Low levels of confrontation between the government and opposition parties are expected during the first half of 2024
Amid escalating violence in Ecuador, President Daniel Noboa achieved a unanimous approval of a 60-day state of emergency and the declaration of an internal armed conflict. These measures aim to control the terrorist outbreak in the country and the escape of gang leader Adolfo “Fito” Macias from a prison in Guayaquil. The security crisis, which has been intensifying since 2021, reached a new height on January 9, with multiple attacks and the interruption of a live broadcast on a television channel in Guayaquil by a group of criminals. In the face of these security challenges, the Assembly has shown strong, cross-party solidarity, marking a significant shift from former President Guillermo Lasso, whose term ended in a more divided political climate with the dissolution of the Assembly and the declaration of the “crossed death.”
Overview
Before these security issues escalated, Noboa had already made significant strides, most notably with the passage of a tax reform to boost revenue and job opportunities, including VAT refunds for construction, incentives for non-resident investors, renewable energy projects, and monthly income tax self-withholding by large companies. Alongside this, the Assembly also approved a reform related to energy efficiency. Additionally, Noboa sent a series of questions to the constitutional court, pending review, for a public referendum focused on security issues. The president proposed changes to the role of the Armed Forces and increasing penalties for crimes such as terrorism and organized crime. However, this measure is not solely a response to the country’s current crime situation. Instead, it follows a precedent set by seven of his predecessors since 1978, using referendums as a mechanism to gauge their popularity and approval at the polls.
Subsequently, Noboa introduced a new bill aimed at the forfeiture of assets derived from corruption and organized crime. Given the current political climate and the demonstrated support from the National Assembly, this bill has a high probability of being approved.
Our View
Amid the upcoming 2025 elections, Noboa’s primary challenge is to effectively execute his agenda within a short period of time before his relationship with the Assembly weakens. So far, Noboa has used the security situation to expedite his agenda, sending more than four urgent projects and quickly gaining approval for tax reform and energy reform. The relationship with the Assembly has been further strengthened, which is crucial to reducing political uncertainty and implementing urgent security reforms to address the crisis. We expect cooperation to remain in place at least throughout the first half of the year, thereby enhancing the likelihood of a re-election in 2025. However, it is likely that in the second half of 2024, Noboa will face increased opposition. Finally, the planned referendum highlights the use of popular consultations not only for policy changes but also as a political tool to assess and possibly enhance public support for the administration. Most of the population will likely approve this referendum, given that Noboa concluded the first 30 days of his term with a ~64% approval rating, according to the latest polls.
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