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Aftershocks Rattle Ecuador's Economy After Devastating Earthquake Kills 654

When the quake rolled through on April 16, Ecuador was in the throes of a major financial crisis, in part, due to plummeting oil prices and growing national debt.

by VICE News
Apr 24 2016, 9:29pm

Un residente de Pedernales usa una máscara, Ecuador, 19 April de 2016. (Imagen por Jose Jacome/EPA).

Ecuador is still reeling from the devastating 7.8 magnitude earthquake that struck last week, killing 654 people, injuring 16,600, and leaving 25,000 homeless.

Additionally, 130 people are still missing.

It was the worst quake to hit the Central American nation in over 30 years.

"The country is in crisis," Ecuadorian President Rafael Correa said on Saturday, as he announced eight days of national mourning for the quake's victims.

In the 36 hours following the first quake, there were over 200 aftershocks, some of which reached a magnitude of 6.1. Tremors and aftershocks are expected to continue for several more weeks.

In the 36 hours after the earthquake, there were more than 200 aftershocks, some of them reaching a magnitude of 6.1.

Eighty percent of Pedernales, the coastal epicenter of the quake, is in ruins, and close to 7,000 buildings across the country have been destroyed.

"The tragedy is so huge that losing your house and everything you own isn't even the worst-case scenario," a writer for gkillcity.com, an Ecuadorian news site, said.

With a hefty clean-up bill looming, the earthquake has exposed cracks in Ecuador's already fragile economy, which relies on exports of oil, shrimp, gold, and bananas.

Correa estimates the damage to be somewhere between $2 billion and $3 billion.

When the quake rolled through, Ecuador was in the throes of a major financial crisis, in part, due to plummeting oil prices and growing national debt. As a result of very low oil revenue, Ecuador's growth has been increasingly stunted.

Last Wednesday, Correa announced on Ecuadorian television that everyone was going to have to shoulder the burden of the quake. As a result, he plans to increase sales tax by 2 percent, dock government wages once for those earning more than $1,000 a month, and impose a new personal wealth tax for the country's millionaires.

But Correa's plan weren't entirely well-received, and some officials have complained that the economy is already in such dire straits that the country can't afford a tax hike. In Portoviejo for example, one of the coastal cities that was badly hit by the quake, residents are concerned about the impact that higher taxes will have on sales.

In particular, some are worried that the increased cost of building materials like concrete and asphalt will provide less of an incentive to embark on reconstructing areas which were destroyed in the quake.

Related: Rescue Workers Are Losing Hope of Finding Survivors After Ecuador's Massive Earthquake

Some business owners say that sales were already lagging, which higher taxes won't help.

Ecuador's booming shrimp industry, which is primarily concentrated in the country's southwest, was left mostly unharmed during the earthquake. The shrimp farming areas which were affected are seeking donations.

Luckily, Ecuador's banana industry escaped relatively unscathed from the quake, as most of its plantations are located further inland from the quake's epicenter. History has shown that when Ecuador's banana industry wobbles, so does its economy. In 2012, after a black sigatoka fungus infested over 40 percent of its banana plantations, Ecuador reported losses of $600 million.

Correa has also publicly pondered asking the international community for loans. His political opponents have raised the possibility of approaching the International Monetary Fund, whose help Ecuador has long rejected due to its demands to cut government spending.

The World Bank has already agreed to lend $150 million to help Ecuador with the financial costs of the quake.