It turns out “God will provide” isn’t the most comforting of economic policies.
The day after Venezuelan President Nicolás Maduro rolled out a series of vague economic reforms and called on a higher power to help the country overcome crashing oil prices, opposition leaders were calling for protests and analysts were clamoring for more details.
There were hopes that Maduro’s nationally televised speech Wednesday would layout a roadmap for overcoming the economic crisis, which has included 64 percent inflation, shortages of basic goods and blood-boiling shopping lines.
Instead, it seemed to kick off a fresh round of showdowns. Pro-government demonstrations were expected on Friday and the coalition of opposition parties, known as the MUD, is calling for a march this Saturday under the banner “Empty Pots Against Hunger and for Change.”
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However, Jorge Rodríguez, a Maudro loyalist and the mayor of Libertador, which is part of greater Caracas, said demonstrators wouldn’t be allowed to set foot in his municipality. On Thursday, he reminded the opposition that similar protests in February left 43 dead on both sides of the political divide.
“We are not going to allow violent protests,” he said. “They haven’t asked for permission and we haven’t issued any permits.”
During his weekly radio address Thursday, Miranda Gov. Henrique Capriles, said the president had missed a chance to calm the nation with solid proposals.
“Were there any important announcement about how we’re going to resolve the problem of shortages?” Capriles asked. “Did you hear any announcements about how to make soap, flour or medicine appear?”
Venezuela is a hostage to oil revenue, which it needs to import goods. As crude prices have fallen below $40 a barrel, the government has had to pick and choose the products it can finance. As a result, even though Venezuela is sitting on the world’s largest oil reserves it’s having a hard time keeping toilet paper, medicine and chicken on the shelves.
During his almost three-hour speech, Maduro blamed the lines and shortages on speculation, hoarding and his political foes who he said are waging an “economic war,” but he didn’t make a strong case for how he would fight back.
While he proposed raising the country’s cheaper-than-water domestic gasoline prices, he didn’t say how high they would go or when this year that change might come. There’s good reason for caution: When the government tried to raise gasoline prices in 1989 it helped fuel the Caracazo riots that left hundreds, if not thousands, dead.
Maduro also talked about tweaking the country’s three-tiered exchange rate system. Under the new plan, the government would keep its fixed rate of 6.3 bolivares to the dollar for critical imports such as food and medicine but move other imports to a floating rate. Additionally, the black market, or parallel rate, which hit 181 to the dollar on Thursday, would essentially be legalized.
“Mr. Maduro was not responsible or brave enough to call things by their name,” María Corina Machado, a former presidential candidate, said in a statement. “He announced the biggest devaluation in our history by legalizing the parallel rate.”
Risa Grais-Targow, an analyst with the Eurasia Group, said that without more details about how much of the currency flow will be shifted to weaker rates it was hard to judge the impacts of the changes.
But she said the moves were unlikely to reduce economic distortions, “which in turn will ensure that social dynamics remain tense, and that the risk of some sort of social crisis will remain high.”
Maduro sweetened the medicine during Wednesday’s speech, announcing a 15 percent increase in wages and pensions, expanding scholarship programs and promising to build 400,000 subsidized homes this year.
All those promises come as the International Monetary Fund is predicting the economy will shrink 7 percent in 2015.
On Thursday, Ramón Guillermo Aveledo, an opposition spokesman, mocked Maduro’s claims that God would look over the economy.
“His economic policies have taken us to hell,” he wrote on Twitter, “and now he wants God to solve the problem of shortages.”