Venezuelan President Nicolas Maduro announced a currency devaluation and gasoline price hike Wednesday, Feb 17, in an attempt to shield the country’s oil-dependent economy from collapse and fend off mounting calls for his ouster, the Associated Press reports.
Gas prices will jump more than sixtyfold — the first increase of any kind in about 20 years. Yet drivers will still be able to fill their tanks for pennies in this South American country where gasoline has long been so heavily subsidized that it is virtually free.
The price of premium gasoline will rise from 0.1 bolivar a liter to 6 bolivars per liter, and regular gasoline will jump from 0.07 bolivar to 1 bolivar per liter. In contrast, a beer costs around 300 bolivars while a basket of strawberries goes for 800 bolivars. Calculated at the widely used black market currency exchange rate, the price per gallon will be a few U.S. cents.
Maduro said the increased gasoline revenue will finance the government’s social programs. “We must charge for gas,” he said. “I ask that the people welcome and support this new system.”
Gasoline prices are a touchy issue in Venezuela, where memories are still vivid from 1989 riots in Caracas that erupted after the proposal of a series of austerity measures including a hike in gas prices.
Maduro also announced that the strongest of the country’s official exchange rates, used for essential goods like food and medicine, would be changing from 6.30 bolivars to the U.S. dollar to 10 bolivars to the dollar. Meanwhile, the bolivar is worth about 1,000 to the dollar on the black market.
The economic measures come as Maduro fights for his political survival.
Oil accounts 95 percent of Venezuela’s export earnings, and plummeting world prices have helped push its state-led economy into a deep recession, with chronic shortages, empty store shelves and soaring inflation.
Opposition leaders took control of Congress in January for the first time in more than a decade and have been on a collision course with the socialist president ever since.
Lawmakers are weighing several options for removing Maduro from office, including shortening his term, and calling a constitutional referendum. But many fear the Supreme Court, which has not ruled against the executive branch since the late President Hugo Chavez took office in 1999, would simply overturn these efforts.