Venezuela Replaces Economy Vice President in Reform Setback

Oil Minister Rafael Ramirez was named Venezuela’s new vice president responsible for the economy, taking over from Nelson Merentes, who had made efforts to improve ties with the business community.

The changes will take effect immediately, according to a decree signed by President Nicolas Maduro published in the official Gazette distributed today. While Merentes will remain as finance minister, Ramirez will take over an economic team that is battling the world’s highest inflation rate and shortages of staple goods.

Merentes had tried to move Venezuela closer to a full market economy, Barclays Plc said in a note to clients on Aug. 14. Since becoming finance minister in April, he had started new dollar auctions, met foreign investment bankers and talked to more than 5,000 businessmen in a bid to tame inflation and ease shortages. By contrast, Ramirez told reporters on Oct. 4 that private industry has “all the responsibility for everything that is happening in the economy.”

“I think the replacement of Merentes as economy VP is a setback for pragmatism and dialogue with the private sector,” Benjamin Ramsey, an analyst at JPMorgan Chase & Co., said by phone from New York today. “The market already had the view that Merentes was losing influence.”

Spokesmen for the finance and oil ministries didn’t reply to phone messages seeking comment. Ramirez has overseen South America’s largest oil industry since 2002.


Maduro has struggled to curb inflation and shrink the record gap between the official and black-market currency exchange rates since winning election in April following Hugo Chavez’s death. The former bus driver has instead blamed the economic woes on “sabotage” by capitalists and meddling by foreign powers, expelling three U.S. diplomats last month.

The president has said he will ask the national assembly today for powers to rule by decree to battle corruption and implement economic changes.

These changes will go ahead regardless of the replacements in the president’s economic team, Tamara Herrera, chief economist at Caracas-based financial research firm Sintesis Financiera, said by phone today.

The price of Venezuela’s credit default swaps, which insure investors against default, rose at the fastest pace in the world today to reach 992.6 basis points at 10:45 a.m. in New York.

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