A special assembly dominated by members of President Rafael Correa’s Alianza PAIS party recently approved a proposed new Ecuadorian constitution that would grant the president broad political and economic powers. The proposed new constitution now faces a national public vote scheduled for September 28, 2008.
If passed, which seems likely given President Correa’s landslide victory in 2007 and current popularity, the new constitution would grant President Correa the power to remove Congress, seek re-election for additional terms and control monetary policy. While critics questioned the concentration of power, supporters reportedly welcomed the vote with chants of “We don’t want . . . to be a North American colony.”
Under the new constitution, the regulatory powers of the heretofore independent Central Bank would be vested in President Correa. Seen as an important source of economic stability to date, the Central bank establishes interest rates and controls the release of U.S. dollars into the dollar-based Ecuadorian economy. Critics’ concern that President Correa’s political interests might interfere with sound monetary policy is heightened by his prior intervention in the Ecuadorian oil and mining industries, which contributed to a 34 percent decline in direct foreign investment in 2007.
Any significant changes in Ecuadorian monetary policy would likely have negative ramifications for the more than 150 foreign insurance and reinsurance companies with operations and/or affiliates in Ecuador. For a copy of the Ecuadorian regulations governing the registration of foreign reinsurers, please click here. For copies of the Ecuadorian statutes governing insurance and reinsurance, please click here, here and here.
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