Venezuela: Reform or act of desperation?

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New currency, a higher minimum wage, the end of the Free-gas: The socialist government in Venezuela attempted a coup. Critics say the measures, however, for tinkering

The of a severe economic crisis-ridden Venezuela sweeps in the fight against the Hyperinflation of five zeros in the prices. With the new regulation, which came into force on Monday, wants President Nicolas Maduro’s crackdown on the exploding inflation – in the meantime, a roll of toilet paper costs more than 2.5 million bolivars, or 40 US cents (article image). Critics, however, see this as more of a next step of socialist politics that could push the South American country deeper into crisis.

With the change in price is accompanied by an increase in the minimum wage to 3000 percent, as well as tax increases to support the state revenue. In addition, salaries, prices and the exchange rate of the country should be state-sponsored crypto-currency Petro-coupled.

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President, with the recipe?

The decline in Oil prices has led to a collapse of state revenue. The International monetary Fund (IMF), according to the country’s economy shrank by 2017 to twelve percent. For this year, the IMF predicts Inflation of a Million percent in Venezuela. In addition, the Venezuelan economy could break in performance of 18 percent.

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Inflation in Venezuela

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Inflation in Venezuela

President Maduro had announced on Saturday on state television comprehensive reforms. “I want the country to recover, and I have the recipe for it. Trust me,” he said.

The Opposition accuses Maduro of the establishment of a dictatorship, economic mismanagement and corruption. Maduro, Venezuela is the victim of a US-instigated Economic warfare.

A higher minimum wage in a “sovereign” currency

In view of the Hyperinflation of five zeros from the currency be deleted. From a Million Venezuelan strong Bolivar) Bolivar (as of Monday, ten Venezuelan soberano (sovereign Venezuelan). The minimum wage will be increased from five million Venezuelan less than a Euro) and Bolivar (1800 Venezuelan soberano (about 27 Euro). The extra money could fuel Inflation. “The Central Bank is printing fresh money. Exactly this has already led to the Hyperinflation,” said the opposition Deputy José Guerra from the Finance Committee of the national Assembly.

At the same time value – added and corporate income tax increases. In addition, the strict control of exchange rates is relaxed. In the future, may be traded in to around 300 exchange offices foreign exchange. Yet there was in Venezuela a whole series of different exchange rates. Most recently, Maduro admitted that the Bolivar is overvalued, according to the official exchange rate massively.

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Limits of sealing for Venezuelans

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Venezuela’s neighboring countries to close the borders

Goodbye to expensive Oddity

To want last but not least, the socialist government put an end to the Curiosity in the crisis state. So far, there is gasoline in Venezuela is practically free. A Liter costs six Venezuelan Bolivar, for the equivalent of one Euro, motorists can fill up so in theory, around one Million litres of fuel. Now the prices should be raised slowly to the international level.

The government assumes that you will lose only by petrol smuggling to Colombia and the Caribbean, per year $ 18 billion (15.9 billion euros). Registered supporters, recipients of social assistance and public transport should continue to be supported through direct subsidies.

Ruinous Oil Deals

Venezuela’s once-proud Oil industry is only a shadow of its former self. The flow rate is decreased to around 1.36 million barrels (each 159 litres) per day, the lowest level in more than 50 years. Because the state oil company PDVSA is not investing for decades in modern conveyor technology, maintenance of their equipment and training of personnel, can skim the country with the largest Oil reserves in the world, its wealth.

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It is dark in Venezuela

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It is dark in Venezuela

“The government has taken out over the years, every Dollar they could get from the company,” said Francisco Monaldi, from the Baker Institute for Public Policy. The gushing profits it pumped into social programs. Went to times of high Oil prices reasonably well. As the prices fell but, got Venezuela in trouble.

Because of the poor state of the conveying equipment, the country does not currently benefit from the recovery in Oil prices. The increase is not enough, the losses due to the declining funding balance. In addition, Venezuela can sell its entire production on the free world market, because a significant part is already scheduled. Thus, the highly indebted country paid its lending in Russia and China with oil Supplies and price, we can also send the socialist allies Cuba is still Oil to preference.

dk/sti (rtr, dpa)