What is the economic plan of Guaidó for Venezuela?

Listen this article

Among the most controversial proposals is the opening to greater participation of private capital

On January 23, the young industrial engineer Juan Guaidó proclaimed himself president of Venezuela in accordance with article 233 of the Venezuelan constitution. With only 35 years of age, Guaidó has completed two postgraduate studies in public policy, served as a deputy for several years, was president and vice president of the Permanent Commission of Internal Policy of the National Assembly of Venezuela and president of the National Assembly.

Leer en español: ¿Cuál es el plan económico de Guaidó para Venezuela?

According to Portafolio, the economic purposes of Guaidó consist in "stopping hyperinflation and the devaluation of the Venezuelan peso, recovering the oil sector, restructuring the debt, creating jobs, attracting investment in terms for freedom and legal norms, in addition to create employment and captivate the human talent that has emigrated in the last decade".

However, warns Yon Goicochea, director of the economic recovery plan of Venezuela of the interim government of Guaidó, these plans can only be carried out fully once Maduro has left power.

How to face the challenge of inflation?

To control inflation, Guaidó proposes the normalization of exchange control during a period of transition while production stabilizes, as well as making the Central Bank an independent entity (for which there is already a law being processed by the National Assembly), preventing thus the "inorganic" issue of money. Likewise, it seeks the negotiation of public debt and access to international credits.

According to Goicochea "between 60,000 and 80,000 million dollars can be requested from the International Monetary Fund, the World Bank, the Inter-American Development Bank and bilateral and multilateral loans".

With regard to international aid, Goicochea points out that, despite the fact that its goal is to achieve investments beyond loans, the government of Guaidó expects to receive 30,000 million dollars from loans in the first year of its government and another 50,000 million in the next two years. This is because, as deputy Ángel Alvarado told RT Noticias, "we are not going to reduce spending, we are not going to live in austerity, we are going to an expansion program to reactivate the Venezuelan economy". A large part of the loans is intended to be used in the recovery of 600,000 cultivable hectares for the reactivation of the industrial sector.

On the other hand, Guaidó proposes the substitution of the subsidies of the Maduro regime for food vouchers destined only to those who really need them during a period of transition after which these bouchers will be eliminated, once the people have acquired enough power purchasing.

How to rescue the oil sector?

With respect to the reactivation of the oil sector, the interim president proposes a restructuring of the fiscal regime to increase productivity. As Goicochea pointed out for Portafolio, "while in Colombia what the government charges for producing oil can reach 70% of the bill, in Venezuela it can reach 90 or 92%, then, compared to a country like Colombia, we are much less competitive".

Likewise, there is the possibility of an opening of the primary sector (exploration and extraction) to the private sector, which goes hand in hand with a change in the norm that relegates private shareholders to be minority partners in the oil industry. Likewise, Guaidó plans to limit the power of PDVSA (state oil industry) over the industry, through the creation of a Venezuelan Hydrocarbons Agency in charge of awarding bids and verifying contract compliance.

Also read: Latin America can take advantage of the shortage of Venezuelan oil

Also, said Goicochea to Portafolio, "there is the issue of investment guarantee so that contracts are not canceled in the middle of execution, with the possibility of returning to international arbitration schemes so that foreign companies have the same guarantees that anywhere in the world, within other things to consider".

For all the above, Goicochea estimates that the investment required in energy matters ranges between 200,000 and 250,000 million dollars, and this is to achieve the levels of production that existed before the arrival of Chavismo.

Finally, legislator Juan Andrés Mejía, told RT Noticias that "in order to advance in the economic area, the AN has already approved several regulations, such as the Law on Asset Recovery, Anticorruption Law and the Law on Public Procurement."

LatinAmerican Post | Sofía Carreño

Translated from "¿Cuál es el plan económico de Guaidó para Venezuela?"