Saturday, February 9th 2013 - 09:32 UTC

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.

Chavez ordered the move from Cuba, said Finance minister Giordani

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.

44 comments Feed

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1 reality check (#) Feb 09th, 2013 - 09:46 am Report abuse
Changes not seen or heard from for nearly two months, hmmmm!
2 ChrisR (#) Feb 09th, 2013 - 10:10 am Report abuse
Dead Man Not Walking coming through well on the séance then from his deep freeze in the mortuary.

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.
3 ptolemy (#) Feb 09th, 2013 - 10:14 am Report abuse
With Venezuela being the model for Argentina, I expect a devaluation of the pesos soon. It would go hand in hand with the recent price freezes, designed to combat a rush to buy,.. just before or after a devaluation. Not a time to own pesos. My take...
4 reality check (#) Feb 09th, 2013 - 10:14 am Report abuse
They are not devaluating, they are adjusting accounts. LMFAO.
Nice spin!
5 Anglotino (#) Feb 09th, 2013 - 10:43 am Report abuse
I so love being proven right!

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.
6 Frank (#) Feb 09th, 2013 - 10:48 am Report abuse
Anybody want to run a book on how long this dead bloke can run the country? The limit would have to be the next election.... or until they run out of ice...
7 ElaineB (#) Feb 09th, 2013 - 11:08 am Report abuse
Apparently Chavez is receiving 'alternative' therapy. Hmmm.

@3 There is no price control. The Argentine government stated this quite clearly in a press conference. It is just an agreement. *coughs*
8 CaptainSilver (#) Feb 09th, 2013 - 11:17 am Report abuse
Argentina next?..... Oops, its already happening!

$1=8 pesos
9 ptolemy (#) Feb 09th, 2013 - 11:47 am Report abuse
yes, I know. I'm speaking for the “official rate” only.
10 Ozgood (#) Feb 09th, 2013 - 12:41 pm Report abuse
Either Chavez gave his instructions through a medium in a seance or his Cuban doctors have wrought a modern medical miracle. Perhaps his medical team should be proposed for the next Nobel prize?
11 DanyBerger (#) Feb 09th, 2013 - 01:03 pm Report abuse
Mercopress says 32% Venezuela currency devaluation, “La Destruccion” old fashion necons newspaper says 46.5%.

May be “Clarin MIente” comes with 62% who knows
12 Sergio Vega (#) Feb 09th, 2013 - 01:10 pm Report abuse
R.I.P. Venezuela......

Sorry Venezuelans, it´s what you deserve......nothing more, nothing elected a death man walking with no brain as president.....for a democratic dictatorship.
13 FritzS (#) Feb 09th, 2013 - 01:44 pm Report abuse
The devaluation is 46.5%, not 32%.
It's simple math ... going from 4.3 to 6.3 = 46.5% devaluation.
14 Captain Poppy (#) Feb 09th, 2013 - 01:54 pm Report abuse
That was no surprised considering their situation, though they had a better opportunity than Rgentina considering they are a world leader in proven oil reserves. Compare them to other world leaders of oil. The real surprise is when will they announce chubby dead?
FritzS, it's Indec math.
15 yankeeboy (#) Feb 09th, 2013 - 03:18 pm Report abuse
This devaluation is only going to increase inflation. It is like immediately pumping 50% more money into the economy. Maybe they felt bad they lost the top spot last year to Argentina.

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.
16 ChrisR (#) Feb 09th, 2013 - 05:02 pm Report abuse
Yes, it's 46.5%.

Stupid twats used the final (devalued) number as the denominator.

I wonder if that is where INDEC goes wrong?
17 mastershakejb (#) Feb 09th, 2013 - 05:19 pm Report abuse
Argentina reminds me of when I was tricked as a little boy on the elementary school playground. An older kid came up to me and offered to sell me a 100 Mexican peso coin for just a couple of US dollars. What a steal! I thought.....then I got home and my parents told me the coin was worthless :/
18 LEPRecon (#) Feb 09th, 2013 - 06:06 pm Report abuse
Maybe Venezula should demand Argentina pay back all the money they borrowed... ;)
19 Captain Poppy (#) Feb 09th, 2013 - 07:15 pm Report abuse
Lep they can but Rgentina already proved they do not pay back what they borrow, or else the would not be in the situation where the world is anti-rgentina
20 commonsparrow (#) Feb 09th, 2013 - 08:01 pm Report abuse
Currency devaluation increases exports. Guess they need the money. It may be a good thing......
21 Brit Bob (#) Feb 09th, 2013 - 08:05 pm Report abuse
All that oil and Chavez and Co still can't get it right - is this the right socialist model for Argentina to follow?

