Venezuela’s Maduro shuffles economic team
Country grappling with excessive inflation despite its oil reserves and its currency may need to be devalued, again.
Venezuela’s President Nicolas Maduro has named an army general as the new finance minister in a reshuffle of his economic team while saying there will be no currency devaluation this year.
Maduro, delivering the annual presidential address to parliament on Wednesday, announced that Rodolfo Marco Torres, the public banking minister who as a military general participated in the late President Hugo Chavez’s 1992 failed coup attempt, would replace Nelson Merentes as finance minister.
Merentes, considered a pragmatist compared to the more ideologically rigid factions in the ruling Socialist Party, is to return to a past role as president of Venezuela’s central bank.
That makes three changes at the central bank since Maduro won an April 2013 election to replace Chavez.
“We’re going to keep the dollar at 6.3 [bolivars] for the whole year and far beyond that,” Maduro said in his speech.
Most economists say a devaluation is long overdue to rectify distortions in Venezuela’s economy, including illegal trading of dollars at 10 times the official rate.
Early last year, Venezuela – which has the largest proven oil reserves in Latin America – devalued the currency, the bolivar, due to rising shortages, and since then basic necessities, such as milk, flour and toilet paper have become valuable commodities.
Number one priority
Venezuela’s official inflation rate is over 54 percent – one of the highest in the world – but some economists estimate the rate could be as high as 283 percent.
Oil production is down over a third since 1998.
Maduro, a 51-year-old former bus driver who has stayed loyal to Chavez’s socialist policies, said the economy was his number one priority and again blamed capitalist foes for an economic “war” against him.
He pledged that foreign-exchange mechanisms would change, with the state currency board Cadivi to be absorbed by another body.
And he brandished an “iron fist” against those who siphon dollars at the official rate to make a profit on the black market.
Maduro said Rafael Ramirez, one of Venezuela’s most powerful officials and a protege of Chavez during his 14-year rule, would keep his roles as head of state oil company PDVSA, minister of energy and vice president of economic affairs.
Scheme under review
Maduro gave few details of his planned changes to the currency-control mechanisms, though he did announce that a new body, the National Centre of Foreign Commerce, would assume the role of Cadivi, which is widely discredited due to corruption.
Al Jazeera’s Alessandro Rampietti, reporting from Caracas on Wednesday, said: “Maduro said that he will try to control the prices across the board. People here were expecting some major initiatives to try to stop the out-of-control inflation.”
A foreign-exchange auction system known as Sicad, which offers dollars at the higher rate of about 11 bolivars for non-essential items, would be strengthened and expanded, he said.
Dollars are sold for 6.3 bolivars to importers for bringing in essential items such as medicines and some basic foods.
But the government is pushing more items into the Sicad system in what many economists are calling a “stealth devaluation”.
Government supporters say that critics overlook social-welfare initiatives that have given millions access to free healt-hcare and subsidised food, underpinning Chavez’s popularity and Maduro’s election win.