Nov. 20 (Bloomberg) -- Venezuela’s President Nicolas Maduro received authority to pass economic laws without congressional approval, a move the opposition says will increase the harassment of businesses and attacks on political rivals ahead of local elections.
The national assembly approved yesterday the so-called enabling law by a three-fifths majority, granting Maduro the power for one year to enact laws, such as limits on profits, without the oversight of congress.
“I requested this enabling law for a hair-raising offensive against corruption,” Maduro told a crowd of supporters outside the presidential palace in a televised speech last night. “With this law I’ll keep prices down, where they need to be,”
Maduro acquired for the first time the same power his late predecessor Hugo Chavez relied on for a third of his 14 years in office to nationalize companies, create taxes and increase labor rights. Maduro said he will use decrees to protect the people from the “parasitic bourgeoisie,” which he accuses of hoarding goods and overcharging customers.
He will pass populist measures to regain support that has been eroded by the fastest inflation in the world ahead of local elections scheduled for Dec. 8, David Smilde, a sociology professor at the University of Georgia, said.
The government “is seeking once again scapegoats to blame for their own mistakes,” the opposition coalition, led by former presidential candidate Henrique Capriles, said in an e-mailed statement. “The government is trying to deviate attention from the serious economic crisis that is hurting Venezuela.”
The proportion of Venezuelans that perceive the economic situation as negative rose about 20 percentage points to 72 percent since April, Barclays Plc said in a Nov. 12 report, citing a Datanalisis poll taken from Sept. 23 to Oct. 2. The margin of error wasn’t provided.
Inflation in Caracas soared to 54 percent in the 12 months through October, the fastest pace in 16 years. A lack of dollars has led to shortages of everything from flour to car parts in a country that imports 70 percent of the goods it consumes.
Maduro said Nov. 18 he will initially use the law to control profit margins across the economy. He said price regulators backed by military inspected more than 1,000 businesses, forcing 99 percent to lower prices.
Profit margins will vary between 15 percent and 30 percent, depending on the sector, Maduro said yesterday. Companies that can operate with reduced prices were “sustainable and viable,” he said.
“We’ll achieve an economic miracle this century,” Maduro said.
Venezuela’s army occupied this month an electronics chain to enforce price reductions ordered by Maduro. He said Daka stores were overcharging customers by as much as 1,200 percent.
Carmaker General Motors Co. suffered the maximum fine of 535,000 bolivars ($84,921) yesterday for allegedly selling parts at excessive prices. Press officials at the company were unavailable for comment.
The yield on Venezuela’s benchmark bond due in 2027 rose 64 basis points since Daka’s occupation order to 13.48 percent at 9:10 am in New York today.
The opposition coalition, known as MUD, voted against the enabling law it said will be used to criminalize opponents.
“Maduro can now put out laws behind closed doors, without consulting the opposition or his own coalition,” said Smilde. “From a democratic perspective it’s undesirable, because it reduces the public’s ability to oversee and counteract what the government wants to do.”
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