You didn’t need to hear President Maduro’s equivalent of our State of the Union address to know that the state of Venezuela’s union is grim indeed. The country can no longer afford its expensive social programs that hark back to the days of $100 oil. But Maduro is struggling to curb these wildly inefficient programs, like fuel subsidies, that enjoy massive popular support. Enter the bizarre financial netherworld of a triple-exchange rate, a symptom of Venezuela’s larger political dysfunction. Reuters reports that Maduro is going to tweak the system in a “seeming devaluation of the currency” (though he won’t abandon the triple rate), while also attempting to tackle the fuel prices:
Under pressure over the OPEC member’s recession, product shortages and plunging oil revenues, Maduro has opted to keep a complex three-tier currency control system, though bands have been shifted to ensure more dollars are sold at higher levels.In an annual speech to parliament on Wednesday night, Hugo Chavez’s successor also bit the bullet on the politically-sensitive subject of fuel prices, currently the cheapest in the world, saying a rise was inevitable this year. […]But without price specifics on either, or any major structural changes to the socialist model, Maduro’s critics said he had not done enough to rescue a shrinking economy and combat shortages plaguing Venezuela’s 30 million people.
Venezuela’s economy was in crisis even before the drop in oil prices, but now the country is reaching Soviet levels of dysfunction. A sign of the times: Just like in the old USSR, waiting in line is now a paying job.