Squatter settlements in the province of Los Ríos Ecuador

Ecuador Indebtedness and Poverty


Ecuador looks back on the longest democratic period in its history. At the same time, the political system has been undermined in recent decades by informal factors such as corruption, the personal interests of individual politicians and family clans, and political scandals. However, since 2007 there have been numerous structural reforms and overall political stabilization. However, a major corruption scandal recently hit the headlines.


In recent years, the economic development of Ecuador was largely positive up until the outbreak of the Corona crisis – both in terms of macroeconomic data and in terms of human development indicators. The country benefited in particular from the increased demand for crude oil on the world market, although the massive drop in oil prices since 2015 has led to an increase in national debt. Poverty has been reduced significantly in recent years. However, the effects of the Covid-19 pandemic, which hit Ecuador hard, have led to a massive recession.


As a country located in northwestern part of South America according to franciscogardening, Ecuador is a hospitable and foreign-friendly country, but it is also characterized by immense social contrasts, machismo, a family and social life based on traditional morals and values and the inevitable problem of corruption.

Administratively, the country is divided into 24 provinces, many of which are named after mountains (Pichincha and Chimborazo) or rivers (Guayas, Napo). The provinces are divided into districts (cantones), which in turn consist of municipalities (Parroquias urbanes y rurales). The youngest provinces are Santa Elena and Santo Domingo de los Tsáchilas, which were formed in late 2007. The three largest cities are Guayaquil (approx. 1.6 million residents), the economic center of the country, the capital Quito (approx. 2.3 million residents) as the political center and Cuenca(331,000 residents), which is often referred to as the cultural heart. The urban share of the total population is 63 percent. The Correa government implemented an administrative reform as part of the Buen Vivir concept and combined several provinces into administrative zones. A total of nine zones were created in this way. The main goal was to achieve a stronger cooperation between Sierra and Costa. The Moreno government has turned away from Buen Vivir, but has retained the administrative zones.

Independence Day: 05/24/1822

Head of state: Lenin Moreno

Head of government: Lenin Moreno

Political system: Presidential Republic

Democracy Status Index (BTI, 2018): Rank 58 (of 129)

Corruption Index (TI, 2018): Rank 114 (out of 180)


After the low of the national debt of 16.4% of GDP in 2009, the debt has grown again, stood at 45.2% of GDP in 2018 and rose to 56.9% of GDP in June 2020, although it is not legally 40% may exceed. Despite recent negative developments, however, Ecuador’s debt situation has improved significantly since the late 1990’s (85.5% of GDP in 1999). At that time, Ecuador was considered the most heavily indebted country in Latin America. Currently the budget deficit is expected at $ 3.4 billion with an annual funding requirement of $ 1.4 billion. According to estimates by the Central Bank of Ecuador, the expected growth in 2019 is 0.2 percent and 0.57 percent in 2020. In March 2020, President Moreno announced a four to eight percent cut in the salaries of public sector employees to solve the current debt crisis The merger of state institutions, the privatization of public companies and the elimination of subsidies

In September 2020, the International Monetary Fund (IMF) and Ecuador agreed on further loans. According to this, Ecuador should receive a total of 6.5 billion US dollars over a period of a good two years. Four billion of this should flow in 2020 and the remaining amount in 2021 and 2022. At the same time, the Moreno government announced tough austerity measures: cuts in the state budget and tax increases are stipulations of the agreement with the IMF.


Over the past decade, Ecuador has been able to significantly reduce the proportion of people living in extreme poverty. This was achieved primarily through a strengthening of the social system and – at least in part – a redistribution policy. According to the national statistics office INEC, extreme poverty has decreased by 55.4 percent since 2007. In 2019, 25% of the population lived below the national poverty line (World Bank data). The national statistics agency INEC defines poverty as a monthly family income of less than 85.03 US dollars and extreme poverty as a monthly family income of less than 47.02 US dollars. According to the government, they lived in 2015 900,000 fewer people in absolute poverty than eight years earlier. However, there is still a clear urban-rural gap. While absolute poverty in cities is 1.9%, the rate in rural areas is 13.8%. In January 2018 the government published a strategy to reduce extreme poverty by 2021 (the end of President Lenín Moreno’s term of office) from the current national level of 8.6% to 3.2%. In view of the massive effects of the Corona crisis, this goal will hardly be achieved. The United Nations World Food Program (WFP) warns of a “hunger pandemic” in Latin America in 2020: around 14 million people could be forced into poverty and hunger. Child labor is an enormous social problem in Ecuador. There are one and a half million children in Ecuador who have to work – that is almost 40% of all children in the country. Seven-year-olds already earn a few cents selling lighters and chewing gum on the street. The statistical office assumes, however, that there has been a significant decline in child labor in recent years.

Squatter settlements in the province of Los Ríos Ecuador