Quito — In an exclusive interview with Bloomberg Línea, Ecuador’s President Guillermo Lasso talks about what comes next for the country after an 18-day strike and protests by Indigenous groups in June that practically paralyzed the country and severely impacted the economy, and which led the country’s National Assembly to vote on an impeachment motion in a bid to remove him from office, but which was ultimately unsuccessful.
During the conversation, Lasso directly blamed former president Rafael Correa, who is currently in exile in Belgium and a fugitive from Ecuadorian justice, for promoting protests against his government because “he is desperate to return to Ecuador to achieve impunity for himself”.
Lasso said he does not feel alone in power, and even in the worst times of the protests he did not consider stepping down.
You can watch the video of the interview here, in Spanish:
On economic issues, Lasso said the strike caused millions of dollars in losses for the country, while insisting that the Ecuadorian economy is in good health, and that he will be able to carry out a plan to accelerate investment in all strategic sectors of the country.
He also announced that in a few days’ time he will make an important announcement together with China regarding the renegotiation of Ecuador’s debt and oil contracts with that country, “where Ecuador will receive an important benefit” regarding the calculation of the price of a barrel of oil.
He added that the free trade agreement with Mexico “is 99% complete”; that he is in talks with Egypt, and that, in a private conversation with US President Joe Biden, Lasso asked him to move forward toward a free trade deal, to which Biden responded affirmatively, and asked his legal team to work to that end.
The following conversation was edited for length and clarity:
The impact of the strike
Bloomberg Línea: I would like to begin by analyzing with you what we have just experienced: the 18-day strike. How do you see the country at this moment after having overcome this episode?
Guillermo Lasso: For sure it was a tough social situation because we have to recognize that in the last 40 years of democracy in Ecuador, development has been fundamentally focused on urban areas, and this was a kind of cry from the rural areas and the countryside, telling us ‘here we are, we also need attention’. And I think it is a just cause. From the economic point of view, it is regrettable that it has generated some costs, but they are not costs that we cannot recover during the rest of the year. From the political point of view, this has led to dialogue, which is the way in which we can resolve differences within Ecuadorian society.
How do you see Ecuadorian society at this moment?
This is the moment to heal wounds, to deepen national unity and I believe that Ecuadorians are in that atmosphere of unity, to look with hope to the future, especially the economic one. In spite of these three weeks of strikes, the government has kept the economy under control and we have managed to maintain our economic program. On June 24 we received approval from the International Monetary Fund (IMF) for a $1 billion credit, as a result of the fourth and fifth review of our economy. We also have to consider that the world is a bit convulsed, a post-pandemic economy negatively impacted by Russia’s war against Ukraine and high inflation. So, we have to consider that global element, but the Ecuadorian economy is in a good moment.
There was international concern when the National Assembly voted on impeachment, and even the president of the Legislature voted in favor of your dismissal. Do you feel alone, politically speaking?
There was an attempt, but the final result was that they did not achieve the number of votes established by the Constitution to achieve this unjustified impeachment that was promoted by former president [Rafael] Correa from Belgium, who is desperate to return to Ecuador to achieve his own impunity because he has been sentenced [in absentia] for corruption, and also to achieve impunity for his colleagues.
I would say that this is one of the few impeachments in Ecuador where the National Assembly has not been successful. We also had to fight the battle in the streets, which was to some extent coordinated with what was happening in the Assembly and in the streets.
As to whether I am alone, I am not alone. I do not feel alone, I am accompanied by the Ecuadorian citizens who, 15 months ago, elected me as their president. In the political field, to tell you the truth, I prefer to be alone than in bad company.
I believe that this government is different from what have been the typical governments of the political class, of the political experts in Ecuador. I am probably naïve, but I represent the naivety of all Ecuadorian citizens, the common, ordinary citizen, who aspires to an opportunity, a job, who wants to see a prosperous Ecuador and who is far from those political agreements behind the scenes. We have not been willing to hand over hospitals or public institutions or public companies in exchange for votes in the National Assembly and I believe that this is an important value in the fight against corruption.
I do not feel alone, I am accompanied by the Ecuadorian citizens who, 15 months ago, elected me as their president. In the political field, to tell you the truth, I prefer to be alone than in bad company.
Guillermo Lasso, president of Ecuador.
During those convulsive 18 days, did you think at any time about stepping aside?
