Venezuela's
socialist government decreed an "economic emergency" on Friday that will
expand its powers and published the first data in a year that shows the
depth of a recession fuelled by low oil prices and a sputtering
state-led model.
The central
bank, which has been lambasted by critics of President Nicolas Maduro's
government for hiding statistics since the end of 2014, said the South
American OPEC nation's economy shrank 4.5 percent in the first nine
months last year.
Inflation soared in that period to an annual rate of 141.5 percent, the world's worst.
Venezuela's oil-dependent economy is forecast
to perform abysmally again in 2016. Maduro lost control of the National
Assembly in a December election due to voter ire over the crisis.
The
government's decree, which the opposition-led assembly says it has the
power to approve or reject, sets a 60-day "economic emergency" and would
give Maduro wider powers to intervene in companies or limit access to
currency.
"We are confronting a
true storm," Maduro said during his state-of-the-nation address to
Congress. "This is not Maduro's storm, as some believe, it is a
situation throughout the country that affects every Venezuelan family."
He
vowed the country would continue servicing foreign debt despite
slipping international reserves, negating growing Wall Street pessimism
about a potential default this year.
He
also insisted "the time has come" to raise heavily subsidized fuel
prices. Economists say doing so is vital to fortifying foreign reserves,
but it is a politically costly move that Maduro has avoided despite
repeated promises.
National Assembly
President Henry Ramos, a longstanding opposition leader, offered a
jocular 40-minute response in which he chided Maduro and his policies
and laughed off the heckling of Socialist Party lawmakers.
"What angst there is here!" Ramos, 72, said at
one point, sticking his tongue out at jeering legislators, during the
rare opposition speech broadcast on state television.
WALL STREET GLOOM
Maduro, a former
bus driver and foreign minister who was elected to replace Hugo Chavez
in 2013, has stuck to his mentor's policies of strict currency and price
controls.
With massive shopping
lines in Venezuela and widespread shortages of basics from milk to
medicines, the government faces mounting pressure to change what critics
call a failed model.
Venezuela
depends on oil for 96 percent of hard currency revenues. The average
price for its basket of oil and refined products fell this week to
$24.38, the lowest level in more than 12 years.
"The
biggest loser in Latin America of the decline in oil prices is clearly
Venezuela. At this point, a credit event in 2016 seems difficult to
avoid," Barclays said in a research note.
The heaviest payments in Venezuela's roughly $10 billion foreign debt bill for 2016 come in October and November.
The government blames its woes on the global oil scenario and what it says is economic sabotage by its foes.
"Venezuela is suffering a new generation
economic war promoted by web pages which fix the bolivar-dollar relation
without any criteria or economic substance," the central bank
complained, referring to the Dolar Today website, which publishes a
black market currency price to the fury of the government.
The
opposition coalition says policy incompetence is responsible for
Venezuela's economic mess. It has said it wants to find a constitutional
way this year to remove Maduro.
"An
emergency economic degree without clear objectives ... is only going to
worsen the situation," tweeted local economist Luis Oliveros, a
frequent government critic.
According
to the central bank, Venezuela's current account deficit was $5.05
billion in the third quarter, hurt by the tumble in prices for its main
export.
(Additional reporting by Diego Ore, Eyanir Chinea, Brian Ellsworth and Girish Gupta.
( uk.reuters.com )
Venezuela: A Dictatorship Masquerading as a Democracy
Nicolas Maduro, Venezuela’s president, recently
announced
that if the opposition were to gain a majority in the National Assembly
in elections this Sunday, “We would not give up the revolution and … we
would govern with the people in a civil-military union.” To ensure that
no one would accuse him of not being a true democrat, he
clarified
that “we would do this with the constitution in hand.” The president
conveniently ignored the small detail that the constitution does not
have any provision for a “civil-military” government, nor does it give
the government the option of disregarding the outcome of an election.
What Maduro
did stress,
however, was that if the revolution fails, “there will be a massacre”—a
threat he has repeatedly made throughout the campaign. He usually
follows such threats with reassurances that this violence will not ensue
since it is impossible for opposition candidates to win enough votes
for a legislative majority, which Maduro’s party has enjoyed for the
past 17 years.
Read more at:
http://carnegieendowment.org/2015/12/04/venezuela-dictatorship-masquerading-as-democracy/imt2
Nicolas Maduro, Venezuela’s president, recently
announced
that if the opposition were to gain a majority in the National Assembly
in elections this Sunday, “We would not give up the revolution and … we
would govern with the people in a civil-military union.” To ensure that
no one would accuse him of not being a true democrat, he
clarified
that “we would do this with the constitution in hand.” The president
conveniently ignored the small detail that the constitution does not
have any provision for a “civil-military” government, nor does it give
the government the option of disregarding the outcome of an election.
What Maduro
did stress,
however, was that if the revolution fails, “there will be a massacre”—a
threat he has repeatedly made throughout the campaign. He usually
follows such threats with reassurances that this violence will not ensue
since it is impossible for opposition candidates to win enough votes
for a legislative majority, which Maduro’s party has enjoyed for the
past 17 years.
Read more at:
http://carnegieendowment.org/2015/12/04/venezuela-dictatorship-masquerading-as-democracy/imt2
Nicolas Maduro, Venezuela’s president, recently
announced
that if the opposition were to gain a majority in the National Assembly
in elections this Sunday, “We would not give up the revolution and … we
would govern with the people in a civil-military union.” To ensure that
no one would accuse him of not being a true democrat, he
clarified
that “we would do this with the constitution in hand.” The president
conveniently ignored the small detail that the constitution does not
have any provision for a “civil-military” government, nor does it give
the government the option of disregarding the outcome of an election.
What Maduro
did stress,
however, was that if the revolution fails, “there will be a massacre”—a
threat he has repeatedly made throughout the campaign. He usually
follows such threats with reassurances that this violence will not ensue
since it is impossible for opposition candidates to win enough votes
for a legislative majority, which Maduro’s party has enjoyed for the
past 17 years.
Distinguished Fellow
International Economics Program
More from this author...
Maduro, in fact, frequently
dismisses
the very notion of an opposition victory as, in his cryptic words, a
“negated and transmuted scenario.” His self-assurance is surprising
considering that almost all
opinion polls show an overwhelming public rejection of the government in general and the president in particular. So why is Maduro so
Read more at:
http://carnegieendowment.org/2015/12/04/venezuela-dictatorship-masquerading-as-democracy/imt2