Venezuela is waiting for dramatic reforms, people are confused

Economists warn that the government package of measures has accelerated hyperinflation.

20. Aug. 2018 o 13:54 TASR

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Varaci. Venezuelan traders and consumers nervously wait for the dramatic reforms introduced by President Nicolás Maduro at the weekend to save the diving economy.

They include a new menu and a minimum wage increase of more than 3,000 percent.

The changes begin on Monday by the introduction of the currency of the sovereign bolivar, which has cut five zeros from the previous one.

Maduro also said that he would raise petrol prices internationally. The combination of these measures will, according to critics, aggravate the situation in the country.

Rural strike

Opposition leaders opposed the tensions between people calling for a national strike on Tuesday, August 21st. They hope that the streets of cities will be flooded with massive protests against the ruling Madura socialist party – something they have not been able to do for more than a year.

Banks will be closed today while they are preparing for the release of a sovereign bolivar, which is five pounds less, to help the government overcome the huge inflation.

Madura's government also announced that by the end of September even the cheapest gasoline in the world will be expensive to limit its uncontrolled smuggling across borders.

Economists argue that the government's package of measures is likely to speed up hyperinflation, instead of tackling major economic problems such as the fall of oil production to levels of 1947. The devaluation of the currency and its replacement as & # 39; new & # 39; are only labeled as a cosmetic treatment that does not really change anything.

Trades could not determine prices

Recommendations on the street markets in Caracas were longer than normal on Saturday (18 August).

People tried to pay in advance because of the uncertainty that awaited them this week. Many of them were frustrated by "bank card readers" who were slow or unable to transact, forcing some to leave empty-handed.

"You have to be patient," said the seller of grain products against a growing customer base. Many other stores remained closed because they did not know what prices they had to set for their goods.

Venezuela was once the most prosperous country in Latin America thanks to the enormous oil reserves, the largest in the world.

But the recent fall in commodity prices coupled with corruption and poor management for two decades of the socialist regime historically caused the worst economic crisis. Inflation in the country could amount to 1 million percent this year in the context of the International Monetary Fund.

Inflation is increasing

High and steadily rising inflation at the same time complicated payments with banknotes. The largest bank of the end currency was one hundred thousand dollars less than three cents (2.63 cents) according to the exchange rate of the black market. A cup of coffee cost more than 2 million bolivariants.

The new currency has two coins and banknotes worth between 2 and 500 sovereigns. The lowest banknote is 200,000, while the highest is 50 million "old" bolivariants.

The old and new names remain in circulation during the transition period.

The government took a similar step in 2008 when President Hugo Chávez issued a new currency and overtook three outs in the fight against rising inflation.

Maduro also announced a strong increase in the minimum wage by more than 3,000% on Friday, rising to around $ 30 on the black market. It is not clear when this change comes into effect.

Maduro caused chaos

The president was even more confused when he said he wanted to link wages, prices and pensions to the oil-covered cryptoma oil. This Venezuela was introduced in February, but it is still out of circulation. According to the president, one dollar has a value of $ 60.

"The next few days will be full of confusion for consumers, including the private sector, particularly merchants," said Asrúbal Oliveros, director of Ecoanalítica, Caracas. "It's a messy script."

Opposition politicians and unionists said on Sunday (August 19) that they call Tuesday for national strike and protest.

"The published measures are not a plan for economic recovery for the country," said opposition leader Andrés Velásquez. "On the contrary, they represent more hunger, more poverty, more suffering, more pain, more inflation and further deterioration of the economy."

Business owners are worried that a sudden wage increase will prevent them from paying employees without a sharp price increase, which is reflected in an acceleration in inflation.

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