World Economy

Call for Reforms to End Misery in Venezuela

Call for Reforms to End Misery in VenezuelaCall for Reforms to End Misery in Venezuela

As Venezuela’s economy sinks deeper into depression with a fourth consecutive year of recession to go along with hyperinflation, some ruling socialist party members are raising their voices to call for reforms.

A closed-door debate is occurring inside the country’s all-powerful constituent assembly, the body stacked only with pro-government lawmakers created in August to sideline the opposition-controlled congress, on what to do with the economy, Bloomberg reported.

While the final word is with President Nicolas Maduro and his inner circle and the majority believe the blame for the country’s ills lie with the private sector and the US, it’s becoming harder to ignore calls from the streets to address the widespread misery regardless of the origin.

Perhaps one of the loudest voices calling for change is Jesus Faria, a former trade and investment minister who’s now a member of the constituent assembly. He has been urging the government to permit a free-floating exchange rate where the forces of the market set the best price for the bolivar, the country’s currency.

While he believes other stronger and subsidized exchange rates to shield the poor should be kept, it’s an odd public posture for a self-proclaimed Marxist economist.

“We cannot delay changes to the foreign currency policy any longer,” Faria, 53, said in an interview in downtown Caracas. “A truly free exchange market has to be established, where supply and demand meet to fix the price.”

Venezuela currently has an official rate for priority imports of 10 bolivars per dollar which is largely reserved for government institutions or close allies of the regime. Another central bank auction market which has been essentially paralyzed was selling dollars to some at 3,345 bolivars to one dollar, while the free-floating street rate has shot up to more than 96,000 from just 4,500 a year ago.

Since taking over for the late Hugo Chavez in 2014, Maduro has resisted calls to devalue the official rates or significantly cut subsidies on everything from gasoline to utility rates and has become infamous for saying he’s going to make important economic announcements without actually following through. While he added denominations of new bills of as large as 100,000 bolivars, it’s done nothing to address the problems.

The most significant economic adjustment he’s taken in order to save dwindling cash for debt payments was to curtail imports for everything from food to medicine and capital goods which has in part been reflected in his approval rating of around 25%. Still, he’s managed to divide the opposition even further and use his influence over all levels of government to increase his power.

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