Venezuela replaces hardline economic czar, announces reforms

Maduro replaces hard-line economic czar after one month

Venezuela President Nicol·s Maduro replaced his economic czar just five weeks after appointing the hard-line leftist as the country grapples with increasingly bleak economic indicators and fears of default.

Maduro said Luis Salas is leaving his post as vice-president for the economy for family reasons.

He will be replaced with a more business-friendly figure, Miguel Perez, who had been serving as commerce minister. Perez previously led a business chamber and has said that Venezuela must simplify its Byzantine exchange-rate system.

On Thursday, Maduro announced long-awaited economic reforms, but analysts say they'll barely have any effect in rescuing the economy.

He has raised gasolene prices and devalued one of the oil country's multiple exchange rates, but assures supporters that doesn't amount to a dramatic austerity scheme.

Analysts agree. They say the modest adjustments have no hope of bringing in the money Venezuela needs to save its crashing economy.

Underlining the gravity of the situation, the Central Bank said Thursday said inflation hit 181 per cent last year, and the economy shrank by nearly six per cent.

The government says it spends more than US$12 billion a year to subsidise gasolene. The new scheme means it will costs dimes instead of pennies to fill a gas tank.

Salas had sparked concern among the opposition by blaming the Venezuela's mounting economic problems on sabotage. Salas said the country was suffering from the world's worst recession and triple-digit inflation because business interests are colluding with the US to sabotage the economy.

Shortages and inflation have become top concerns among Venezuelan voters, many of whom spend hours each week waiting in line for goods that are increasingly impossible to afford.

Local media had reported in recent days that Salas favoured suspending Venezuela's payments to foreign creditors.

- AP reports