Ecuador's president-elect facing fiscal, economic emergencies

Daniel Noboa, who won Sunday’s presidential runoff in Ecuador, is facing a tense relationship with the national assembly while having to deal with empty public coffers.

Center-right Noboa will serve out the current government term through May 2025, as outgoing President Guillermo Lasso triggered elections by dissolving the national assembly amid an impeachment trial.

Noboa won 52% of the vote, compared with 48% for his rival, Luisa González, an ally of leftist former president Rafael Correa.

NATIONAL ASSEMBLY

Although Correa’s allies hold 53 of the 137 national assembly seats, they lack the strength to pass or block bills.

Noboa’s prime objective should be preventing Correa’s allies “from attracting lawmakers to form a destabilizing majority. At least he should neutralize [their influence]. Having a bloc to pass structural reforms is more complicated,” Walter Spurrier, president of political risk consultancy Grupo Spurrier, told BNamericas.

Lawmakers allied to Fernando Villavicencio, who was assassinated on the campaign trail in August, will be key.

Noboa could also capture votes from the right-wing social Christian party or smaller groups. “We’ll have to see what ability Noboa has to achieve that, but he has an advantage. [Indigenous bloc] Pachakutik, which is an anti-system group, is being replaced by the group that supported Villavicencio and is more susceptible to being attracted with a good strategy,” Spurrier said.

Noboa was a lawmaker and chaired the assembly’s economic commission. He already announced that he will run for president in 2025 run, so he is unlikely to adopt unpopular measures like the elimination of the fuel subsidy.

ECONOMY

Spurrier said Noboa will also have to deal immediately with the payment of salaries of public servants, who receive extra pay before Christmas, even though public coffers are practically empty.

Potential power cuts are another issue. During dry season, Ecuador buys energy from Colombia, but with the effects of the El Niño phenomenon looming, the latter may not have enough to sell and the former has not contracted new thermal generation.

Noboa must also negotiate problems stemming from the constitutional court’s suspension of a presidential decree that regulated environmental consultations, which are necessary to obtain environmental licenses, but remain halted because of the court’s decision, affecting all sectors of the economy.

Noboa should persuade the court to reactivate certain projects and streamline environmental permitting, according to analysts.

Given the short government term and the challenges ahead, Noboa would have to focus on projects his predecessor left unfinished. Among them is a tender for modernization, expansion and operation of the integral plant at the Esmeraldas refinery and the implementation of a conversion process, and a tender for the  south Guayaquil bridge.