Venezuela devalues its currency by 95 percent and raises minimum wage by 3,000 percent

Aug 20, 2018

By Tom Phillips

Venezuela moved to shore up its crumbling economy on Monday, devaluing its currency and preparing to raise the minimum wage by more than 3,000 percent in what the country’s president, Nicolás Maduro, declared a visionary bid to tame rampant hyperinflation.

More than 1,00,000 Venezuelans have fled overseas this year amid chronic shortages of food and medicine, soaring crime and warnings from the International Monetary Fund (IMF) that inflation could hit one million percent this year.

But on Friday Maduro unveiled a dramatic raft of measures designed to end a depression he blames on an “economic war” being waged by imperialist foes of the Bolivarian revolution he inherited after Hugo Chávez’s 2013 death.

“I want the country to recover and I have the formula. Trust me,” Maduro said in a televised address from the presidential palace, adding, ominously, that “no experts were involved” in the elaboration of that plan.

Maduro began to implement his blueprint – known as the “programme for recovery, growth and economic prosperity” – on Monday, claiming it would represent an inflection point for his once wealthy nation.

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“We are going to begin a process of recovery in the coming days, weeks and months,” Venezuela’s 55-year-old leader vowed on Sunday in a live Facebook broadcast. “It is a revolutionary formula … unique in the world!”

The recovery package includes measures such as raising taxes, increasing petrol prices for some drivers, and introducing a rebranded currency – the sovereign bolívar – which will have five fewer zeros than its inflation-stricken predecessor, the bolívar.

“Venezuela is going to experience an economic miracle,” Maduro boasted.

Economists and opposition figures, who are calling a nationwide strike for Tuesday in protest, are sceptical the plan will fix an economy so broken that a Venezuelan version of Who Wants to be a Millionaire had to be scrapped because the prize had become so worthless.

A recent survey found that about 90% of Venezuelans now live in poverty while more than 60% admitted to waking up hungry because they lacked the means to buy food.

Henrique Capriles, a prominent opposition leader, denounced Maduro’s move as a Venezuelan “Black Friday” that would go down as one of the darkest days for the country’s already reeling economy.

“The government has decided to thrust us into one final disaster,” Capriles wrote in an online essay in which he accused Maduro of plunging the oil-rich nation into “the greatest tragedy in its history”.

Another opposition leader, Andrés Velásquez, said: “The measures announced on Friday are not any economic recovery plan for the country. On the contrary, they represent more hunger, more ruin, more poverty, more suffering, more pain, more inflation, more deterioration of the economy.”

Henkel García, director of the Caracas-based consultancy Econometrica, told Bloomberg Maduro’s plan was “a head-scratcher”. “This series of measures is a mix of incoherent and contradictory ideas … It is a worrying contraption that generates a lot of uncertainty about how it will be executed,” he said.

During Sunday’s Facebook broadcast, Maduro claimed he was ushering in a period of “definite and necessary economic change”. He alleged the recent botched attempt to assassinate him with explosive-laden drones was intended to thwart this bright new economic dawn. “I’m alive … and I am ready to give my whole life for the recovery and economic prosperity and growth of this country,” he said.

“Everything will work out. I have such great faith. I love Venezuela profoundly and I know when you turn love into politics miracles can happen.”
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Credit: The Guardian, www.theguardian.com

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