CARACAS (Reuters) – President Nicolas Maduro shook up complex currency controls on Wednesday and also prepared Venezuelans for a rise in the world’s cheapest fuel prices in response to a recession worsened by plunging oil revenue.
The socialist-run OPEC member’s economy shrank 2.8 per cent in 2014 while inflation topped 64 per cent, the socialist leader announced in a speech to parliament, in what is almost certainly the worst performance in Latin America.
With oil prices down by more than half since mid-2014, Venezuela’s economic mess has hit Maduro’s popularity hard and threatened the future of the ruling “Chavismo” movement named for his charismatic predecessor Hugo Chavez.
The 52-year-old Maduro blamed political foes for Venezuela’s dismal data, but he also announced the most concrete changes in months to try to shore up the economy.
Carefully avoiding the word devaluation and without giving much detail, Maduro said he was modifying existing complex currency controls to combat the black market for dollars while sticking to a complex three-tier model.
On the touchy subject of domestic fuel prices, Maduro said he favored a rise this year, a measure recommended by many economists to lessen distortions and boost revenue.