Girish Gupta

HOME

PHOTOS

ONLINE

Twitter
Instagram
IFTTT
Facebook
LinkedIn
Keybase
GitHub

BY COUNTRY

Brazil
Colombia
Cuba
Ecuador
Egypt
Guyana
Iraq
Jordan
Lebanon
Mexico
United Kingdom
Venezuela

BY MEDIUM

Text
Photo
Radio
TV/Video

BY PUBLISHER

Al Jazeera
BBC
BuzzFeed
CBC
Christian Science Monitor
CNN
Daily Mail
Datum
Ecologist
Economist Intelligence Unit
Emerging Markets
Financial Times
Foreign Policy
France 24
Fusion
GlobalPost
Guardian
Independent
La Prensa (Panama)
LatinFinance
Mancunion
Monocle
National (Abu Dhabi)
New Internationalist
New Statesman
New York Times
New Yorker
NPR
PBS
PRI
Radio France Internationale
Reuters
RTE
Sky News
Sun
Sunday Times
Telegraph
TIME
Times of London
USA Today
Vice
WLRN

ABOUT

About
CV
Contact (PGP Key)
Maduro insists that petrol prices will not be raised
Dec. 16, 2014 — Caracas, Venezuela

Published by Economist Intelligence Unit

Event

The president, Nicolás Maduro, indicated in mid-December that his administration does not intend to raise petrol prices, currently the lowest in the world, even as a steep drop in global oil prices has a marked impact on fiscal revenue.

Analysis

In an interview with a leftist former vice-president, José Vicente Rangel, Mr Maduro claimed that there is "no hurry" to raise prices. Petrol prices are kept artificially low in Venezuela thanks to generous government subsidies that have an opportunity cost of around US$12.5bn annually. Mr Maduro admitted that the issue of raising petrol prices is politically sensitive; when a previous government tried to do so in 1989, widespread rioting broke out. However, Mr Maduro did say that the cost at the pump should at least cover production costs, implying that an increase would be a pragmatic move.

The economy continues to suffer from the recent sharp decline in global oil prices. The weekly price of the country's oil basket—which is around US$7 lower than international market prices, owing to the country's heavier crude—was released on December 14th, a Monday rather than the previous Friday (as is customary), in what represents another sign of worry within the government. The basket was priced at US$57.53/barrel, below the US$60/b budgeted figure. Annual consumer price inflation, last reported in September, was running at more than 60%. The country's currency has fallen by 65% on the black market this year alone, to BsF184:US$1 in mid-December, compared to the strongest official exchange rate of BsF6.3:US$1. In the interview with Mr Rangel, Mr Maduro reiterated his plan to adjust the Sicad II exchange rate, the country's third exchange rate, which currently stands at around BsF50:US$1. However, he insisted that the strongest rate would continue to be used only for priority goods. Many Venezuelans say that they are unable to obtain dollars at the preferential rate.

These developments continue to worry investors. The government's benchmark 2027 bonds fell following Mr Maduro's interview to their lowest levels (on close) since before the former president, Hugo Chávez (1999-2013), came to power. Although the government's willingness to pay its debts appears secure, its ability to do so could come under threat unless it makes much-needed pragmatic policy reforms.

Impact on the forecast

We have made no changes to our economic forecasts at this time and will wait to do so until an official policy announcement is made by the government.

Filed from
Caracas, Venezuela






More...

Exclusive: At least 123 Venezuelan soldiers detained since protests - documents
Jul. 6, 2017


Venezuela hikes minimum wage 50 percent, effectively down 17 percent
Jul. 2, 2017


Venezuela movie actor behind helicopter attack on government buildings
Jun. 28, 2017


Fourteen Venezuelan army officers jailed in first week of protests - documents
Jun. 6, 2017


Exclusive: U.S. considers possible sanctions against Venezuela oil sector - officials
Jun. 4, 2017


Exclusive: Trump administration concerned about U.S. firms giving financial 'lifeline' to Venezuela
Jun. 4, 2017


United Airlines ends flights to Venezuela, further isolating country
Jun. 3, 2017


Venezuela sets new exchange mechanism, as currency continues to slide
May. 24, 2017


Exclusive: Venezuela holds 5,000 Russian surface-to-air MANPADS missiles
May. 22, 2017


Venezuelan opposition activists march to Leopoldo Lopez' jail
Apr. 28, 2017


Venezuela says inflation 274 percent last year, economists say far higher
Apr. 20, 2017


Venezuelan protests against government leave three dead
Apr. 19, 2017


Venezuelans return to streets, roused by ban on opposition leader
Apr. 8, 2017


Venezuelan opposition, security forces clash in anti-Maduro protests
Apr. 6, 2017


Venezuela security forces battle anti-Maduro protesters
Apr. 4, 2017








© Girish Gupta