Venezuela devalues currency by 95%
Fuel subsidies slashed; minimum wage raised 3,000% amid the worst hyperinflation in Latin American history
The economic crisis in Turkey may look out of control, but there is one leader Turkish President Recep Tayyip Erdogan can point to as an alleged example of even worse economic management: his friend Venezuelan President Nicolas Maduro.
The embattled socialist leader has just undertaken one of the single largest devaluations of a currency ever, slashing five zeros off the value of the bolivar.
One likely outcome of the drastic measures, according to Bloomberg, is that inflation, which is already forecast to reach 1 million percent this year, will get even worse. It is already the most extreme case of hyperinflation ever seen in Latin America, by some measures.
In addition, the government is reportedly slashing fuel subsidies and increasing the minimum wage by 3,000%.
“I want the country to recover and I have the formula. Trust me,” Maduro said in a televised address on Friday night, as quoted by The Financial Times. As part of the measures, the bolivar will be pegged to a state-run cryptocurrency called the petro.
Maduro “might as well have chosen pegging it to unicorns,” Russ Dallen, head of Caracas Capital, an investment bank, was quoted as saying.
Desperate for cash, the country has also moved to raise the value-added tax by 4%.
Like Erdogan in Turkey, Maduro has blamed his country’s economic woes on Washington, which has imposed crippling sanctions on the South American nation. Despite gross economic failure under the Venezuelan leader’s watch, Erdogan went out of his way to endorse Maduro in a recent presidential election in a show of solidarity among countries that feel threatened by US foreign policy.