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Updated September 9, 2022
Ecuador: An Overview
Ecuador is a small, ethnically and geographically diverse
Lasso inherited a difficult economic situation. A crash in
country of 17.5 million inhabitants located in South
global oil prices and the pandemic drove Ecuador into a
America between Colombia and Peru (See Figure 1).
deep recession in 2020, when the economy contracted by
President Guillermo Lasso of the conservative Creating
nearly 8% and the poverty rate climbed to an estimated
Opportunities (CREO) party took office for a four-year
33%. The economy began to recover in 2021, with 4.2%
term in May 2021. He sought to build on the
growth; the IMF projects it will grow by nearly 3% in 2022.
accomplishments of his predecessor, President Lenín
Moreno (2017-2021), who implemented liberal political
Figure 1. Ecuador at a Glance
and economic reforms and pursued closer ties with the
United States. Like Moreno, Lasso faces resistance from
some sectors of the population, including the Indigenous
leadership, and a divided legislature. Issues of broad
interest to Congress include U.S. trade and investment with
Ecuador, counternarcotics and environmental cooperation,
and Ecuador’s relationship with China.
Political and Economic Background
During a decade in power (2007-2017), leftist populist
President Rafael Correa—Moreno’s predecessor—brought
some stability to Ecuador’s previously tumultuous political

scene. Correa presided over a public investment-driven
Area: 109,483 square miles, slightly smaller than Nevada
economic expansion, with growth averaging 5% annually
Leadership: President: Guil ermo Lasso; Vice President: Alfredo
between 2010 and 2014. Although stronger growth and
Borrero; Minister of Foreign Relations: Juan Carlos Holguín;
increased social expenditures helped reduce poverty,
Finance Minister: Simón Cueva
Correa’s policies left Ecuador with significant debt to China
Ethnic Makeup: 72% Mestizo (mixed Amerindian and White);
and reinforced Ecuador’s dependence on petroleum and
7.4% Montuvio (coastal farmers of mixed race and Indigenous
heritage); 7.2% Afro-Ecuadorian; 7% Amerindian; and 6.1% White
other commodity exports. Correa also governed in an
(2010 census, National Statistics and Census)
increasingly authoritarian manner, constraining freedom of
Key Trading Partners: United States (23.1%), China (18.6%),
assembly and association, stifling freedom of the press and
and Panama (7.9%) (Trade Data Monitor)
expression, and restricting judicial independence.
Poverty Rate: 33% (2020, World Bank)
Moreno, of Correa’s Alianza Pais (AP) party, was elected
Economy: GDP = $115.5 bil ion (current U.S. $, 2022, IMF est.)
president in 2017. Although he had served as one of
Correa’s vice presidents, Moreno quickly distanced himself
President Lasso has struggled to move his agenda through
from Correa in style and substance. Moreno sought funding
the divided National Assembly. His CREO party joined the
from financial institutions such as the International
new National Agreement (BAN) pro-government voting
Monetary Fund (IMF) and made efforts to curb corruption,
bloc, increasing Lasso’s legislative support. However, the
revive democracy, and liberalize trade, resulting in backlash
new legislature is dominated by the leftist opposition
from his AP party and some sectors of Ecuadoran society.
coalition, Unity for Hope (UNES), linked to former
The fallout of the Coronavirus Disease 2019 (COVID-19)
President Correa (see Figure 2). The Pachakutik (PK)
pandemic further eroded Moreno’s popularity, who left
party—the political party of the country’s main Indigenous
office with an approval rating under 9%.
organization, the Confederation of Indigenous Nationalities
(CONAIE)—is the second-largest party in the 2021-2025
2021 Election and Current Challenges
National Assembly.
In April 2021, Lasso defeated Andrés Arauz, a loyalist of
Rising inflation and government-imposed fuel price
former President Correa, in a second-round presidential
increases prompted three weeks of social protest in June
runoff. Lasso’s CREO party won 12 of 137 seats in the
2022. The protests, led by CONAIE, prompted the UNES
unicameral National Assembly elected in April.
coalition to attempt, unsuccessfully, to impeach President
Inaugurated in May 2021, Lasso had campaigned on tax
Lasso. The unrest also led to the replacement of the head of
reforms intended to promote growth, import duty reduction,
the National Assembly, a PK party member who is
and a 2% income tax elimination on small- and medium-
considered less likely to support the Lasso’s agenda. The
sized businesses. He also promised to double oil production
protests, at times violent, ended when the government
and mining concessions.
conceded to enter into negotiations and reduce fuel prices.
The talks reached a preliminary deal in September 2022,
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Ecuador: An Overview
suspending new oil and resource extraction projects in
and have continued under President Lasso. Lasso has
Indigenous territories until a new law on prior consultation
expressed interest in strengthening security and economic
is passed, expected within the next 12 months.
ties with the United States. In June 2022, he announced that
he would propose a “Plan Ecuador” to advance the
Overall, Ecuador has seen a sharp rise in violence in the
countries’ cooperation in the fight against drug trafficking.
past two years, which the Lasso government attributes
In August 2022, the U.S. Agency for International
mainly to illicit drug trafficking and organized crime.
Development (USAID) announced an additional $19.8
Homicide rates jumped from 5.7 per 100,000 people in
million for democracy and governance projects in Ecuador,
2018 to 14 per 100,000 in 2021. There have been several
for a total of $36.7 million since 2020.
high-fatality prison riots, prompting the government to
announce reforms to address poor conditions and gang
For FY2022, the State Department allocated $45.6 million
rivalries in prisons. In August 2022, an explosion in
in bilateral foreign assistance for Ecuador. The Biden
Guayaquil, Ecuador’s largest city, killed five and injured
Administration’s FY2023 Congressional Budget
more than two dozen people in what Ecuadorian authorities
Justification, released in March 2022, proposed $35.3
labeled a terrorist incident. Since Lasso’s May 2021
million in foreign assistance for Ecuador, with the largest
inauguration, his government has declared four states of
portion for Development Assistance ($16 million), followed
exception (states of emergency) to quell violence or restore
by $13 million for International Narcotics Control and Law
stability in various provinces.
Enforcement programs. The United States donated 2
million doses of COVID-19 vaccine in July 2021, and
Under President Lasso, Ecuador has improved its fiscal
USAID has provided approximately $51.8 million to
stability by reducing public spending and improving tax
support Ecuador’s pandemic response since FY2020. The
collection. In September 2020, the IMF granted Ecuador a
United States also has provided more than $221 million
27-month extended $6.5 billion loan—conditioned on
since 2017 to help Ecuador address the humanitarian needs
structural reforms—to address the crisis caused by the
of some 500,000 Venezuelan migrants and their host
pandemic. The Lasso administration is on target to meet its
communities.
goal of keeping the budget deficit to $2 billion, or 2% of
GDP, in 2022, though Lasso still faces significant
Ecuador’s largest trade partner is the United States. The top
legislative hurdles for his fiscal agenda, given the
U.S. import from Ecuador is petroleum, followed by
government coalition’s limited representation.
seafood, including shellfish, and fruits, including bananas.
Ecuador’s top imports from the United States are refined
Figure 2. Ecuador’s Legislature (2021-2025)
petroleum and machinery. The Lasso government hopes to
increase bilateral trade with the United States by expanding
on a first-phase limited trade agreement that entered into
force in August 2021. In January 2022, Ecuador began the
process of becoming a full member of the regional free-
trade bloc known as the Pacific Alliance.
President Lasso has expressed interest in a free trade

