Economic crisis: Venezuela devalues bolivar

Economic crisis: Venezuela devalues bolivar

Venezuela’s president, Nicolás Maduro, has announced the first rise in petrol prices in 20 years and a sharp devaluation of the currency which he said aimed to shore up the flailing economy, hard hit by falling oil prices which make up 95% of foreign income. Prices at the pump in Venezuela will jump as much as 6,086% for 95 octane gasoline, from 0.097 bolivars to 6 bolivars, or 1,300% for 91 octane as of Friday.

The official exchange rate used for food and medicine imports will weaken to 10 bolivars per dollar from 6.3, as of Thursday, while a second rate will be allowed to float. The socialist government’s announcement on Wednesday revealed some of the free market reforms that analysts have been clamouring for in the oil-dependent nation although critics say they don’t go far enough to right the country’s crisis-hit economy.  “This is a necessary measure, a necessary action to balance things, I take responsibility for it,” said Maduro in a five-hour televised speech in which he announced the measures.

Maduro said the new fuel prices would help support social programmes such as housing, health services and education, which had won his predecessor, Hugo Chávez, a broad following when he set the country on a socialist path 17 years ago. Maduro said he hoped the measures “will be understood by the people on the streets”, alluding to the 1989 wave of violence known as the “Caracazo” that left hundreds dead, sparked by a rise in fuel prices. Maduro also announced a 20% increase to the country’s minimum wage, effective 1 March. Read more

 

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