Ecuador's political divisions could descend into violence on Wednesday as opponents and supporters of the government hold counter-demonstrations in the country's industrial heartland.

Clashes on the streets of Guayaquil, Ecuador's biggest and most economically important city, could cool investors' renewed enthusiasm for the country following President Lucio Gutiérrez's trip to the US last week to announce plans for a bond issue.

The heightened political tension in Guayaquil comes in the wake of Mr Gutiérrez's purge of the country's Supreme Court last month. His slim congressional majority voted to dismiss the court's 31 justices most of whom were close to the opposition, especially the Social Christian party, whose support base is in Guayaquil.

Guayaquil mayor Jaime Nebot, a leading member of the Social Christian party, has organised Wednesday's march ostensibly to demand that the Quito government fulfil its commitments to spend more on security, health and sanitation in the port city.

A counter-demonstration has been called by the pro-government Roldosista party (PRE), led by Abdala Bucaram, a former president now in exile in Panama to avoid prosecution on corruption charges.

Mr Nebot says his supporters have a right to march in defence of their city. Mr Bucaram says he is attempting to prevent a coup.

The two men insist their demonstrations will be peaceful, but, 1,000 national police have been drafted into Guayaquil. Both organisers have warned of the risk of street violence.

Vitali Meschoulam, Latin America analyst at HSBC in New York, says violence in Guayaquil could adversely affect investor attitudes at a time when Ecuador hopes to return to international debt markets after its default in 1999. On Monday Standard & Poor's increased Ecuador's long-term credit rating to “B-” from “CCC+”.

“In the last two weeks lots of positive sentiment has been generated. Investors were reassured by fiscal discipline and relative political calm,” he says. “But increased social tension could get people refocused on political instability.”

Mr Gutiérrez is apparently so concerned about the anti-government march that during his trip to the US he urged that Ecuadorean expatriates encourage their relatives back home to stay away from today's opposition rally, according to the Guayaquil daily El Universo.

Last week Mr Gutiérrez celebrated the fifth anniversary of the coup that, under his leadership, overthrew president Jamil Mahuad. The president, who was democratically elected in 2002, also announced plans to call a referendum on his judicial reforms. Mr Gutiérrez's government depends on support from the PRE and the Party of National Institutional Action and Renovation, led by Alvaro Noboa, the billionaire banana magnate.

Get alerts on World when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.

Comments have not been enabled for this article.

Follow the topics in this article