Venezuela devalues currency 32% to help cut 11% of GDP fiscal gap
Venezuela devalued its currency for the fifth time in nine years as ailing President Hugo Chavez seeks to narrow a widening fiscal gap and reduce a shortage of dollars in the economy. The new exchange rate falls by 32% to 6.3 Bolivar per dollar starting Feb. 13, Finance Minister Jorge Giordani told reporters in Caracas.
A spending spree that almost tripled the fiscal deficit last year helped Chavez, 58 win a third six-year term. The devaluation can help narrow the budget deficit by increasing the amount of Bolivar the government receives from oil exports. Chavez ordered the move from Cuba, where he is recovering from a fourth cancer surgery, Giordani said.
Venezuela’s fiscal gap widened to 11% of GDP last year from 4% in 2011, according to Moody’s Investors Service.
“This isn’t a change that was done for fiscal reasons,” Giordani said. “We have sufficient revenue but we need to adjust the accounts. We need an increase in efficiency and efficiency means spending less.”
Annual inflation accelerated to 22.2% in January, the fastest pace in eight months, led by a jump in food prices. Prices climbed 3.3% in January after rising 3.5% in December.
In the black market, the Bolivar weakened 6% to 19.53 Bolivar per dollar, according to Lechuga Verde, a website that tracks the rate. Venezuelans use the unregulated credit market because the central bank doesn’t supply enough dollars at the official rates to meet demand.
However the government will keep the currency at 4.3 per dollar for certain imports that were ordered before Jan. 15, Giordani said. The central bank-administered currency market known as Sitme that traded at 5.3 Bolivar per dollar will be eliminated. The market had been used by some importers.
Chavez has not been seen or heard from since he underwent a fourth surgery for an undisclosed type of cancer Dec. 11. Before travelling to Cuba, Chavez anointed Vice President Nicolas Maduro his successor, urging Venezuelans to vote for the 50-year-old former bus driver and labour union leader should he die or step down because of his health.
“We’ve got to do more with less,” Maduro said on state television before the devaluation was announced.
Former opposition presidential candidate Henrique Capriles Radonski said the measure “mocked Venezuelans,” and criticized the government for attempting to hide the impact of the devaluation by announcing it the day before the annual carnival holidays.
Suggested Stories
-
Jun 18th 2013
To silence rationing rumours, Venezuela announces 760.000 tons of imported food is on the way
-
Jun 18th 2013
Thousands camp in the Peruvian Andes to protect a lake from major gold mining project
-
Jun 16th 2013
”Venezuela is not part of Mercosur; it was not ratified by Paraguayan congress”
-
Jun 16th 2013
Booing down of President Rousseff reflects growing dissatisfaction with the economy
44 comments Feed
Note: Comments do not reflect MercoPress’ opinions. They are the personal view of our users. We wish to keep this as open and unregulated as possible. However, rude or foul language, discriminative comments (based on ethnicity, religion, gender, nationality, sexual orientation or the sort), spamming or any other offensive or inappropriate behaviour will not be tolerated. Please report any inadequate posts to the editor. Comments must be in English. Thank you.
Do these commie twats think anybody with a brain believes this drivel?
Still, the country with the largest reserves of proven oil deposits has to devalue the currency.
You couldn’t make this up.
They are not devaluating, they are adjusting accounts. LMFAO.
Nice spin!
I called this nearly 2 years ago. He would get reelected and THEN devalue.
I didn't predict him dying though! I think that's called icing on the cake.
@3 There is no price control. The Argentine government stated this quite clearly in a press conference. It is just an agreement. *coughs*
$1=8 pesos
yes, I know. I'm speaking for the “official rate” only.
May be “Clarin MIente” comes with 62% who knows
www.lanacion.com.ar//1553282-venezuela-reconocio-su-crisis-economica-devaluo-casi-un-50-su-moneda?utm_source=n_tis_nota2&utm_medium=titularS&utm_campaign=NLExt
Sorry Venezuelans, it´s what you deserve......nothing more, nothing less......you elected a death man walking with no brain as president.....for a democratic dictatorship.
It's simple math ... going from 4.3 to 6.3 = 46.5% devaluation.
FritzS, it's Indec math.
I wonder why South American countries have not learned you can not devalue your way to prosperity. Having more pesos don't necessarily mean you are richer.
This won't work anyway the black market (real) exchange rate is 20/1. It is unsustainable.
If Argentina devalues it will have to be above 8 (now) but if you ask me they're going to do something nutty like Chavez and have 3-5 different exchange rates depending on what you are buying/selling.
Idiots.
Stupid twats used the final (devalued) number as the denominator.
I wonder if that is where INDEC goes wrong?
Will Argentina devalue the Peso again and fleece its people?
Yes I know they won't pay it back, but then the Argentine government will have to start calling Venezula pirates and vultures, and the rest of South America will know not the lend the Argentines a dime, let alone any significant funds.
www.zerohedge.com/news/2013-02-09/after-freezing-prices-argentina-bans-all-advertising
RIP cows
The opposition have to pay lip service to the Government
Hugo Chavez, president of Venezuela, will die, according to his doctors. These doctors have notified Chavez's family and the Venezuelan government that he has lost his voice and, after a fourth surgery failed to cure his cancer, the recently reelected president will not recover.
www.policymic.com/articles/25326/hugo-chavez-loses-his-voice-venezuelan-president-is-unable-to-recover-from-cancer
www.eluniversal.com/nacional-y-politica/130209/president-chavezs-absence-likened-to-surrealist-novel
another funny story regarding Venezuela
Some say that,
But one things for sure,
He aint saying nothing.
??
According to the article Chubby has lost his voice. Strange that as he gave orders to do the devaluation himself only yesterday!
The telling phrase is shown below:
“Symptoms of cancer progression are again clearly evident.”
I still think he is in the freezer and has been for some time.
Perhaps they contact 'him' by séance.
Next time I go I am going to bring a suitcase full of sugar and another full of toilet paper and live like a KING for a month.
Brilliant!
I think TMBOA should be next for the treatment.
Disaster beckons....
1- they want to give outright handouts to the poor rather the help the poor by providing opportunity and subsidies until they are self sufficient.
2-The corruption is so perversion there that little is left for the poor.
3-Mis-management of the industry. Rather than hire the best in the industry, as they can well afford it, the place bureacratic croonies in charge of the industry.
My brother in law has been going there for years. He said it's worst than what is reported and near war zone conditions. The chubby legacy is one of indoctrination of the poor and exploiting the working and middleclass......just like rgentina. In fact. rgentina is so closely resembling venezuela that it is scary, only the rgentines don't get it yet. The dollar clamp was chubbies idea. I hope chubby is lifting his glass of formaldehyde and yelling.....SALUDE!
www.payvand.com/news/13/feb/1049.html
Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!