Confusion reigns in Venezuela as President Nicolas Maduro attempts to combat the historic economic crisis in his country. Turbulence ensued after he made substantial changes to the structure of its currency, hiked taxes, and minimum wage. He also restructured the fuel prices.
On Friday, Aug. 17, 2018, he announced the changes. Maduro’s financial plan began with a 96 percent devaluation of the Venezuelan currency and replaced the bolivar with the “sovereign bolivar,” according to Bloomberg. The changes are intended to aid the nation’s recovery from its economic crisis.
On Saturday many shops remained closed and they struggled to change the pricing of their goods. Most businesses are accepting both currencies. Information Minister Jorge Rodriguez explained, “the government will open 300 currency exchange kiosks in hotels, airports and shopping malls as part of a bid to supersede the country’s black market.”
The monetary structure of the sovereign bolivar is attached to Venezuela’s cryptocurrency, the Petro. The Venezuelan Federal Government is connecting the value of the Petro to the value of their official currency, or the bolivar. The value of the currency will devalue by 95 percent.
Bloomberg reported that the Maduro administration will raise taxes, increase gasoline prices, and greatly devalue gasoline prices in the federal republic. The nation’s government will raise the minimum wage over 3,000 percent or 1,800 Sovereign Bolivar. However, that would be the equivalent of $30 per month.
CNBC reported that after the president raised the minimum wage 60-fold small business owners were forced to make a difficult decision. They could either permanently shut down their business of operation, or sabotage their business by raising the prices of their products to an amount that their customers could not afford.
The shopkeepers were already economically struggling in daily life because of hyper-inflation. The socialist regime of Venezuela regulates the prices for their nation’s products, such as diapers and flour. The far-left oligarchy set strict policies for currency that diminished the size of their imports. Many small business owners closed their stores on Saturday, Aug. 18 to consider the dire consequences of their economically oppressive government’s actions on their businesses, as Maduro triggered an economic crisis in Venezuela.
There is a mass exodus of Venezuelans from their home country caused by the tension created by Maduro’s administration attempts to address the problems of the faltering economy. The radical leftist leader is fueling anxiety amongst the authoritarian state’s masses.
By John A. Federico
Edited by Cathy Milne
Bloomberg: Confusion Reigns as Maduro Mega-Devaluation Roils Venezuela
CNBC: Venezuelan shopkeepers alarmed by Maduro’s latest economic moves
The Wall Street Journal: Venezuelan Crisis Escalates as President’s Economic Plans Fuel Tensions
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