Not at all, I stayed in Quito, I stayed here in the Government Palace, I stayed with my wife and my youngest daughter living in the presidential residence and I said no, this is the seat of government, this is the capital of Ecuador and I stay here in Quito and I stay in the Government Palace, and always with serenity.
There is a hostile Assembly, and it is inevitable to say it, how do you intend to maintain governability with this Assembly?
We have moved forward for 14 months, the first 14 months of my government. Remember the Pandora Papers case, where they also wanted to turn it into a social commotion, but they could not; then came the attempt to apply Article 130, which is a political trial, an impeachment, then they tried through the National Electoral Council, they tried on the streets, and they have not been able to, which implies that we are not so alone or absent in the political strategy.
And that would be the message for the region?
Ecuador is a dollarized country, a democratic country, where the rule of law is respected, where individual freedoms are respected, where we have projects for close to $40 billion of investment in strategic sectors, where we have investment possibilities in shrimp, bananas, cocoa, coffee, avocado, hemp... we have productive land and there is a great advantage: being a dollarized country, where you do not have the problem of the exchange rate. You invest a million dollars and you know how to calculate the yield of your million dollars, you do not invest in a local currency and then have to calculate the value discounting inflation and devaluation. I think this is a great advantage that Ecuador has somehow failed to promote.
But does a strong dollar also have its disadvantages?
Well, every currency does, but you have to know how to navigate in these storms. What I can guarantee you and all those who listen to us is that we are in control of our economy, like a ship’s captain who takes the helm and knows exactly where he wants to go despite the storms, despite the rain, despite the water that may enter the ship.
The final result is that they did not achieve the votes required by the Constitution to achieve this unjustified impeachment, which was promoted by former President [Rafael] Correa from Belgium, who is desperate to return to Ecuador to achieve his own impunity.
Guillermo Lasso, president of Ecuador.
Such destabilization attempts could be repeated, how is the government preparing for this now?
The National Assembly already made use of Article 130 of the Constitution by trying to remove the president from office, that is only possible once in a term.
But could they use other impeachment arguments?
Well, I want to touch on some issues that are important and that somehow mitigate those risks, and that is good management of the economy.
Commitments with the Indigenous movement
What numbers stand out in terms of the government’s economic management?
Ecuador’s economy is doing well. When I came to power on May 24, 2021, the economic growth projections for the end of 2021 were 2.8% and we managed to close the year with 4.2%. In just seven months of management we managed to change the expectations, we created 350,000 jobs in seven months and we lifted more than 750,000 Ecuadorians out of poverty; we also managed to reduce a fiscal deficit in 2020 that was $7 billion (approximately 7% of GDP) to $4 billion in 2021, and today we maintain our goal of reaching a fiscal deficit in 2022 of 2% of GDP.
We have a program with the International Monetary Fund (IMF) that is one of the fundamental pillars of our economic program. During my government, the third, fourth and fifth revisions have been approved. Rarely has Ecuador achieved this in its economic history. My government will do everything necessary to comply with the sixth review which will imply an additional disbursement of $700 million until the end of the year. The economy is doing well.
Ecuador’s international monetary reserves are at $9.1 billion and are, historically, the highest international monetary reserves that Ecuador has had since it became a Republic. It is a dollarized country and with these monetary reserves the deposits of the banks, the social security deposits and the decentralized autonomous governments are guaranteed. So there are positive indicators of the Ecuadorian economy that we will continue to take care of, preserving them in order to generate hope and prosperity for future generations.
But the challenge is precisely to articulate these macroeconomic figures with the citizens’ demands, and for this purpose commitments have been signed with the Indigenous movement. What specific actions coud avoid more social unrest?
What implies fiscal cost is fundamentally the reduction of fuel prices, which more or less represents $280 million, equal to 0.28% of GDP. It is a significant figure, but it does not disarm our economic program. I am optimistic, we have a second-half ahead of us in which we will make every effort, as we did in 2021, to recover the costs incurred by the three-week stoppage.
Do you think that after what happened the country can grow at least 4%? What do you need to do to return to at least pre-pandemic levels?
Pre-pandemic Ecuador had almost zero, negative growth of 0% and 0.1%. Having achieved 4.2% in our first seven months of government, changing the trend, is a very great effort that shows that this government has management capacity, especially for how we face the pandemic.
In the first 100 days of government we vaccinated 53% of the Ecuadorian population with two doses, and today with two doses we have already reached 85% and close to 40% with the third dose, and we are applying the fourth dose. This allowed us to reactivate the economy. Our plan remains intact.
