Observation on proposed elimination of fuel subsidies for Ecuadorian airlines

Posted on November 30, 2011 • Filed under: Economy, Ecuador, Latin America Aviation, Oil, TRAVEL



President Correa is proposing in 2012 that the fuel subsidy will be eliminated for airline companies in Ecuador. This will no doubt impact everyone’s pocket book and could put further stress on tourism and travel for Ecuadorians within the country. Overall, a negative for most Ecuadorians.

It is often apparent for anyone who has traveled or lived in Ecuador, that much of the benefit of the country’s oil reserves has not trickled down to the masses except in one area – FUEL SUBSIDIES. The subsidies provided by the government contributed to keeping the economy moving along and provided ALL Ecuadorians a direct benefit of the country’s oil reserves with inexpensive gas and fuel prices for vehicles and aircraft. Almost everyone seems to have benefited from a resource owned by the State.

More cars were purchased and more people flew in a country that is highly divided by geography. Airline flights within Ecuador have generally been among the least expensive in Latin America. As for the tourism industry, the pricing subsidies clearly made it more affordable for many to see many destinations in the “Jewel of the Andes”.

No doubt President Correa will explain that the new funds gained for the government by eliminating the subsidy will be used to expand Ecuador’s social programs as well as infrastructure and or airport facilities.

Some Ecuadorians may view this action as a slap in the face to take away a benefit of a natural resource that all had been privy to.

As President Correa continues to build a government that bulges with huge numbers of employees, he will continue to whittle away wherever he can to raise money to fund his ever expanding government. Anyone is invited to look at the numbers of how military expenditures and programs have increased dramatically all in the name of modernization from his viewpoint. Moreover, much of the income from oil is used to service the national debt.

Elimination of the subsidy will have a negative impact on the economy and take away a benefit of a resource which belongs to the state and could benefit all Ecuadorians as a whole.

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