CARACAS: Venezuelan bond prices edged down on Thursday while opponents savaged economic changes by President Nicolas Maduro that included a seeming devaluation of the currency and an imminent rise in domestic gasoline prices.
Under pressure over the OPEC member's recession, product shortages and plunging oil revenues, Maduro has opted to keep a complex three-tier currency control system, though bands have been shifted to ensure more dollars are sold at higher levels.
In a speech on Wednesday, Hugo Chavez's successor also bit the bullet on the sensitive subject of fuel prices, currently the world's cheapest, saying a rise was inevitable this year. Economists had been recommending changes on both issues.
But without price specifics on either, or any major structural changes to the socialist model, critics said Maduro had not done enough to rescue a shrinking economy and combat shortages plaguing Venezuela's 30 million people.
"Today more than ever, we have to unite all Venezuelans to get out of this crisis," opposition leader Henrique Capriles said, mocking Maduro as a "pirate" and "liar" and urging people to rally on the streets against him in coming days.
In early trading, most Venezuelan debt slipped slightly.
The benchmark Global 2027 price was off 0.41, with a yield of 28.287 percent.
"If these measures were introduced a year ago then the market reaction would have been euphoric. However, the measures may not prove sufficient considering the extent of the oil shock while commitment is still uncertain for an extremely weak government," said Siobhan Morden, of New York-based Jefferies. Venezuela's lively Twitter scene was abuzz with debate, and some ridicule, over Maduro's most headline-grabbing phrases, including his reassurance that "God will provide" in the face of oil revenues that have plunged by more than half.
POLITICAL STAKES
"Crucify me, kill me if you want!" the 52-year-old president also defiantly said, in reference to the possible rise in gasoline prices, something of a sacred cow in Venezuelan society where people can fill up for less than $0.02 a liter. A 1989 fuel hike by then president Carlos Andres Perez infamously sparked the "Caracazo" riots killing hundreds.
With his popularity falling, a parliamentary election looming later this year, and foes forecasting the imminent end of "Chavismo", Maduro told Venezuelans popular welfare programs would not only be maintained but expanded.
Many poor voters fear opposition politicians would take away free health clinics and subsidized food.
"We're not happy, of course. I don't think Maduro is handling the economy properly. But vote for the extreme right? Never!" said Gladys Moreno, 33, waiting at dawn with hundreds of others outside a state supermarket.
In a recognition of hardship on the streets, Maduro also announced a 15 percent rise in the minimum wage.
But he was far less specific on the all-important currency changes, saying the strongest rate of 6.3 bolivars per dollar would be kept for essential food and medicine imports, while two Central Bank rates would be merged, and a third freer band would be created to compete with the black market for greenbacks.
Maduro did not say at what levels those second and third tiers would operate, but Venezuelans assumed they would be higher than the current ones of about 12 and 50 bolivars respectively - effectively representing a devaluation.
The black market price for dollars rose slightly to 179 bolivars, from 177 on Wednesday, according to the widely-tracked dolartoday.com web site.
"It's an implicit devaluation," said local pollster and economist Luis Vicente Leon, whom Maduro referred to several times in his speech as an important opinion-former in Venezuela.
"The moving of currency to higher rates is positive for deficit control, import reduction and private oil production.
But the magnitude of the crisis and fall in revenues is so great that the expected impact of the measures looks insufficient." Many Venezuelans fear Maduro's announcements will stoke inflation which, at 64 percent last year, is already the highest in the Americas. The economy contracted 2.8 percent in 2014.
According to UN estimates, Argentina is the only other country in Latin America whose economy was seen contracting last year, though by less than Venezuela.
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