CARACAS (Reuters) - President Nicolas Maduro vowed on Tuesday to reform Venezuela’s Byzantine currency controls in early 2015 as part of a six-month plan to shake Venezuela out of recession, but foes accused him of incompetence and inaction.
After sitting on GDP data all year, the Central Bank announced that OPEC member Venezuela had entered recession, with the economy contracting in each of the first three quarters: by 4.8, 4.9 and 2.3 percent, respectively.
Confirming Venezuela as the region’s worst-performing major economy this year, the bank also said 12-month inflation reached 63.6 percent in November, the highest rate in the Americas.
Maduro, 52, who won election last year to replace his socialist mentor Hugo Chavez, blamed political opponents for damaging the oil-dependent economy with months of street protests earlier this year.
Maduro vowed to head up a six-month plan to turn around the economy in 2015 by reducing inflation-inducing liquidity, boosting international reserves, cutting unnecessary costs, and reforming the three-tier foreign exchange system.
“We are going to perfect the currency system,” he told a news conference, without giving much further detail on that or the other measures. “2015 will be a year of economic recovery ... great economic transformation.”
Opponents quickly slammed Maduro’s comments as devoid of detail and real solutions for the ailing economy.
“Yet again, no announcements. He doesn’t know what to do,” opposition leader Henrique Capriles fumed. “Today makes clear to all Venezuelans that with Nicolas we will not escape the chaos.”
Venezuela, whose last recession was from 2009-2010, has been handicapped by the plunge in oil prices. Venezuelan crude, which provides 96 percent of hard currency revenues, has halved from mid-year to $46 per barrel.
Venezuela's central bank had not published inflation data since August. The figures released on Tuesday put September inflation at 4.8 percent, October 5.0 percent and November 4.7 percent, compared with the same months of 2013. ( here )
The bank said opposition demonstrations during the year had disrupted both distribution and production, causing an inflationary spike and the GDP decline.
The demonstrations sparked Venezuela’s worst political violence in a decade. Forty-three people, including protesters, security officials and Maduro backers, died.
Chavez-era welfare policies have long been popular among Venezuela’s poor, and the bank said social indicators were all improving despite the poor GDP data.
It said extreme poverty was down to 5.4 percent of households in 2014, half the level before Chavez came to power, while unemployment fell to 5.9 percent.
“Despite the protests and economic war during 2014, Venezuela’s economic indicators have improved,” Maduro said.
“This economic war, this fall in the oil prices, is a great opportunity for economic change. 2015 is the year of opportunity, for great change in the economic model.”
Many analysts have been recommending a unification of Venezuela’s currency controls and a rise in gasoline prices that are the cheapest in the world. But Maduro has balked at such measures so far, perhaps wary of a social backlash prior to a crucial vote for a new parliament next year.
Russ Dallen, head bond trader at investment bank Caracas Capital Markets, said he counted Maduro using the phrase “economic war” 63 times during Tuesday’s news conference.
“The speech was long on excuses and short on adjustments,” he said. “If Maduro had a million dollars for each of his excuses, Venezuela’s economic problems would be solved.”
The central bank said Venezuela’s balance of payments posted a surplus of $6.8 billion by the end of the third quarter, with a current account surplus of $899 million, and the capital account showing a deficit of $568 million.
Venezuelan exports, of which oil accounts for more than 90 percent, fell 14.2 percent to $19 billion in the third quarter, while imports were down slightly, by 1.4 percent, to $12.2 billion in the same period.
Additional reporting by Eyanir Chinea and Diego Ore; Editing by Peter Murphy and Andrew Hay