Will Argentina devalue the Peso again and fleece its people?
22 LEPRecon (#) Feb 09th, 2013 - 08:53 pm Report abuse
@19 - Captain Poppy

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.
23 reality check (#) Feb 09th, 2013 - 08:58 pm Report abuse
I don't know Brazil sounds good for a tenner, don't think they have tapped them up for a while.
24 agent999 (#) Feb 09th, 2013 - 09:25 pm Report abuse
truly independent media
25 Ayayay (#) Feb 09th, 2013 - 09:31 pm Report abuse
The Big Mac was $16 in Venezuela compared to $4 in the U.S.
RIP cows
26 slattzzz (#) Feb 09th, 2013 - 10:33 pm Report abuse
@24 Agent999 thats a pretty damning piece
27 reality check (#) Feb 09th, 2013 - 10:39 pm Report abuse
They do not mind, they do not care if their government treats them like utter morons, the more they get shafted, the more they seem to like it.
28 The Cestrian (#) Feb 09th, 2013 - 11:02 pm Report abuse
The Botox Queen is obviously now clueless about what to do with her economy. Imagine banning advertising. Goodness gracious.
29 Troy Tempest (#) Feb 10th, 2013 - 09:00 am Report abuse
Hoping CLARIN finds a way to generate. enough revenue to fund themselves and keep press freedom alive in Argentina
30 golfcronie (#) Feb 10th, 2013 - 11:04 am Report abuse
The trouble with most Latin countries there is NO credible opposition
The opposition have to pay lip service to the Government
31 yankeeboy (#) Feb 10th, 2013 - 02:13 pm Report abuse
Who wants to bet the 1st thing that goes is SOY for OIL and free OIL to the Bolivarian Socialist Countries. Cuba is doomed.

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.
32 agent999 (#) Feb 10th, 2013 - 02:40 pm Report abuse
Another article on his absence
33 mastershakejb (#) Feb 10th, 2013 - 06:18 pm Report abuse
another funny story regarding Venezuela
34 briton (#) Feb 10th, 2013 - 07:38 pm Report abuse
Some say this
Some say that,

But one things for sure,

He aint saying nothing.

35 ChrisR (#) Feb 10th, 2013 - 07:45 pm Report abuse
@31 yankeeboy

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.
36 Ayayay (#) Feb 10th, 2013 - 11:39 pm Report abuse
Youtube video of how Venezuelans are reacting
37 Idlehands (#) Feb 11th, 2013 - 01:03 pm Report abuse
The alternative therapy that Chavez is currently recieving is probably plastination.
38 yankeeboy (#) Feb 11th, 2013 - 01:18 pm Report abuse
37. Argentina will have the same problems shortly. It is the only country in the world where Cars and Appliances GO UP in value (peso terms) over time!
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.
39 ChrisR (#) Feb 11th, 2013 - 02:58 pm Report abuse
37 Idlehands


I think TMBOA should be next for the treatment.
40 Captain Poppy (#) Feb 11th, 2013 - 04:44 pm Report abuse
Does it really take this long to make a glass crypt? I wish they would get it over and the venezuela that chubbies blood was replaced by formaldehyde.....though he really belongs in an ashtray.
41 Brit Bob (#) Feb 11th, 2013 - 06:07 pm Report abuse
All that oil and they still can't manage their economy and poor old Argentina is following in the footsteps of Chavez and Co. Will Argentina follow and devalue (again) when the poor old Peso is reduced to bum fodder?
Disaster beckons....
42 Ayayay (#) Feb 11th, 2013 - 06:39 pm Report abuse
@38 haha
43 Captain Poppy (#) Feb 11th, 2013 - 09:19 pm Report abuse
#41 yes all that oil, one of the largest proven reserves in the world and they are still broke.....why? A few reasons:
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!
44 agent999 (#) Feb 12th, 2013 - 12:39 pm Report abuse
like this

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