Development Challenges

Since 1999, Ecuador has weathered one of the worst economic crises in its history. The country has been dollarised, privatized and decentralized. The continuing erosion of the economy has affected the country's capacity to govern. High turnover of top officials in key ministries, such as for public health, education and social welfare has led to further problems.

Economic disparities between rich and poor have deepened, increasing poverty levels. In 2005, about half of the entire population was struggling on two dollars a day, while 20 per cent were surviving on one dollar a day or less. The Food and Agriculture Organization estimates that one-fifth of all Ecuadorians are malnourished. In 2002, the United Nations Common Country Assessment concluded that inequity, including the exclusion of segments of the population from the benefits of socio-economic development, particularly young people, women and the Quecha indigenous minorities, were among the root causes of poverty.

Ecuador spends only $158 per capita per year on social welfare programmes, compared with the regional average of $540 per person. External debt repayment increased in 2004 to 52 per cent of the national budget, resulting in further cuts in social services, particularly in health and education. Despite the precarious state of its economy, Ecuador is categorized as a middle-income country and ranks 100 out of 177 countries on UNDP's Human Development Index (2004). [also see Ecuador Human Development Report, 2001 ]

In an effort to reduce the economic disparities, the Government is concentrating its efforts on poverty reduction and decentralization of authority from the central to provincial and local levels. Increasing the capacity of municipalities to provide better governance is seen as key to improving health services, including those that address reproductive and sexual health, expanding educational opportunities and promoting gender equity. UNFPA and other UN partners strongly support the devolution of political authority and the strengthening of local governance as a way to more efficiently meet the needs of its people.