Ecuadoreans recently voted to ban mining in the Chocó Andino region, a UNESCO-designated biosphere reserve, and halt oil drilling in a section of the Amazon rainforest. While environmentalists and indigenous groups hail this move, it has raised concerns about the impact on Ecuador’s economy, The Financial Times reported.
The bans could result in billions of dollars in lost export revenue, and the country’s next president will likely need to raise taxes and cut fuel subsidies to fill the fiscal gap. There are also worries that the referendums could deter foreign investment in the country’s mining and oil sectors.
It will be interesting to keep up with how the Ecuadorian government might revisit its fiscal strategy after the vote. The government potentially losing a major source of revenue stream will create fiscal headaches leading to it scrambling to find alternative revenue sources and appease a public who could suffer as a result of increased taxation and the undoing of fuel subsidies. The impact of the ban could severely hinder the country’s ability to meet its domestic and international financial obligations.
