Maduro: Universal Welfare Aim of Venezuela’s Socio-Economic Model

Mérida, 1st May 2014 (Venezuelanalysis.com) – Venezuelan president Nicolas Maduro announced new initiatives yesterday to address current economic problems, stating that guaranteeing the population’s universal welfare is a key aim behind policymaking.

The announcements come amid renewed focus on the country’s economic problems, principally an overvalued currency, shortages of some basic foodstuffs, and annual inflation of 57%.

Opponents of the Maduro administration blame government “mismanagement” for the situation. They say that insufficient dollars have been granted to companies through currency-exchange controls for imports and production, which has provoked scarcity and inflation.

However the government has pointed to companies engaging in currency exchange fraud, hoarding of goods, reduced production, price speculation, and contraband activities, arguing that a form of economic “sabotage” is being carried out against it.

Nevertheless Maduro recognised recently that problems with “bureaucracy”, “priorities” and a “lack of monitoring” had at times hindered economic policy-making and implementation.

Despite the economic problems and current low to negative growth forecasts, poverty continued falling last year and unemployment is a seasonal low of 7.2%. The country was also one of fifteen recognised last summer by the UN Food and Agriculture Organisation (FAO) for making “exceptional progress” toward eradicating hunger and malnutrition, praise which was reiterated again by the organisation last month.

Yesterday Maduro inaugurated the first of a series of new state-run food outlets geared specifically to workers. The new store, called PDVAL Obrero (PDVAL Worker) will sell over 20 basic foodstuffs at regulated prices directly to 9.000 Caracas metro workers and their families in a bid to ensure the goods are not lost to contraband or other criminal activities.

The Venezuelan president revealed that the government had made an “extraordinary investment” of 56 billion bolivars (US $8.9 billion) in boosting food production and importation over the previous year, which sought to “guarantee food security to the Venezuela that works, and which has been submitted to a bestial and brutal economic war”.

Other policies implemented by the government to combat existing problems include reforming currency controls, cracking down on contraband, combating hoarding and price speculation, and introducing a new electronic card for purchases in state-run supermarkets.

This weekend consumer protection officials are set to “comb the country” to ensure commercial outlets are not flouting price controls on basic goods and charging speculative rates to the public.

Maduro said to workers and press yesterday that he hopes current policies will help establish a “balance” between “production, supply and fair prices” which will defeat problems such as “induced inflation”.

The president emphasised that his government’s policymaking is geared towards the universal welfare of the population. He said that housing, food and social security programs for workers should operate in a complementary manner with national public health, education, welfare, house building, social and cultural programs.

“There never used to be social justice, there was never attention given to workers or the poor, never. This changed when the giant [former president] Hugo Chavez arrived,” Maduro said.

Yet national and foreign private companies continue accusing the government of not authorising them access to sufficient amounts of dollars through official currency exchange mechanisms, hindering their economic activities.

Earlier this week the Polar Group, Venezuela’s largest food producer, announced that it was temporarily closing its pasta processing plant in the city of Maracaibo, citing a lack of access to foreign currency to import durum wheat.

Meanwhile foreign airlines have accused the government of not honouring agreements to convert ticket sales made in bolivars into dollars, claiming that the government owes airlines a total debt of $3.9 billion in pending currency conversions.

According to the International Air Transport Association (IATA), half of the 24 foreign airlines that operate services to Venezuela have cut the frequency of flights to the country, the latest being Alitalia.

The Venezuelan government has met regularly with both airlines and national companies over currency issues, and previously offered airlines a deal to cancel the debt through mixture of cash, bonds and fuel.

In an interview earlier this week, Vice President of the Economy Rafael Ramirez stated that one of the reasons for Venezuela’s economic problems was that the currency exchange system had become “compromised”, with currency fraud and speculation sending the black market value of the dollar spiraling.

The controls have been in place, with modifications, since 2003, and are designed to prevent capital flight and give the government control over the distribution and spending of income from oil sales.

Ramirez said the government is “working hard” to resolve the economic situation. Earlier this year currency controls were overhauled, and a more flexible tiered system partially based on “market demands” was introduced.