Fri, Jan 17, 2014 - Page 7 News List

Venezuela shuffles economic team, keeps forex rate

Reuters, CARACAS

Venezuelan President Nicolas Maduro named an army general as new finance minister in a reshuffle of his economic team on Wednesday, and said there would be no currency devaluation this year despite a soaring black market for US dollars.

“We’re going to keep the dollar at 6.3 [bolivars] for the whole year and far beyond that,” Maduro said in the annual presidential address to the OPEC nation’s parliament.

Most economists say a devaluation is long overdue to rectify distortions in Venezuela’s economy, including illegal trading of greenbacks at 10 times the official rate.

That situation has been a factor behind inflation of 56.2 percent last year — the highest in the Americas — and shortages of goods from toilet paper to flour as businesses struggle to access enough US dollars.

Maduro, a 51-year-old former bus driver who has stayed loyal to his predecessor, former Venezuelan president Hugo Chavez’s socialist policies, said the economy was his No. 1 priority and again blamed capitalist foes for an economic “war” against him.

He vowed that foreign exchange mechanisms would change, with state currency board Cadivi to be absorbed by another body. He vowed an “iron fist” against those who siphon dollars at the official rate to make a profit on the black market.

Maduro surprised his audience by announcing that Venezuelan Minister of Public Banking Rodolfo Marco Torres, a military general who participated in Chavez’s 1992 failed coup attempt, would replace Venezuelan Minister of Finance Nelson Merentes.

“He’s held many big posts for a long time and has not been tainted [by corruption],” an annonymous source who knows the incoming finance minister said. “He’s also good at negotiating and has good relations in the bank sector.”

Merentes, considered a pragmatist compared with the more hardline 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 election in April last year to replace Chavez.

“He’s going backwards and forwards. He’s not clear what to do,” local economist Asdrubal Oliveros said.

The president said Venezuelan Minister of Energy and Vice President of Economic Affairs Rafael Ramirez, one of Venezuela’s most powerful officials and a protege of Chavez during his 14-year rule, would keep his roles, as well as his position as head of state oil company PDVSA.

Maduro gave few details of his planned changes to the currency control mechanisms, though he did announce that a new body, the National Center of Foreign Commerce, would assume the role of Cadivi, which is widely discredited due to corruption.

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.

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