Published by Economist Intelligence Unit

Event

Rafael Ramírez was reassigned to a post at the UN, a move that is a further demotion for the man who, until recently, ran the country's state oil company and was the president's top economic adviser.

Analysis

Mr Ramírez will take up his new post as Venezuela's ambassador to the UN in January, just as Venezuela takes a two-year position on the Security Council. The move is a serious fall for the man who began the year as oil minister, head of the state oil company, Petróleos de Venezuela (PDVSA), and economy vice-minister. In a major cabinet reshuffle in September, Mr Ramírez was demoted to foreign minister. Just three months later, he has been further sidelined to the UN position. He is replaced as foreign minister by Delcy Rodríguez, a lawyer and former information minister.

Mr Ramírez had remained a major player in oil policy after taking on his role as foreign minister. He represented Venezuela at a November meeting of OPEC in Vienna. With 96% of Venezuela's export income coming from oil sales, the country has suffered from the recent drop in global oil prices. Mr Ramírez called for a cut of 2m barrels per day by OPEC, but this was not agreed to by other member nations, notably Saudi Arabia. This failure on the international stage may have played a part in the decision of the president, Nicolás Maduro, to move Mr Ramírez to the UN post.

Mr Ramírez's fall has much bigger implications for Venezuela, as its economy verges on collapse. He was the lone voice—at least in public—that advocated pragmatic economic reforms such as streamlining the country's complex foreign-exchange mechanisms and raising petrol prices, currently the world's cheapest (costing the government around US$12.5bn per year in lost income). It now appears likely that Mr Maduro will be unwilling or unable to implement such policies, given political pressure from hardline elements within his party and his sinking popularity with voters.

Impact on the forecast

We maintain our forecast that the government will resist crucial policy changes, resulting in continued economic problems and fuelling the risk of economic collapse.