(Adds opposition statement, paragraph 7)
By Alexandra Ulmer
CARACAS, Sept 3 President Nicolas Maduro has
reshuffled his cabinet in a bid to boost his popularity but
shows no sign of revamping Venezuela's troubled economy, meaning
prospects of gasoline price hikes and a unification of Byzantine
currency controls have dimmed.
Caught between trying to preserve predecessor Hugo Chavez's
socialist legacy and fixing the economy, Maduro on Tuesday night
pushed Rafael Ramirez from his twin posts as oil minister and
boss of state oil company PDVSA, ending the official's
decade-long grip on the country's energy industry.
Ramirez, also moved from a third post of vice-president for
the economy, had been advocating reforms such as one official
foreign currency rate instead of the current three and an
increase in the price of the world's cheapest gasoline. He was
named foreign minister.
Maduro promoted PDVSA's exploration and
production chief, Eulogio Del Pino, to the company's top job and
tapped Asdrubal Chavez, cousin of late leader Chavez, to lead
the oil ministry.
After weeks of government officials talking of a major
"shakeup," critics and some economists said the shuffle shows
that Maduro, whose popularity has been slipping, is not willing
to shoulder the political cost of undoing the Chavez-era model.
Though popular social welfare projects from Chavez's 14-year
rule are still in place, the economy is teetering on recession
and annual inflation has risen to over 60 percent. A lack of
U.S. dollars due to strict currency controls has led to
shortages of basic goods ranging from powdered milk to soap.
"The rotation of ministers without a change in the economic
and social model is surely going to worsen the signs of the
crisis," the opposition Democratic Unity coalition said. "The
statist, inefficient model is the main cause of the penuries
Venezuelans are suffering today."
In a show of market disapproval of the reshuffle, Venezuelan
bonds fell on Wednesday with the benchmark 2027
off 1.55 percent to bid at 75.44 in afternoon trade.
"Politicizing even more key sectors of the economy is likely
to lead to further deterioration which, despite the support of
the Chavez family, will potentially undermine political
stability in the medium term for Maduro," IHS Latin America
analyst Diego Moya-Ocampos said in a note to clients.
CHANGES IN PDVSA?
Some oil sector players, however, were cautiously optimistic
that respected energy industry veteran Del Pino might have
enough technical know-how to revamp PDVSA, which is in charge of
the world's largest oil reserves.
Del Pino is known as a technically savvy manager who also
helped turn PDVSA into the financial engine of Chavez's
self-styled revolution until he died of cancer in 2013.
"Del Pino's technical credentials are about as good as it
gets" in PDVSA, said Ben Ramsey, an analyst with J.P. Morgan.
But the Stanford-educated geophysicist was formerly in
charge of production and exploration, two challenges at PDVSA,
which has seen output stagnate in the past six years and is
struggling to get projects off the ground.
Though possibly more able than Ramirez to focus on
technicalities than politics, Del Pino was unable to boost
output in his previous job and will still have to tread
carefully if he tries to overhaul PDVSA, the backbone of the
The company earns about 95 percent of the country's foreign
revenues and funds everything from clinics to anti-poverty
At a time of sporadic social protests over shortages and
inflation, it will be tricky to cut down on the lavish spending
analysts blame for PDVSA's financial shortfalls.
"There will be lingering doubts about (Del Pino's) political
abilities to confront the vested interests that have impeded the
company from dedicating sufficient resources and energy to
increasing production," Ramsey said.
Maduro gave finance minister and army general Rodolfo Marco,
who participated in a failed 1992 coup alongside Chavez, the
vacant post of economy vice-president. Though he has been making
some overtures to the private sector, Marco is something of an
unknown quantity for the markets.
(Reporting by Alexandra Ulmer, additional reporting by Eyanir
Chinea in Caracas and Marianna Parraga in Houston; Editing by
Andrew Cawthorne and Kieran Murray)