Venezuela’s Maduro devalues currency, hikes fuel prices

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(London Post)     Venezuelan socialist leader Nicolas Maduro has raised the cost of heavily subsidized gasoline, calling it a “necessary measure.” The subsidy has been in place since 1989, when hundreds were killed protesting fuel prices.

Venezuelan President Nicolas Maduro on Wednesday announced a series of measures, including devaluing the bolivar currency and raising the price of gasoline, to stem a widening economic crisis in the South American country.
According to the president, prices at the pump would rise from 0.097 bolivars ($0.02/0.01 euros) a liter to 6 bolivars for 91-octane gasoline, while 95-octane petrol would jump from 0.07 bolivars to 1 bolivar.

“We spend about $1 billion in products making 95-octane gasoline. We could save $800 million with the new pricing system, which can go to food and medicine,” Maduro said.

“We must charge for gas,” he added. “I ask that the people welcome and support this new system.”

In 1989, a fuel price hike led to three days of riots in the capital, Caracas, resulting in military repression known as the “Caracazo,” in which several hundred people were killed. Memories of the event have steered politicians away from touching oil subsidies.

“This is a necessary measure, a necessary action to balance things. I take responsibility for it,” Maduro said, referring to the gas hike.

The OPEC nation has been hit by oil prices' downward spiral, resulting in chronic food shortagesThe OPEC nation has been hit by the downward spiral of oil prices, resulting in chronic food shortages

Financing the Bolivarian dream

Meanwhile, the socialist leader said a three-tier system of exchange rates would be slimmed down to two as of Thursday.

Venezuelan army vows support for Maduro

The Venezuelan military has declared its allegiance to President Maduro, as the country faces a mounting political and constitutional crisis. Opposition lawmakers are seeking Maduro’s removal.

A protected official rate for food and medicine imports, the strongest official exchange rate of the three, would remain place. It will be devalued by 37 percent dropping from 6.3 bolivars to 10 bolivars to the US dollar.

A parallel “floating” rate for other transactions will also be created.

According to Latin American broadcaster Telesur, Maduro added that the state must “develop the Bolivarian economic agenda to improve the distributive system,” referring to the state-led economic program launched by his predecessor, the late President Hugo Chavez.

Maduro said the new measures will help finance the government’s social programs, which have significantly increased literacy across the country since Chavez assumed power in 1999.

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