November 18, 2019 / 2:22 AM / a month ago

Ecuador lawmakers reject president's proposed economic reforms

QUITO - (Reuters) - Ecuador’s National Assembly on Sunday rejected a package of tax and monetary reforms proposed by President Lenin Moreno, a new setback in his efforts to reduce the country’s burdensome fiscal deficit.

FILE PHOTO: Ecuadorian President Lenin Moreno visits areas affected by protests, in Quito, Ecuador October 17, 2019. REUTERS/Henry Romero/File Photo

The reforms stemmed from a loan agreement the government reached in February with the International Monetary Fund (IMF) for about $4.2 billion.

“With 70 affirmative votes, the National Assembly plenary decides to deny and archive the economic growth bill,” the legislature said on Twitter.

The government’s bill aimed to improve tax collection through the increase of some taxes and a special contribution for companies with revenues of more than $1 million annually.

It also moved to give autonomy to the country’s central bank and prevent it from becoming a direct source of government financing.

Several of the proposals were opposed by the indigenous movement and social organizations, while others were questioned by the business sector.

The government, which had hoped to raise more than $700 million next year through the reforms, did not immediately comment on the assembly’s decision.

In mid-October Moreno abandoned measures to end fuel subsidies after almost two weeks of violent protests shook the Andean country.

After repealing the decree that raised the price of extra gasoline and diesel, Moreno opened a round of dialogue with the indigenous movement. An agreement has yet to be reached.

     “Social pressure first achieved the repeal of decree 883 (fuel subsidy) and today brought down another IMF imposition that undermined the rights of the people and was harmful to the country,” said the CONAIE indigenous group on Twitter after the rejection of Moreno’s reform package.

Ecuador expects a fiscal deficit of about $3.6 billion this year, with plans to lower it to $3.4 billion in 2020.

Reporting by Alexandra Valencia; Writing by Sarah Kinosian; Editing by Tom Brown

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