New Venezuelan Finance Minister Promises No Financial Policy Shift

Mérida, June 17, 2008 (venezuelanalysis.com)— Ali Rodríguez, the new finance minister that President Chavez appointed last Sunday, promised to hold the course in financial policies as he took over his new post on Tuesday. Rodríguez is a former Secretary General of OPEC and has held numerous important posts in the Chavez government, such as Foreign Minister and PDVSA President.

“Alí Rodríguez is going to be the new Finance Minister … He is a man of great experience, honesty. Wholly and truly revolutionary,” Chávez declared on his weekly Sunday talk show Aló Presidente.

Rodríguez will replace Rafael Isea, who was nominated by the United Socialist Party of Venezuela (PSUV) to run for governor of the central Venezuelan state of Aragua in the regional elections scheduled for November 23rd.

“The process and the revolution require that [Isea] assume another responsibility, this time in the state of Aragua,” Chávez commented on Isea’s candidacy.

Upon relinquishing his position as minister, Isea proclaimed, “the public bank is in much better condition for the fulfillment of its function, however the path ahead is very long, a lot is lacking in order to move forward.”

Isea said that as minister he had successfully generated liquidity of funds for the National Development Fund (FONDEN), a principal financier of the government’s extensive network of social programs.

Also, Venezuela has “more solid banks with greater capacity, we have now bought a new technological system that will be installed in [the Social Development Bank] BANDES and the Industrial Bank,” Isea said.

Rodríguez, upon assuming his new role as Chávez`s ninth finance minister, announced that no more changes to federal policy are planned at this time. “There are no changes of great significance beyond, for the moment, substituting one dear companion for another perhaps not so dear companion,” said Rodríguez, self-deprecatingly.

Rodríguez affirmed his “commitment to move forward and solidify what has already been achieved, and advance toward new achievements with the objective of exalting Venezuela,” as long as these achievements are coupled “with a just system of distribution of the growth.”

Rodríguez takes charge of the ministry in the wake of President Chávez’s recent economic stimulus initiatives and invitation to private business owners to “become partners” and “make alliances with the state.”

The specific initiatives announced last Wednesday include increased agricultural subsidies, the elimination of taxes on financial transactions, the creation of 200 new "socialist" factories, and a $1 billion investment fund for "strategic" sectors of the economy such as food, energy, manufacturing, and housing.

"The efforts that are being put forward [by the government] must contribute to the achievement of greater development, which cannot be just the objective of the state, but must also be the fruit of Venezuelan society, which also includes the private sector," said Rodriguez upon taking office. 

Rodríguez is also left to decide whether to carry out Isea’s plans to purchase $1.5 billion in foreign debt.

Venezuelan opposition leaders say the minister switch is mainly an electoral strategy for the PSUV and that Rodríguez’s appointment will not improve the government’s financial policies.

The national coordinator of the opposition party Movement Toward Socialism (MAS), José Antonio España, called the recent minister appointment “Operation Recycling,” referring to the fact that Rodríguez has held several government posts since Chávez was elected to his first term in 1999.

“New ideas, new concepts, and audacious measures are needed in the economic arena,” said España, who also criticized Chávez for announcing the recent economic measures without dialoguing with opposition groups first.

Rodríguez previously served as the Venezuelan Energy and Mining Minister, the President of the state oil company PDVSA, the Venezuelan Foreign Relations Minister, the Venezuelan Ambassador to Cuba, and, most recently, the regional director of the PSUV in the Andean region of western Venezuela. Rodríguez was also a guerrilla rebel in Venezuela during the 1960s.

The Venezuelan economy grew 4.8% in the first quarter of this year. This marked its 18th consecutive quarter of economic growth, but was a noticeable drop from the 8.8% growth registered in the first quarter of 2007. Inflation was 22.5% last year and 8.9% in the first quarter of this year, and interest rates were adjusted in February to combat inflation by encouraging saving and investment.

"This year the economic growth rhythm of the country has not been the same [as in previous years] and that has to do with the world economy, mainly the United States and Europe," said Rodriguez on Tuesday. "We have an economic growth of above 4%," he added, while also saying that by the end of the year this could be higher.