Infrastructure investments, FTAs
On the trade agreements being planned...
On July 13 I spoke with the Mexican foreign minister, precisely to follow up on the free trade agreement with Mexico. Negotiations are 99% advanced. There is a pending issue to be resolved that has to do with the shrimp sector. And he told me that in the next few days I would have a response from President AMLO [Andrés Manuel López Obrador], with whom I have a very good relationship, and this is a fundamental step to request Ecuador’s entry into the Pacific Alliance.
We are moving forward with the free trade agreement with China, we are moving forward with Canada, with South Korea, also with Costa Rica, and I just had a meeting with the Egyptian ambassador, with whom I talked about the possibility of a free trade agreement.
I spoke with the Mexican foreign minister, precisely to follow up on the free trade agreement with Mexico. Negotiations are 99% advanced. There is a pending issue to be resolved that has to do with the shrimp sector.
Guillermo Lasso, president of Ecuador.
Since the strike, have business leaders expressed their interest in maintaining investments?
Definitely, in all sectors, both in public-private alliances and in the purely private sector. So this is going forward, the economy is under control. There has been a change of economy minister, but there has not been a change in the economic program, nor a change of government or president. The economic program continues, the commitment with multilateral companies continues, and we have a whole financial program that gives us peace of mind.
What will be the government’s approach be for the second half of this year? Economy Minister Pablo Arosemena told the press that the budget execution in some social sectors had been around 30%. People are obviously wondering: how are we in the middle of the year with only a 30% execution so far?
Not only in the social sector. Fundamentally, one of the sectors that has had a low level of budget execution is infrastructure: schools, hospitals, road infrastructure. We are planning an accelerated investment in roads and in all the sectors that were impacted by this year’s harsh winter. In all of this there is an overall investment, which does not include this year’s execution, of close to $2 billion.
What is going to be done in the next half of the year to accelerate budget spending? What will you focus on?
In terms of infrastructure, we have three segments. One, repairing all the damage caused by the winter. Two, we have $5.2 billion for the promotion of public-private alliances, and three, studies of large-scale works such as the Quito-Guayaquil and Cuenca-Guayaquil highways. In this third segment I am talking about studies because in three years we will not be able to execute all the works.
How are investments progressing?
We are making progress in terms of investment; we have projects for $39 billion in hydrocarbons, mining, electric power, telecommunications and infrastructure. This has not stopped and then we also have private investment agreements for close to $5 billion, and the most optimistic thing for me is to receive calls from business leaders to tell me, ‘we are firm, more than ever we are moving forward more than ever’.
I have received visits from foreign investors interested in ports in Ecuador. We have also received confirmation from foreign investors in the mining sector, and also in private oilfields in Ecuador. Our commitment continues with the government program, with the IMF, with multilateral lenders, the World Bank, IDB, CAF.
We are making progress in terms of investment; we have projects for $39 billion in hydrocarbons, mining, electric power, telecommunications and infrastructure. This has not stopped and then we also have private investment agreements for close to $5 billion.
Guillermo Lasso, president of Ecuador.
Oil and financing
There was international concern that the strike would prevent Ecuador from taking better advantage of its oil surpluses, since the government has offered to invest more in public works, but where is the money going to come from?
Oil production today is maintained at normal levels. There was a 10-day impact, that is a reality, and that impact has a cost of $260 million this year, but we expect to recover it by the end of the year. Our medium-term objective remains the same: to double oil production in Ecuador, and we are working on that.
The financing remains the same as planned?
It remains the same, it is the same as planned, it basically comes from multilateral credit organizations. This year we did not plan to go to the international market, and that has not changed.
Would you expect conditions to be optimal to do so?
We have just completed an IMF review. The country risk, in a way, is impacted more by the global environment and by the drop in oil prices, but the fundamentals of the Ecuadorian economy are similar to before the strike.
What are the measures focused on the recovery of the micro-economy? Because this feeling of a hit pocket generates discomfort.
One of the specific measures we have taken since January of this year: credit at 1% interest for up to 30 years for the base of the productive pyramid of Ecuador, that is, the micro-entrepreneur, the agricultural family, the micro-merchants, the small-scale industrialists. In the first half of the year, nearly 30,000 families have taken out this type of credit to invest in avocados, to expand their pig and poultry farms. Our objective is to meet the goal of $1 billion in the four years of government. We have made available $80 million for 30,000 families, when in previous governments $100 million was channeled to a friend of the president, which is illogical
Does this go hand-in-hand with the job generation goal? Is that goal maintained?
