CARACAS, Venezuela – Venezuelan President Nicolas Maduro reassigned members of his economic team Wednesday but didn’t announce a painful currency devaluation that analysts say is needed to stabilize Latin America’s biggest oil economy.
Maduro’s state of the union speech to Congress was closely watched by Venezuelans, who started the year experiencing worsening shortages of everything from bread to newsprint.
In the three-hour speech, the socialist leader said he would use an “iron fist” against companies he accuses of gouging consumers. Rebuffing a chorus of economists who say a devaluation of Venezuela’s currency is overdue, he vowed to maintain the official exchange rate of 6.3 bolivar per dollar for the entire year and beyond.
He said the government would instead strengthen an alternative foreign exchange mechanism as a way to attract much-needed foreign investment in 11 vital areas ranging from tourism to the oil industry. Oil is responsible for 95 per cent of the nation’s exports.
“The entire population is at war and nobody can remain indifferent,” Maduro said while standing next to a giant poster of his political mentor and predecessor, the late Hugo Chavez.
He said he would implement in the coming days a previously announced plan to cap businesses’ profit margins at 30 per cent.
In recent weeks, the government has starting selling dollars to oil companies and other productive sectors at almost half the official rate. But greater flexibility hasn’t stopped the bolivar’s slide on the black market, to which many Venezuelan companies must turn to get around strict currency and capital controls in place since 2003.
Maduro announced he had shuffled several members of his Cabinet.
Nelson Merentes, who investors see as an ally nudging the government to a more market-friendly stance, will step down as finance minister and resume duties as president of the central bank, a post he held until nine months ago.
He’ll be replaced as finance chief by Rodolfo Torres, who currently oversees the banking system.
Rafael Ramirez, the longtime oil minister and head of state-run producer PDVSA, will remain vice-president for economic affairs.
Maduro said he is disbanding Cadivi, the much-derided state agency that tightly administers the nation’s dollars, and hand its duties over to the recently created National Center of Commerce
Joshua Goodman on Twitter: @APjoshgoodman
Associated Press writer Jorge Rueda contributed to this report.