Merida, January 16, 2019 (venezuelanalysis.com) – President Nicolas Maduro made a series of announcements during his Annual Address Monday, including adjustments to various economic policies as the government looks to slow hyperinflation and turn around a five year recession.
Measures included a quadrupling of the minimum wage, as well as extra funding for agriculture and transport. He also set various targets for his 2019-2025 mandate, including raising oil output to 5 million barrels per day and building 5 million social houses.
The four hour speech was delivered to the National Constituent Assembly (ANC) and streamed on live TV and radio. Four of Venezuela’s five independent powers of state were present, with the legislative branch refusing to occupy their seat in the Legislative Palace having declared Maduro’s mandate to be illegal.
Maduro reviewed the government’s measures in 2018 and also presented the new six-year Homeland Plan for the 2019-2025 period. The Plan, he emphasised, is a continuation of the Bolivarian policies of his predecessor Hugo Chavez.
“The backbone of this plan was elaborated by Commander Chavez in the period 2013-2019, and to add to this backbone we have had a national debate with more than 30,000 proposals,” he told the nation.
Wages, taxes, and oil privatisation?
In one of the key announcements, Maduro devalued the the exchange rate between the Bolivar (BsS) and the Petro cryptocurrency (Ptr) from 1 Ptr = 9,000 BsS to 1 Ptr = 36,000 BsS.
As such, Venezuela’s minimum wage, which is fixed at half a Petro, rose from 4,500 BsS to 18,000 BsS (US $21 at the official rate, US $6 at the parallel market), in what Maduro described as efforts to protect workers’ salaries in the face of hyperinflation. This is the second adjustment of the Petro-Bolivar exchange rate since August’s monetary reconversion, which together have seen the Bolivar lose 90 percent of its value.
In other areas, Maduro asked the ANC to review tax rates for “fortune” owners, and new funding was announced for 2019’s national crop plan worth €1 billion, which has the goal of cultivating 3.33 million hectares of land, of which 100,000 is urban, and producing 25.8 million tonnes of food. Increasing food production is considered key to overcoming the country’s economic woes by analysts across the political spectrum.
In the oil industry, Maduro announced a target of not only stabilising falling production levels, but raising them from the current 1.137 million bpd to 5 million bpd by 2025. Previous government pledges to raise production to 2 million bpd by the end of 2018 have not materialised as production levels continue to fall.
“We have to revert this fall in the oil sector, which has been paralysed by mafias, rotting it from inside,” the President stated. “What we need to do is to produce wealth in our country to push forward the diversification of our economy,” he continued, promising to “personally take over the handling of the oil industry.”
As part of his plans, Maduro announced that he will be welcoming foreign investment into both the oil sector and other public or state-run firms which are working below capacity. Likewise, Maduro promised a “shake up” in these industries, which will look to root out corruption, inefficiency, and other vices.
The Venezuelan president also addressed criticisms that there is a privatising tendency taking hold, stressing his policy is a pragmatic choice.
“We are not going to privatise [...] I am not a privatiser, but I am also not obtuse. If I manage to bring international capital to recuperate our firms shouldn’t I?” he added, mentioning possibilities of Russian, Chinese and Turkish investment.
Social programs and communal organisation
In the social area, Maduro reinforced a number of achievements during his past mandate, describing 2018 as “a year of resistance.”
Government social spending has been kept around 75 per cent of the budget, he explained, with 11 new universities created, the Housing Mission reaching 2.5 million social houses built and another million more repaired, and a million children enrolled in the El Sistema of Youth Orchestras. Both the Housing Mission and El Sistema figured in Maduro’s planned expansion in social coverage during his next term, with targets set for 5 million houses and two million children in the musical program. He also vowed to have a vaccination plan achieving 100 percent immunisation by the end of next year.
Regarding the Local Committees of Food Production and Supply (CLAP), which attend to six million Venezuelan families, Maduro ordered an expansion of the highly subsidised program to supply households regularly every two weeks. Currently, some communities receive the CLAP produce every three to four weeks, but other areas receive it with much less frequency.
Regarding the construction of communes, Maduro recognised the work done in his previous mandate which has seen 3,054 communities and communal councils organise themselves into the superseding bodies. He called on community leaders to push towards the goal of 8,000 communes by 2025 and encouraged them to organise themselves into “communal cities” with the support of elected Mayors and Governors, whom he urged to dedicate one day a week to the issue.
“The commune is the defining unit of the Venezuelan path towards socialism,” Maduro stated.
Maduro also unveiled a the new “Beautiful Venezuela” Mission, which will look to improve the aesthetics of fifty Venezuelan cities over the next six years. The crisis has seen public services, such as garbage collection and infrastructure deteriorate, especially in large urban centres, hindering the development of diversifying income sources such as tourism.
Transportation is another area that has been severely affected by the crisis, and the president announced the incorporation of 2,000 new bus units and the reparation of 2,000 others, as well as plans to expand or reactivate both public and private transport routes in urban centres.
‘Interim presidents’ and the political challenge
In reference to recent political manoeuvres by Venezuela’s US-backed right wing opposition, President Maduro reaffirmed his constitutional right to rule, stressing the free and fair nature of the presidential elections last May as well as reaffirming his commitment to dialogue.
He went on to mock the pretensions of the President of the National Assembly, Juan Guaido, who proclaimed himself “interim president” last week and who is rallying international support for his unconstitutional claim.
The National Assembly, which continues to be “null and void” since 2016 due to administrative irregularities, has refused to recognise Maduro as the legitimate president following his swearing in for the new term last Thursday. On Tuesday the body approved a motion claiming to invoke article 233 of Venezuela’s Constitution, which establishes what happens should an “absolute power vacuum” be declared, as well as how and by whom this may happen.
“Let them activate 233, 215, activate anything you want, because President Maduro is going to continue ruling here alongside the people,” Maduro stated defiantly, once again referring to the 35-year old right wing politician as a “young immature kid.”
Maduro's full speech from January 14 (Luigino Bracci Roa)