World Bulletin/News Desk

Ecuador’s recent imposition of tariffs on imports from neighboring countries is an indication of how desperate the country is to shore up its economy, a policy analyst said Wednesday.

Ecuador placed tariffs on imports from Colombia and Peru on Tuesday to defend against goods cheapened by the countries’ depreciating currencies, as it tries to cushion the impact from tumbling crude oil prices.

The OPEC country will impose a 21 percent change on Colombian goods and a 7 percent duty on Peruvian imports, its trade ministry said in a statement.

“That Ecuador is resorting to imposing tariffs on goods from its Andean neighbors is a measure of how troubled the economy is,” said Michael Shifter, president of the Washington-based Inter-American Dialogue. 

“Chinese loans may not be enough to offset the considerable loss in oil revenues. The [Rafael] Correa government is clearly worried,” he added.

“The ‘exchange safeguard’ measure comes as a result of the devaluation of the Colombian peso and Peruvian sol, which affects conditions of competition in trade relations,” the ministry said.

Ecuador, which adopted the U.S. dollar in 2000, says trade has suffered as regional currencies have depreciated on speculation the U.S. Federal Reserve will raise interest rates.

Colombia’s peso has fallen more than 20 percent against the dollar in the last year, while Peru’s sol receded 6 percent in the same period.

The plummeting price of crude oil, Ecuador’s main export, has cast a shadow on growth. President Correa's government launched a fiscal stimulus package in November to spur foreign investment.

Oil accounts for 25 percent to 30 percent of total government income and 57 percent of total exports, according to Dutch bank Rabobank.

Ecuador’s “external position remains weak and under pressure from low oil prices and falling remittances,” Rabobank analyst Alexandra Dumitru wrote in a Dec. 31 note. 

West Texas intermediate closed Tuesday at its lowest level since April 2009, falling to $48 a barrel.

Ecuador cannot levy the duty without the approval of the Andean Community, the customs union said Tuesday – comprised of Bolivia, Colombia, Ecuador and Peru.

If it presses ahead, Ecuador could be sanctioned according to the terms of membership.

The tariffs may give rise to trade retaliations, with Colombia considering its response, Shifter said.

Ecuador is set to expand 4.4 percent in 2014, though will slow to 3.5 percent in 2015, The Economist Intelligence Unit projects.

Colombia had a $716 million net trade surplus withEcuador between January and September 2014, exporting $1.37 billion in goods to Ecuador and purchasing $654 million in imports.

With Peru, Ecuador had a net trade surplus of $826 million from January to October 2014, with $1.52 billion in exports and $698 million in imported goods.