agreement with the United States. The U.S. International
Source: CRS, using information from National Congress of Ecuador,
Development Finance Corporation provided $188 million to
accessed March 2022.
support small and female-owned enterprises in Ecuador in
Notes: The Congress is composed of members from UNES (Unity
2021 and considers financial backing to Ecuador to be
for Hope), Pachakutik (Indigenous political party), BAN (National
among its most effective in the region. For some Members
Agreement, a pro-government coalition comprising Lasso’s 12-seat
of Congress, China’s economic engagement with Ecuador
CREO [Creating Opportunities] party and some independents),
has raised concern. In early 2022, Ecuador announced the
Izquierda Democratica (Democratic Left), Partido Social Cristiano
start of negotiations for a free-trade agreement with China,
(Social Christian Party), and Independents.
which are expected to be finalized by year’s end.
Ecuador continues to contend with the destabilizing
Congress may seek to influence the Biden Administration’s
economic consequences and public health challenges posed
policy toward Ecuador through tools such as the
by the COVID-19 pandemic, which had resulted in 35,000
appropriations process and oversight hearings. In March
deaths as of September 2022. Ecuador suffered one of the
2022, the Senate Foreign Relations Committee reported a
earliest and most severe outbreaks of the disease in the
bill, S. 3591, to advance U.S.-Ecuadorian relations (a
region but by August 2022 had attained a full vaccination
related bill, H.R. 8711, was introduced in the House in
rate of nearly 80%, up from 4% in May 2021.
August). Some Members of Congress have expressed
support for a free-trade agreement with Ecuador. Others
U.S.-Ecuadoran Relations
have focused their attention on the Lasso government’s
Although the United States traditionally had close relations
performance in policing and security; its counternarcotics
with Ecuador, former President Correa’s populist style and
and environmental policies, such as marine protection for
policies, which he called “anti-imperialist,” increased
the Galapagos; its relationship with China; and its handling
frictions. Among other actions, Correa shut down U.S.
of the plight of Venezuelans residing in Ecuador.
counterdrug operations at Manta Air Force Base in 2009
and expelled the U.S. ambassador in 2011. However, closer
June S. Beittel, Analyst in Latin American Affairs
bilateral relations resumed under former President Moreno
Rachel L. Martin, Research Assistant
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Ecuador: An Overview

IF11218


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