On February 23, 2026, a significant reform to the Organic Code of Territorial Organization, Autonomy, and Decentralization (Cootad) was published in Ecuador’s official registry. This reform aims to enhance sustainability and expenditure efficiency for the country's decentralized autonomous governments (GADs). It was put into effect without any objections from President Daniel Noboa, who advocated the reform as economically urgent and backed its approval with 77 votes from his party, Acción Democrática Nacional (ADN), and allied legislators during a session in Samborondón, Guayas.

The reform comprises seven articles that introduce new fiscal sustainability and rationality rules aimed at ensuring better management of public resources. By establishing these guidelines, the government seeks to secure ongoing public investment, maintenance, and provision of essential services while also ensuring compliance with existing financial obligations. As these regulations come into force, municipalities and prefectures are expected to adapt their budgeting and spending processes to align with the new legal framework, which emphasizes accountability and efficiency.

This legislative change reflects a strategic move by the Ecuadorian government to address fiscal challenges and promote sustainable development at the local level. The successful passage and immediate enactment of the reform indicate a shift towards responsible fiscal management that can potentially stabilize the economy and improve public services. However, the practical implications of these reforms will depend on the capacity of local governments to implement the new rules effectively and the engagement of the community in monitoring their adherence to the specified fiscal standards.