The goal is maintained. Ecuadorians, especially young people, no longer want a job, they want to be self-employed and want facilities for entrepreneurship, and credit is a facility. There are other social projects that began on the first day of my government, such as the fight against chronic child malnutrition. Unfortunately, Ecuador has one of the highest levels in the region: 29%. And provinces in the Central Sierra, with a majority Indigenous population, have 35%. There we are investing in water and irrigation projects, precisely to benefit more than 27,000 families. And we are also investing resources in the fight against violence against women. Now we will continue the task with a fundamental commitment to investment in rural areas and in the countryside, where investment is cheaper than in urban areas.
Renegotiation with China
On the subject of the renegotiation with China, we know that there will be news about it, but what can you tell us anything in advance?
What I can tell you is that there will be excellent news, not only in the financial renegotiation of the debt, but also in the renegotiation of the oil contracts with China. I really must highlight the good will of President Xi Jinping, with whom I met in February and I told him: ‘You know that the post-pandemic economy has hit all countries in the world and Ecuador is no exception, I need to renegotiate Ecuador’s financial debt with China’. We are making important progress. Out of respect for China, we have agreed to make a joint announcement and I want to respect that commitment.
Will the announcement be in two weeks’ time, as Economy Minister Pablo Arosemena said?
I hope it will be in the shortest time possible. I have to talk to the foreign minister to find out the exact date. We have also made good progress in the renegotiation of oil contracts, where Ecuador is going to receive an important benefit because the renegotiation is fundamentally based on the calculation of the price of a barrel of oil. I told President Xi: ‘Some Ecuadorians, in association with other foreigners, used China to abuse Ecuador. I ask you personally to consider renegotiating the oil contracts that are detrimental to Ecuador’s interests’. Commissions from China with Ecuador negotiating, and I hope in a few days to make an important announcement.
Plan Ecuador
You know better than anyone the UN report that has just come out indicating that Ecuador is the third country with the most drug confiscations. In your visit to the US you had the intention of proposing a Plan Ecuador to President Biden, did you do that?
I had a few minutes’ meeting, about 15 minutes, with President Biden alone. I do not say it was a bilateral meeting because in diplomatic terms it was a casual meeting and I raised two specific points. The first, that in the first year of my government, Ecuador has seized 300 tons of drugs, which, compared to the 10 previous years, is five times the average. But this has a fundamental objective, which is to protect the lives of our children and young people, but we are also protecting the lives of children and young people in the United States and also in Europe, therefore, we have to share this bill, Ecuador cannot pay it alone. I spoke to him about the need for a plan, which may have a name other than Plan Ecuador, but it was very well received by President Biden.
The second point I made was that Ecuador is the only country on the Pacific coast of the Americas that does not have a free trade agreement with the United States, and that puts us at a disadvantage that even impacts employment generation and migration to the United States. President Biden was very sympathetic to this message and instructed his advisors to find a legal way to include Ecuador in the free trade agreement with Colombia and Peru, which is the closest to us.
Is there any concrete progress so far?
I expect to have a meeting or conversation with President Biden in the next few weeks.
Latin America’s shift to the left
With the election of Gustavo Petro in Colombia, there is a turn to the left in the region, an ideological turn if you like, and Ecuador remains on another line, how will you handle these relations?
Ecuador’s good relations with Colombia are historically traditional, and when I was asked during the campaign what my attitude would be, I said that I would work with the president chosen by Colombians, respecting the will of the Colombian people, and I will honor that.
Have you talked to President-elect Petro?
I phoned him on the day of the election to congratulate him, and I also invited him to visit Ecuador as president-elect. I hope it is possible in his agenda, if not I will be glad to attend the transfer of power on August 7 and I will talk to him there.
There is an issue that somehow went unnoticed during the strike, the election of Ecuador as a non-permanent member of the United Nations Security Council...
This is important in terms of Ecuador’s international relations, we have objectives in terms of trade, investment, security, and we will always promote multilateralism and respect for international law, and this will be our contribution to global peace with Ecuador’s vote in the United Nations Security Council.
Are you thinking about a second term?
It is not an issue that keeps me awake at the moment, what keeps me awake at night is to fulfill a government program, an economic program that generates employment, opportunities for Ecuadorians, and then we will see.
Translated from the Spanish by Adam Critchley
