CARACAS, Venezuela (AP) – Residents of Venezuela's capital spent a nervous weekend with dramatic measures announced by President Nicolas Maduro to save a downward-spiraling economy, including an increase in the minimum wage of more than 3,000 percent.
The changes begin on Monday with the introduction of a new currency that removes five zeros from the country's rapidly declining bills. Maduro says he will also raise fuel prices to an international level – a combination of measures that critics say will only make things worse.
Opposition leaders seized on tensions among residents and called for a nationwide strike and protest on Tuesday. They hope to mobilize masses against Maduro's socialist ruling party ̵
Banks will close Monday as they prepare to release the "sovereign Bolivar," the new five-currency-printed currency, with fewer zeros to curb inflation. Maduro's government says that by the end of September, the world's cheapest gas will rise to international levels to curb rampant smuggling across borders.
Maduro said on Friday that the minimum wage will rise dramatically soon.
Economists say the package will likely accelerate hyperinflation rather than addressing its economic problems, such as oil production, which has fallen to 1947 levels.
"The conversion of the Bolivar will be like being under the knife of a famous plastic surgeon from Caracas," Johns Hopkins The University Economist Steve Hanke wrote on www.forbes.com. "The look changes, but in reality nothing changes, that's what the Bolivar expects: a facelift."
The lines on Saturday were longer than normal on a street market in Caracas where people were stocking up on the uncertainty What will come this week? Many were frustrated with bank card readers who were slow to register or failed and forced some to leave their goods empty-handed.
"You have to be patient," a seller of grain told customers. Many other businesses remained closed, unsure what prices should be set for their goods.
Venezuela was once among the wealthiest countries in Latin America, retaining the world's largest proven oil reserves, but a recent decline in oil prices accompanied by corruption and mismanagement. Decades of socialist rule have put the economy in a historic economic and political crisis.
Inflation could exceed 1 million percent this year, according to International Monetary Fund economists.
Inflation has made it difficult to find paper money. The largest bill under the outgoing cash register system was the 100,000 Bolivar note, which was below the usual black market rate of less than 3 cents. A cup of coffee costs more than 2 million bolivars.
The new paper bills will have two coins and paper pieces from 2 to 500. The lowest corresponds to the purchasing power of 200,000 current Bolivarians, while the highest represents 50 million
The old and new currencies will remain in circulation together for a transitional period.
The government took a similar step in 2008, when then-President Hugo Chavez issued a new currency that eliminated three zeros to combat rising inflation. 19659002] Maduro announced on Friday also a jump in the minimum wage by more than 3000 percent, which increased at the widespread black market rate to about 30 dollars. It is not clear when the change will begin.
Maduro has contributed to the confusion by announcing that he wants to tie wages, prices and pensions to the Petro government – a cryptocurrency announced in February that has not yet been circulated. He said a Petro would be $ 60, with the aim of setting a single floating rate linked to the digital currency in the future.
"The next few days will be very confusing for both consumers and the private sector traders," said Asdrubal Oliveros, director of Caracas-based Ecoanalitica. "It's a chaotic scenario."
A coalition of opposition leaders and union officials said Sunday they called for a strike and protest on Tuesday.
"The measures announced on Friday are not an economic stimulus for the country," opposition leader Andres Velasquez said. "On the contrary, they mean more hunger, more ruin, more poverty, more suffering, more pain, more inflation, more worsening of the economy."
Business owners say they fear that the sudden pay rise would make them unable to pay employees without sharply rising prices, even though Maduro wanted to help small and medium-sized businesses in the first three months.
Jesus Pacheco, who employs six employees at his butcher shop in Caracas, said on Sunday that he had no choice but let some of his employees go to stay in business. He assumes that slaughterhouse prices will rise for him.
"They will buy products, and they are more expensive," Pacheco said. "We have to lay off staff, what else can you do?"
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