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Venezuelan leader wraps up 'superpowers' with 28 laws

20 november 2014, 16:22
0

 Venezuelan President Nicolas Maduro wrapped up a year of congressionally granted "superpowers" Wednesday by decreeing 28 new laws that analysts said would do little to salvage the troubled economy, AFP reports.

A year ago, the Venezuelan National Assembly, which is controlled by Maduro's United Socialist Party, granted the president the power to govern economic policy by decree for 12 months, ostensibly to fight corruption and the country's sharp economic downturn.

Maduro closed out the year by signing a tax increase on luxury goods, alcohol and tobacco, eliminating inflation adjustments on corporate taxes, and tightening controls to prevent businesses from making profits of more than 30 percent.

Other measures aim to fight monopolies, expand the state's role in the gold-mining industry and increase foreign investment.

Maduro, the political heir to late socialist firebrand Hugo Chavez, announced the new laws in a TV broadcast of several hours.

But economic analysts said the measures would do little to reverse annual inflation of 63.4 percent, end the shortages of basic goods that have fueled unrest in the country, or help the ailing oil giant shore up its dwindling foreign reserves.

Venezuela holds the world's largest proven oil reserves, but is struggling to maintain an economic model in which it exports crude to allies at cut-rate prices, sells gasoline cheaper than bottled water on the domestic market, and props up the value of the bolivar with rigid exchange rate controls.

Maduro's new measures are "unfocused," said economist Luis Vicente Leon, director of consultancy Datanalisis.

"You can't use deficit compensation mechanisms that go against the heart of the problem, which is production and investment," he told AFP.

"Raising taxes on what's left of the productive economy, controls and threats won't resolve the deficit or solve the supply problem."

Maxim Ross of the University of Monte Avila's economics department said the measures "may have a short-term impact" but would not address the key issue of the exchange rate.

"You can take whatever economic measures you like in Venezuela, but if you don't touch the issue of the exchange rate, the black-market dollar, devaluation, you're not doing anything. You'll always have inflation that eats up any subsidy, any salary increase the next day," he said.


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