Maduro's economic reforms fail to convince Venezuelans

Venezuela's President Nicolas Maduro speaks during an agreement-signing ceremony of the Venezuelan state oil company PDVSA, in Caracas, Venezuela on Aug 28, 2018.
Venezuela's President Nicolas Maduro speaks during an agreement-signing ceremony of the Venezuelan state oil company PDVSA, in Caracas, Venezuela on Aug 28, 2018.PHOTO: REUTERS

CARACAS (AFP) - President Nicolas Maduro has launched a raft of economic reforms aimed at injecting life into his country's dying economy, but Venezuelans aren't convinced and continue to flee in the thousands.

Among the bare supermarket aisles and pharmacy shelves, interminable bank queues to withdraw scarce cash and buses that have grounded to a halt, the feeling of disillusionment, incredulity and haplessness is palpable in the streets of Caracas and beyond.

"It's a disaster, we don't have basic foods. The measures are pure lies, they'll bring more hunger and unemployment," 34-year-old doctor Marielsi Ochoa told AFP.

Shelves are filled with cleaning materials and fizzy drinks but meat, chicken, eggs and corn flour - what used to be the Venezuelans' staple diet - have disappeared.

Maduro's government has been busy recently, trying to generate capital and reverse the recession and hyperinflation that have gripped a country in which the International Monetary Fund is predicting inflation will reach one million percent this year.

The minimum wage got a 3,400 per cent increase, while the currency was redenominated - removing five zeros - devalued to the tune of 96 per cent and fixed to the value of Venezuela's largely discredited cryptocurrency, the petro.

There's also been an increase in the value added tax (VAT) and reduced petrol subsidies - Venezuelans pay the lowest prices in the world for fuel.

But experts say this won't solve the greatest economic crisis in Latin America's recent history.

"I cannot see how Maduro's latest financial package can possibly address the huge inflation problem confronting Venezuela," said Peter Hakim, president emeritus and a senior fellow at the Inter-American Dialogue think-tank.

'Not coherent'

David Smilde from the Washington Office on Latin America said Maduro's "plan is not coherent." One of the main problems centres around the new bolivar being anchored to the petro, "which is backed by oil, which is itself calculated in dollars," said Smilde.

"This by itself could work, since one necessary task for getting out of hyperinflation is to emit a new currency."

However, Hakim said that in reality "the new currency has no backing beyond Maduro's rhetoric: no dollars, no gold, no increase in oil earnings, no nothing!"

Some experts have described the petro as nothing more than a tactic to circumvent US economic sanctions that Maduro blames for his country's woes.

Jesus Gonzalez, a 58-year-old bricklayer, said the "sacrifice" of standing in line for hours waiting to withdraw the daily limit of 20 bolivars from a cash point is barely worth it.

"It's not enough for anything," he said. That sum will just about buy a cup of coffee.

"I'm no economist, but Maduro's measures seem to be the same song with a different chorus," he added.

Hundreds of thousands of Venezuelans have given up hope of seeing normality or stability return to their country and have joined the southward exodus through Colombia and on to Ecuador, Peru, Chile and even Argentina.

Many have travelled thousands of km, mostly on foot, carrying just a bundle of clothes and often forced to sleep outside in the street.

'You've got to go'

Genesis, a 27-year-old lawyer, hopes to soon cross with her husband and three-year-old daughter into Colombia where she has a promise of work as a waitress.

"I don't have enough to buy the child her school uniform. Everyone around me is saying: 'You've got to go,'" she told AFP.

According to the United Nations, some 2.3 million Venezuelans live abroad, of which 1.6 million have emigrated since 2015.

Hakim can see no end to the exodus.

"How can ordinary people remain in Venezuela with massive food shortages, medicines and medical care virtually unavailable, jobs scarce or badly paid, schools without teachers, escalating crime rates and no signs of relief?" he asked.

Maduro's socialist government insists the reforms will work this time and brands the exodus a "right-wing campaign."

On Monday, the government flew 89 Venezuelans back home from Peru where it said they had suffered "xenophobia" and "harassment."

"Stop cleaning toilets abroad and come live in the fatherland," Maduro said on Tuesday evening at a ceremony in which he signed agreements with foreign oil firms to boost oil production by a million barrels a day.

OPEC says it stands at 1.5 million barrels a day, way down from 3.2 million in 2008.

In another reform, the banking regulator Sudeban said Venezuelans sending remittances back home must do so through authorised currency traders, not between private parties, and thus pay taxes on these transfers.

Earlier this week Maduro ordered banks to adopt the petro as a unit of account and launched an offer of bonds backed by gold bullion in a bid to inject optimism into the public.

"It will be the most appealing Christmas gift," he said of the bonds, due to be rolled out in two weeks, and backed by miniature gold ingots that come in pieces of 1.5 and 2.5 grams (0.05 and 0.09 ounces.)

"This is another farce," said Laura Lopez, a 64-year-old housewife who is weighing leaving the country as well.

Industrial output in Venezuela has dropped dramatically to just 30 per cent of its capacity.