuadorians, increasing a monthly transfer by $15.
The government says the fuel subsidies have cost the nation close to $60 billion since they were introduced in the 1970s.
On Tuesday, Ecuador said it would quit the Organization of Petroleum Exporting Countries, to avoid having to cut output to meet quotas.