Tags: maduro | venezuela | economy

Maduro Promises to Fix Venezuela's Economy, Currency in 2015

Wednesday, 31 Dec 2014 01:15 PM

Venezuelan President Nicolas Maduro vowed an economic “counter-offensive” to steer the country out of recession, including an overhaul of the foreign exchange system. He didn’t provide details of his plans.

Struggling to rein-in the world’s fastest inflation and revive an economy that has contracted for three straight quarters, Maduro said in a televised address Tuesday that new measures are coming Jan. 3. While the main government-controlled exchange sets a rate of 6.3 bolivars per dollar, the black market rate is as much as 173 per dollar.

“We have created a new system and there are many things to adjust and rectify,” Maduro said. “Plans for the economic recuperation will be revealed later.”

Maduro, who took office last year following the death of then-President Hugo Chavez, may be hard-pressed to spark growth. Bank of America Corp. said in a report that the country could face 1,000 percent inflation, up from the current 64 percent, as early as next year if the bolivar isn’t weakened.

“It’s never too late to take measures,” Asdrubal Oliveros, the director of the Caracas-based consultancy Econanalitica, said in a phone interview before Maduro’s presentation. “But every day that passes they become more difficult, they are bigger adjustments, and much more costly.”

Venezuela’s benchmark dollar bonds due in 2027 were little changed today at 48 cents on the dollar as of 10:16 a.m. in New York. The country’s dollar-denominated notes lost an average 28 percent in 2014, more than any other nation tracked by Bloomberg indexes. Maduro vowed that his new plan would help the country meet its international commitments.

Basic Goods

Central Bank President Nelson Merentes and Finance Minister Rodolfo Marco Torres will explain changes to “optimize” and “perfect” the foreign exchange system next month, Maduro said.

With basic goods including medicine, some food staples and toilet paper increasingly hard to find, Maduro’s approval rating fell to 24.5 percent in November, Bank of America said, citing Caracas-based pollster Datanalisis.

At about $22 billion, Venezuela’s foreign reserves cover about two years of overseas debt payments for the government and state oil company Petroleos de Venezuela SA, known as PDVSA. Research company Eurasia Group estimates that less than $2 billion of that can be readily deployed to pay debt.

Maduro said his economic strategy would include measures to cut unneeded spending, citing the possibility of shrinking embassy staffs abroad.

While Venezuela lays claim to the world’s largest oil reserves, crude’s 46 percent decline since June has accelerated expectations among analysts that the country needs different policies. The South American country’s economy shrank 4.8 percent, 4.9 percent and 2.3 percent, respectively, in the first three quarters of the year, the government said Tuesday.

 

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Venezuelan President Nicolas Maduro vowed an economic "counter-offensive" to steer the country out of recession, including an overhaul of the foreign exchange system. He didn't provide details of his plans. Struggling to rein-in the world's fastest inflation and revive an...
maduro, venezuela, economy
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2014-15-31
Wednesday, 31 Dec 2014 01:15 PM
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