QUITO - Ecuador, one of the smallest members of the Organization of the Petroleum Exporting Countries (OPEC), said on Tuesday it will leave the 14-nation bloc from Jan. 1 due to fiscal problems.
The Andean nation is attempting to increase crude production to raise more income and has on multiple occasions broken its output quota fixed by OPEC.
"The decision is based on the issues and internal challenges that the country must take on related to fiscal sustainability," the energy ministry said in a statement, without providing further details.
"This measure is in line with the national government's plan to reduce public spending and generate new income," it added.
Ecuador produces about 545,000 barrels per day (bpd) of crude, but is struggling with tight liquidity because of a wide fiscal deficit and a hefty foreign debt load.
It reached a $4.2 billion deal with the International Monetary Fund in February which allowed it to receive an immediate disbursement of $652 million and opened the door for an additional $6 billion in loans from other multilateral institutions.
Despite its decision to leave OPEC, Ecuador will continue to support efforts to stabilize the world oil market, the ministry said.
OPEC, Russia and other producers have since Jan. 1 implemented a deal to cut output by 1.2 million bpd. The alliance, known as OPEC+, in July renewed the pact until March 2020.
Ecuador had in February asked OPEC for permission to produce above its quota, but the government never confirmed whether the organization responded to the request.
Quito has bet on new oil wells in its top-producing Ishpingo-Tambococha-Tiputini block to help increase output.
The block recorded production of 82,658 bpd on Monday.
It is set to provide around $603 million in government income in 2020, assuming a crude price of $57 per barrel, according to state oil company Petroamazonas.
Ecuador joined OPEC in 1973, withdrew in 1992, then rejoined in 2007.
Other small former OPEC members have also left the organization for fiscal reasons. Indonesia suspended membership in 2016 as it sought to increase oil exports.
Ecuador's debt grew under former leftist President Rafael Correa. His successor Lenin Moreno has implemented more market-friendly policies and begun an austerity plan that includes layoffs of workers at state-owned companies and cuts to gasoline subsidies.
The plan also includes efforts to find a private operator for state-run telecoms company CNT and other state-owned firms.