Maduro entrusts the Venezuelan economy to God

Venezuelan President Nicolás Maduro presented his annual report on the state of the nation in a televised speech six days after the date dictated by the Venezuelan Constitution. Although the opposition criticized him for the lapse, it seemed of only minor importance given that he had been expected to announce concrete measures to deal with falling oil prices. Around 96 percent of Venezuela's revenue comes from crude oil sales and the president’s tour of China, Russia and the Middle East in early January failed to raise funds to alleviate the crisis. Maduro not only dodged making announcements as to how he would tackle the problem, but he also admitted that the country would face difficulties as a result of its financial issues. “The barrel of crude oil fell from $96 to $40 but we will not lack any resources,” he said. “Oil will never cost $100 again but God will provide. Venezuela will never do without.”

We will not face this crisis using the formulas of the International Monetary Fund or with a right-wing administration” President Nicolás Maduro

The president turned his annual report into an electoral campaign pitch. During his almost three-hour speech, he attacked his adversaries and claimed to be the victim of a plot that seeks to topple his government and take advantage of dejected chavista voters during this election year. The National Assembly will hold elections in the second half of 2015 and the regime plans to maintain its qualified majority in parliament. Starting February 1, the government will increase the minimum wage and pensions by 15 percent. It also plans to more than double the meager scholarships university students receive, from 200 to 500 bolivars each month, or about three dollars at black market exchange rates. Maduro has also promised to build 400,000 public housing units. The measures fall under the government’s social investment program, which it uses to show its great commitment to the vast majority of Venezuelans who are grappling with a 63-percent inflation rate, the highest in the world.

Maduro confirmed what his administration had previously hinted at: that there would be no changes in the government’s model and that the president would not make any decisions that strayed from the so-called “Plan de la Patria” written by his predecessor Hugo Chávez, which established the road toward socialism. The manual is based on the Cuban revolution and Maduro uses it as his personal bible. “We will not face this crisis using the formulas of the International Monetary Fund or with a right-wing administration,” he declared.

The president also announced a new foreign exchange system but gave no further details. He avoided the word “devaluation” but everything points in that direction. Venezuela has four exchange rates for the US dollar. One platform, Sicad I, sells the dollar at 6.30 bolivars for food and medicine and at 12 bolivars for non-preferential imports and purchases made abroad. Sicad II trades one dollar for 50 bolivars to individuals and businesses through auctions. The fourth rate buys the dollar at 175 bolivars, its actual value on the black market.

Maduro said the government would keep the currency controls established in 2003 that sell the dollar for 6.30 bolivars for “preferential imports” and would unite the exchange rates for Sicad I and II into one system that would work according to market logic. Further details are due to be announced by the economic team at a later date.

Maduro confirmed that there would be no changes in the government’s model

The initiative is a covert maneuver to devaluate the bolivar and end subsidized trips abroad. This may be the highest political cost the administration is willing to pay in order to maintain power during this crucial year. No more than 3 percent of Venezuelans travel abroad.

The government has also promised to respond to scarcity and shortages. This week, it was due to begin inspecting distributors and vendors to make sure they do not hoard supplies in an effort to control the market. The administration will also inaugurate more than 30 stores operated by Pdval, the supermarket chain owned by the state-owned oil company, Petróleos de Venezuela (Pdvsa).

Maduro brought subsidized gas back into the spotlight, saying that the government was giving the fuel away. The time has come to charge customers, he said. The president admitted that he had already drafted a proposal to present to Vice President Jorge Arreaza. “But there’s no hurry,” he added.

While Maduro delivered his annual report, Reuters published an article on the government’s efforts to raise funds. Citgo Petroleum, a Pdvsa subsidiary based in the United States, has put up some of its shares as a guarantee in exchange for bonds and $2.5 billion in credit. Until last month, the refinery network, which has the capacity to process 750,000 barrels a day, was on sale. At least four firms showed interest but, in the end, Venezuela chose to use it as collateral for loans.

Translation: Dyane Jean François