Venezuelan President Restructures Cabinet, Prepares Economic Adjustments

Merida, September 19^th 2009 (Venezuelanalysis.com) -- On Thursday, Venezuelan President Hugo Chavez announced structural changes to his Council of Ministers, and gave a glimpse of impending economic measures designed to increase employment, reduce inflation, and improve production amidst the world economic crisis.

Chavez created six vice presidencies to take charge of defense, politics, finance, production, social issues, and territorial development. These positions will be filled by the current Defense Minister Ramon Carrizalez, Foreign Relations Minister Nicolas Maduro, Planning Minister Jorge Giordani, Science and Technology Minister Jesse Chacon, Chief of Staff Luis Reyes Reyes, and Energy and Petroleum Minister Rafael Ramirez, respectively.

Chavez also added a permanent secretariat to his cabinet, to be headed up by former Caracas Mayor Freddy Bernal, and an administrative oversight committee "to solve routine administrative problems, make administrative tasks more expeditious, and continue the fight against bureaucracy and delays," he said.

"This is part of the self-criticism that we have been carrying out in the heart of the high levels of government," Chavez explained. He added that the purpose of the structural changes is "to convert the Council of Ministers into a political entity and not merely an administrative entity," and "improve cohesion."

Economic Measures

In an eight-hour meeting on Thursday, Chavez and his cabinet discussed a series of economic measures that will be announced in greater detail in the coming days.

One of the measures will be an "extraordinary plan for employment" aimed at quickly producing jobs through investments in the agricultural and construction sectors to lower unemployment, which rose from 7.8% to 8.5% last month.

To increase liquidity on the domestic market, the government will increase the amount of dollars it issues to small and medium-sized importers at the regulated exchange rate of 2.15 bolivars to the dollar, and sell $5 billion worth of domestic bonds, Chavez told the press on Thursday.

This follows recent announcements by the head of the Central Bank, Nelson Merentes, that the government was studying methods of lowering the price of dollars on the informal market, where they are sold for as much as seven bolivars, as a means of lowering overall inflation.

The funds necessary for these measures were made available by the recuperation of Venezuela's dollar reserves to approximately $34 billion so far this year as a result of the increase in the price of oil, Venezuela's principal export. This is $10 billion more than the amount of reserves that the government had predicted it would have at this time, Chavez said.   

In its first round of economic adjustments in reaction to the world crisis last March, the Chavez administration reduced its overall budget by 6%, adjusted the estimated average price of oil from $60 to $40 per barrel, increased its domestic debt, raised the sales tax from 9% to 12%, cut unnecessary government spending, and maintained social spending.

Re-launch of Missions

In addition, Chavez said his government plans to revamp and reorganize the well-known social programs known as "missions," which provide educational, health, nutrition, and other social services, and are managed by the national government.

Over the course of the coming months, Venezuela's missions will be united into one, overarching "system of missions," with organizational assistance from the coordinators of Cuba's system of social services.

Chavez said nearly 2,000 additional doctors who studied social medicine in Cuba will arrive in early October to serve low-income communities through the Barrio Adentro mission, which has expanded access to basic health care to nearly all Venezuelans since its founding nearly six years ago.

The president urged Venezuela's tens of thousands of communal councils to assist in the revitalization of the missions. "On October 8^th the new wave of Barrio Adentro will begin and the communal councils starting now should reactivate themselves and commit themselves to this re-advance," said Chavez.

October 8^th is the 42^nd anniversary of the assassination of the Argentine doctor and leader of the Cuban revolution, Che Guevara, after whom a Venezuelan social mission dedicated to the instilling of socialist values is named.

Published on Sep 19th 2009 at 4.04pm