The Latin American Report # 551

Ecuadorian President Daniel Noboa has initiated a Milei-style move in terms of economic and financial policy, closing and merging ministries and laying off hundreds of public employees. In his case, he appears to be working toward meeting the spending targets set by the IMF, though some press reports indicate that the agreement does not explicitly require mass layoffs. Thus, a decree from the current head of Carondelet has triggered one of the largest fiscal adjustment processes in his country’s recent history, sparking widespread backlash among working-class sectors, particularly from the Correísta left and powerful Indigenous movements.

Specifically, Noboa ordered a 30% reduction in the number of ministries, eliminating dedicated entities for issues such as women’s rights—the head of the Heron's Palace, in Panama, also recently removed his country’s equivalent—environmental preservation, water and ecological transition, and tourism. According to the specifications of the global lender, tied to the $5 billion loan for the 2024-2028 period was a wage bill optimization that should amount to 1.2% of GDP, representing an estimated adjustment of up to $390 million.

Noboa’s authoritarian tone when discussing the layoffs is deeply concerning, as it suggests that the 5,000 dismissed employees bring no value to the country—or, alternatively, that they do not align with his own perspective—and are therefore rightly disposable. "We are here to work with people committed to their country, to truly change Ecuador. Those who aren’t, out," declared the Florida-born president via Instagram.

A human rights organization described Noboa’s plan as "a deliberate bet on militarization and punishment, rather than structural investment in prevention, reparations, equality, and socio-environmental justice." "Beyond bureaucratic savings and efficiency, it means the loss of differentiated approaches and obligations, political leadership, and technical expertise to advance public policies that diligently protect rights," the group added in a statement.

Interestingly, in the case of the now-defunct Ministry of Women, its creation was an initiative of former President Guillermo Lasso, a prominent banker who was impeached by Congress and subsequently triggered a snap election to save himself. "The Ministry of Women is non-negotiable; its autonomous existence is the result of the struggle by women’s and feminist movements, and its weakening sends a clear signal of state disinterest and neglect toward the multiple forms of violence we face," stated the National Coalition of Women in a release. Meanwhile, environmental activists argue that merging the Ministries of Environment, Energy, and Mines is equivalent to "putting the wolves in charge of the sheep."

The National Confederation of Public Servants of Ecuador rejected the layoffs and endorsed swift protest demonstrations, set to begin on July 31 with a rally at the Constitutional Court. For its part, the Ecuadorian Medical Federation also opposed Noboa’s austerity measures, reporting that despite promises to exempt healthcare workers, two doctors and three nurses were fired from a gynecological-obstetric hospital in Quito, the capital, this Friday. (There was also some friction on Friday with Colombia over Ecuador’s allegedly uncoordinated deportation of Colombian prisoners, per the Casa de Nariño.)

Looking at Argentina, where Milei’s government implemented an austerity plan more aggressive than even the IMF demanded, macroeconomic success in the numbers remains at odds with the lived reality of ordinary people. For instance, the Executive Committee of the National Episcopal Conference lamented the "everyday scenes of grandparents in pharmacies, forced to choose which prescribed medicines they can afford and which they must forgo."

A trade war between Caracas and Brasilia?

Interesting note: According to Italian news agency ANSA, Venezuela may have imposed tariffs on Brazilian goods that should be exempt under an 11-year-old trade agreement—though this was signed in a very different context. The reason behind Caracas’ move remains unclear, with some speculating it could be a customs system error. That said, I wouldn’t rule out Maduro punishing Brazil for blocking Venezuela’s entry into BRICS last year. The Brazilian state of Roraima is particularly affected by the measure, which took effect without warning.

The following is a must-read report from AP 👇