Ecuador

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Development Challenge The USAID Program Other Program Elements Other Donors Program Data Sheets Summary Tables USAID Search: Ecuador Previous Years' Activities 2002, 2001, 2000, 1999, 1998, 1997 Last updated: 33     THE DEVELOPMENT CHALLENGE: Ecuador made several important strides toward greater economic stability during FY 2001. Annual inflation, while still extremely high, dropped from more than 90% in 2000 to approximately 24% in 2001. Economic growth, spurred by the initiation of construction on a new crude oil pipeline, increased from 1.9% to more than 5% during that same time. Unemployment is down from 14.4% to 11% (due in part to a substantial increase in workforce migration out of the country). After seven failed attempts, Ecuador has successfully completed a stand-by agreement with the IMF. Nevertheless, it will take substantial time before the positive effects of these indicators are felt by Ecuador's citizens, 70% of whom live in poverty. This unstable economic system, together with pervasive corruption and rising crime, continues to erode Ecuadorian confidence in a fragile democratic system of government. Preliminary results from a USAID-funded national democratic values survey indicate that in the face of rising corruption and crime a great majority of Ecuadorians are beginning to favor non-democratic forms of government - a deeply disturbing trend. Powerful special interests continue to dominate decision-making, accelerating resource degradation (e.g. uncontrolled clearing of primary tropical forests) and a growing sense of exclusion for many social and economic groups. The security situation in the northern border provinces is becoming more tense, with escalating violence and increasing reports of cross-border incursions by narco-terrorist groups. Planned reductions in subsidies (e.g., for cooking gas, gasoline) also threaten political stability. Fortunately Ecuador's armed forces continue to maintain a low profile (after the January 2000 coup that overthrew President Mahuad). The environment for 2002's national elections remains unsettled and could derail the reform process, taking the country backwards once again. Most recent figures put Ecuador's external debt at $12.6 billion, close to 77% of GDP. 70% of Ecuador's population lives in poverty; confidence in democracy is dangerously low; and narco-terrorism from Colombia increasingly threatens the northern border region. Situated in the heart of Latin America's most conflictive region, Ecuador's importance to U.S. interests far outstrips its size. A democratic, prosperous, and secure Ecuador can play a key role in stabilizing the northern Andes and curbing the spread of narco-terrorism and violence. Actions taken now (in particular through the Andean Regional Initiative) will help prevent far greater (and more costly) problems in the future, both for Ecuador and the United States. THE USAID PROGRAM: FY 2002 Estimate: $34.355 million FY 2003 Request: $45.380 million USAID's development plan in Ecuador continues to evolve in response to the myriad challenges that are emerging throughout the region. USAID is requesting funds for five important programs. The democracy program is providing critical help to make key democratic institutions more transparent and accountable and Ecuador's democratic process more inclusive, while at the same time facilitating consensus on critical national policy issues. USAID's poverty reduction program will expand access to microfinance services and provide technical assistance to support macroeconomic policy reform. Targeted efforts are underway through USAID's environment program to reduce resource-based conflicts and support the sustainable use and conservation of Ecuador's globally significant (and economically important) biological resources. In the north, USAID's Northern Border Development program is expanding. This program has helped improve living conditions, enhance stability, and reduces vulnerability to narco-violence from southern Colombia. USAID is currently providing technical assistance to conduct field assessments and identify additional high-priority activities (e.g., development of licit production alternatives to increase income and employment) for this region during 2002 and beyond. USAID's Southern Border Integration program continues to help consolidate the Ecuador-Peru peace process by providing assistance to one of the poorest regions of the country, a region that plays an important role in the illegal movement of drugs and precursor chemicals. By targeting assistance toward the country's fragile political system and its most vulnerable regions, USAID's program is uniquely positioned to meet Ecuador's development challenges and enhance the country's economic and social stability. ONGOING PROGRAMS FOR WHICH NO NEW FY 2002 OR FY 2003 FUNDING IS REQUESTED:None. OTHER PROGRAM ELEMENTS: USAID's centrally funded Living Landscapes Program provides assistance through the Wildlife Conservation Society to conserve the biodiversity of the Greater Yasuní-Napo Moist Forest Landscape Conservation Area in the Ecuadorian Amazon. This program is working with indigenous groups, public- and private-sector stakeholders (including local oil companies), and NGO partners to develop a strategy to improve management of the protected areas and surrounding biological resources. The Washington-managed Collaborative Research Support Program (CRSP) brings the expertise of several U.S. universities to Ecuador, with three activities: integrated pest management (to reduce the very high levels of pesticides now used on target crops); studies on nitrogen fixation (to improve crop yields) and; an analysis of the impact of the increasing human population on the conversion of forests and the management of integrated livestock systems. The National Endowment for Democracy (NED) is also providing some assistance, e.g. analyzing the importance of civil-military relations in Ecuador. The Pan American Health Organization is using USAID funds to assist municipal government leadership to improve health services decision-making, directly complementing USAID's democratic local governance efforts. OTHER DONORS: In FY 2000, the United States ranked second (with 19%), after Japan (31%), in non-reimbursable assistance to Ecuador. Total development assistance from all donors reached $723 million of which loans amounted to $603 million. Japanese funding supported social development, transportation, agriculture, fishing, and some production forestry initiatives. German assistance was targeted at agricultural research and development, natural resources management, local government strengthening, and decentralization. Switzerland, Belgium, Holland, and Spain all supported rural development, poverty alleviation, health, education, and social infrastructure. Multilateral development banks contributed more significant resources, with the Corporación Andina de Fomento (CAF) providing 23% of multilateral development bank (MDB) support for macroeconomic stabilization, strengthening of the financial system, tax reform, and infrastructure. The Inter-American Development Bank's (IDB) program (41% of MDB funding) included decentralization and municipal strengthening; administration of justice, fiscal transparency and tax administration; and support for environmental management. Similarly, the Global Environmental Facility/World Bank (GDF/WB) recently committed $18 million to finance a program to support eradication of introduced species in the Galapagos. The World Bank has several important projects in Ecuador focused on rural poverty alleviation; water supply and sanitation; modernization of health services; administration of justice; and public financial management. The USAID coordinates closely with other donor institutions. For example, the Global Environmental Facility and World Bank approved three proposals to continue environmental activities initiated by USAID on (sustainable forestry, land titling and forest products marketing in Esmeraldas province). USAID is analyzing the efforts of the GEF/WB, IDB, and Spain to better define our support to the Galapagos. More directly, a binational program on water and sanitation in the Southern Border area is being implemented in conjunction with the Swiss development agency (COSUDE). Opportunities for coordination on the new poverty reduction program are excellent, with different donor efforts (albeit small) ongoing and planned in the microfinance and macroeconomic policy reform areas. Coordination will be especially important for the Northern Border Development Program, with the recent Consultative Group meeting in Brussels yielding donor pledges of $266 million over five years. Program Data Sheets 518-001  Biodiversity conserved in selected protected areas and their buffer zones 518-011  Improved Social and Economic Conditions of Inhabitants along the Peru-Ecuador Border, thereby Promoting Border Integration 518-012  Increased Support for the Democratic System 518-013  Improved Quality of Life of Population Living Along the Northern Border 518-014  Increased Economic Opportunities for the Poor Country Background Information Resources     CIA Factbook Library of Congress National Geographic Country Maps State Dept. Country Information

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