bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Agence France-Presse

Uncertainty reigned in Venezuela after President Nicolas Maduro unveiled a major economic reform plan aimed at halting the spiralling hyperinflation that has thrown the oil-rich, cash-poor South American country into chaos.
Ahead of a major currency overhaul on Monday, when Caracas will start issuing new banknotes after slashing five zeroes off the crippled bolívar, Maduro detailed other measures he hopes will pull Venezuela out of crisis.
Those measures – revealed in a speech to the nation late Friday – include a massive minimum wage hike, the fifth so far this year.
But analysts say the radical overhaul could only serve to make matters worse.
“There will be a lot of confusion in the next few days, for consumers and the private sector,” said the director of the Ecoanalitica consultancy, Asdrubal Oliveros.
“It’s a chaotic scenario.”
What next for Venezuela’s broken economy, with 1,000,000 per cent hyperinflation?
Three of the country’s leading opposition groups – Primero Justicia, Voluntad Popular and Causa R – have rejected the reform plan and called for a day of protest on Tuesday.
The embattled Maduro, a former bus driver and union leader, said the country needed to show “fiscal discipline” and stop the excessive money printing that has been regular in recent years.
The new currency, the sovereign bolívar – to distinguish from the current, and ironically named, strong bolívar – will be anchored to the country’s widely discredited cryptocurrency, the Petro.
Each Petro will be worth about US$60, based on the price of a barrel of Venezuela’s oil. In the new currency, that will be 3,600 sovereign bolívars – signalling a massive devaluation.

In turn, the minimum wage will be fixed at half a Petro (1,800 sovereign bolívars), starting Monday. That is about US$28 – more than 34 times the previous level of less than a dollar at the prevailing black market rate.
Maduro also said the country would have one fluctuating official exchange rate, also anchored to the Petro, without saying what the starting level would be.
As it stands, the monthly minimum wage – devastated by inflation and the aggressive devaluation of the bolívar – is still not enough to buy a kilo of meat.
In the capital Caracas, residents were sceptical about the new measures.
“Everything will stay the same, prices will continue to rise,” 39-year-old Bruno Choy, who runs a street food stand, said.
Angel Arias, a 67-year-old retiree, dubbed the new currency a “pure lie!”
The International Monetary Fund predicts inflation will hit a staggering one million per cent this year in Venezuela – now in a fourth year of recession, hamstrung by shortages of basic goods, and crippled by paralysed public services.

Maduro blames the country’s financial woes on opposition “plots” and American sanctions – but admits that the government will “learn as we go along” when it comes to the currency redenomination.
His government pushed back Saturday against criticism of the economic reform plan.
“Don’t pay attention to naysayers,” Information Minister Jorge Rodriguez said.
“With oil income, with taxes and income from gasoline price hikes … we’ll be able to fund our programme.”
Electronic transactions were to be suspended from Sunday to facilitate the introduction of the new notes.
Oil production accounts for 96 per cent of Venezuela’s revenue – but that has slumped to a 30-year low of 1.4 million barrels a day, compared to its record high of 3.2 million 10 years ago.
The fiscal deficit is almost 20 per cent of GDP while Venezuela struggles with an external debt of $150 billion.
Venezuela launched the Petro in a bid for liquidity to try to circumvent US sanctions that have all but stamped out international financing.

Friday’s devaluation ranks among Venezuela’s most significant. In 1983, President Luis Herrera Campins devalued the bolivar for the first time in 22 years after oil prices crashed on a day known locally as “Black Friday”.
When in 1989 Venezuela raised gasoline costs, lifted foreign-exchange controls and let the currency plunge, prices soared 21 per cent in one month, leading to the “Caracazo” riots that killed hundreds and paved the way for the leftist President Hugo Chavez’s rise to power.
Maduro’s predecessor Chavez stripped three zeroes off the bolívar in 2008, but that failed to prevent hyperinflation.
Oliveros warned that the new bank notes will crumble “within a few months” if hyperinflation is not brought under control.
As Venezuela disintegrates, a new breed of pirates terrorises the Caribbean
According to economist Jean Paul Leidenz, Venezuela is trying to emulate Brazil, which replaced its old cruzeiro currency with the real in the 1990s after the former was destroyed by hyperinflation.
But he said that will not work because of the government’s fiscal indiscipline and a lack of financing
Cryptocurrency rating site ICOindex.com has branded the Petro a “scam” while the US has banned its nationals from trading in it.
“Anchoring the bolívar to the Petro is anchoring it to nothing,” said economist Luis Vicente Leon, director at polling organisation Datanalisis.
Right from the outset, it has not been clear how the Petro would operate, nor what being backed by oil actually means.
Maduro’s government is desperately grasping at straws to try to fix the country’s economic meltdown.
Earlier last week, he announced a curb on heavily subsidised fuel in a bid to prevent oil being smuggled to other countries.
Subsidies would only be available to citizens registering their vehicles for a “fatherland card” – which the opposition has decried as a mechanism to exert social control over opponents.
Fuel subsidies have cost Venezuela US$10 billion since 2012, according to oil analyst Luis Oliveros, but without them, most people would not be able to buy fuel.
Additional reporting by Associated Press


How a once-hopeful Venezuela spiralled to the bottom

China waits and watches as the US fights all its tigers at once

Opposition leader Machado will return to Venezuela in coming weeks

China bought ‘legitimate’ Venezuelan oil from US after Maduro seizure, energy secretary says

Venezuelan crisis

Crisis-hit Venezuela on edge as new sovereign bolívar banknotes enter circulation

A kilogram of meat is pictured next to 9,500,000 bolívars. Photo: Reuters

epa06955344 A handout photo made available by the Miraflores Press Office shows Venezuelan President Nicolas Maduro during a mandatory radio and television broadcast in Caracas, Venezuela, 17 August 2018. Maduro increased the minimum wage of the workers by raising it up to a price 35 times higher than the current one, according to the official reference rates in the country. The salary will go up from 5,196,000 bolivars to 180,000,000, an amount that will be expressed in 'sovereign' bolivars, that goes into effect on 20 August, when a reconversion will come into force removing five zeros from the currency. EPA-EFE/MIRAFLORES PRESS HANDOUT HANDOUT EDITORIAL USE ONLY/NO SALES

A toilet paper roll is pictured next to 2,600,000 bolivars, its price and the equivalent of 0.40 USD, at a mini-market in Caracas, Venezuela August 16, 2018. It was the going price at an informal market in the low-income neighborhood of Catia. REUTERS/Carlos Garcia Rawlins SEARCH "GARCIA ECONOMY" FOR THIS STORY. SEARCH "WIDER IMAGE" FOR ALL STORIES.

epa06957104 View of bill samples of the new currency in a store in Caracas, Venezuela, 18 August 2018. There is unease and confusion among the population as new measures of President Nicolas Maduro’s economic plans will go into effect on 20 August. The ‘Bolivar Soberano’ currency will be the new official currency and the crypto-currency Petro will be a valid secondary currency. EPA-EFE/MIGUEL GUTIERREZ

News

World

Americas

The government will enact a drastic currency devaluation and a tax increase, and will raise fuel prices


Crisis-hit Venezuela on edge as new sovereign bolívar banknotes enter circulation

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The government will enact a drastic currency devaluation and a tax increase, and will raise fuel prices

The government will enact a drastic currency devaluation and a tax increase, and will raise fuel prices