Venezuelan President Nicolas Maduro has stated he will take “the most radical measures to protect our people’s economy” as a deadline for businesses to adhere to new price controls approaches.
“We will expropriate whatever needs to be expropriated,” the president said during a speech in Caracas amid commemorations of the 22nd anniversary a 1992 failed coup d’état. The coup was led by Maduro’s predecessor, Hugo Chávez. Although he served prison time for the insurrection, Chavez’s popularity was bolstered, and he went on to win the 1998 presidential elections by a landslide.
Maduro has pledged to continue the socialist revolution started under Chavez. “I’m determined to make an economic revolution. Nobody, nothing will stop me,” Maduro added.
New Price Controls
During his address on Tuesday, Maduro declared that businesses have until 10 February to fully comply with new price controls.
The Law for the Control of Fair Costs, Prices and Profits came into effect nationwide on 23 January, but businesses were given a grace period to adhere to the new controls. Under the law, profit margins are restricted to a maximum of 30%, though specific regulations vary between sectors, products and geographic areas. The law also imposes new penalties for economic crimes such as hoarding and price speculation – both of which are punishable by up to a decade imprisonment.
Three new offences are also added under the law: economic destabilisation, unauthorised resale of certain products and a new category of corruption.
Other offences listed under the law include usury, product tampering, price tampering, smuggling and speculation.
Maduro urged the private sector to voluntarily comply with the new law by self-regulating prices.
“Next Monday, if companies are found violating the fair prices law, I will implement the most radical measures [yet],” the president warned.
However, within hours of the speech Venezuela’s largest commercial lobby group declared it’s planning a legal challenge to the new law.
Venezuelan Federation of Chambers of Commerce (Fedecamaras) president Jorge Roig stated that the law imposes undue restrictions on businesses.
“Not only it is unconstitutional, but also makes the situation of the country dramatically worse,” Roig stated, according to conservative newspaper El Universal.
“In a meeting of the board of directors, it was unanimously decided to take legal actions to request the annulment of the Law on Costs and Fair Prices,” he said.
Colombia and Venezuela cooperate to “crush” smugglers
Along with warning businesses, during his speech yesterday Maduro also declared that a “shock” plan would be launched to tackle smugglers.
“The Bolivarian National Armed Forces will continue to be deployed throughout the country, confronting the economic war that we have been attacked by since 2013,” Maduro stated.
The Venezuelan head of state said he is committed to ending “this problem that is affecting all of us Venezuelans”.
In the morning before his speech security forces uncovered a smuggler’s “warehouse with thousands of products, food and blankets” near the Colombian border, according to Maduro.
“The boss who was responsible has been arrested, and will pay with 14 years in prison,” Maduro stated.
30 tonnes of contraband flour and 110,000 litres of diesel fuel were also seized this week in the border state of Zulia, according to local police.
In a press release issued today, Zulia state deputy police chief Cesar Augusto Martínez stated the contraband was found in a municipality south of the state capital Maracaibo.
“It’s assumed that the fuel would have been transferred to a neighbouring country,” Martinez stated.
Tomorrow the government will meet with Colombian authorities to discuss strategies to counter smuggling on the shared border.
Maduro has stated he hopes to see the meeting produce tougher new measures to “crush the smugglers”.
Earlier this week the head of the National Assembly (AN) Diosdado Cabello stated that between 30 and 40 percent of Venezuela’s imported and domestically made food products are smuggled to Colombia.
“A bottle of water costs Bs10 in Venezuela, while when it goes to Colombia it costs Bs600,” Maduro said yesterday.
The president has labeled smugglers part of an “economic war” that he says is driving inflation and scarcity of consumer goods.
Products ranging from corn flour to dish washing soap have been scarce in some parts of the country in recent weeks.
Business groups including Fedecamaras have blamed currency controls for the shortages, claiming the government isn’t supplying out enough foreign cash for imports.
However, last week Maduro announced a government initiative to streamline imports.
The Estado Mayor de Abastecimiento (Supply Command) is an administrative task group mandated with overseeing improvements to Venezuela’s import process. Its members include the ministers of agriculture, food, industry, economics, finance and the head of the new consumer protection body, the National Superintendency for the Defence of Socioeconomic Rights (Sundde).
“The Supply Command will be installed to coordinate plans and actions needed,” Vice President Jorge Arreaza tweeted on Monday.
SICAD cancelled this week
Maduro has also pledged to increase access to dollars for industries through the Complimentary System of Foreign Currency Acquirement (Sicad).
Although the government tightened access to official rate currency in January, Maduro stated that double the amount of cash would be offered this year in the government’s weekly Sicad dollar auctions.
Sicad has held regular currency auctions since last year, offering foreign currency at a rate of around Bs11.30 to the dollar, according to the latest figures. US$220 million was set to be up for offer at this week’s auction, until it was unexpectedly cancelled by the central bank yesterday.
“This determination owes to a series of anomalies and noncompliance with required procedures, which were detected after an exhaustive review of the orders,” the central bank stated in a brief press release.
No further details of the cause of the cancellation were provided.
Suppliers of paper and timber products, chemicals, pharmaceuticals, textiles and footwear had been invited to participate in this week’s auction.