Venezuelan president Nicolás Maduro announced regulations for gasoline sales – the cheapest in the world – during a congress of the ruling party that paradoxically debates to relax the rigid controls on the economy to overcome the crisis.
Although he did not mention a rise, Maduro said that the current fuel prices do not cover production costs and encourage smuggling, so he proposed regulating the sales through the country’s card, an electronic card that gives access to state subsidies.
Saying gasoline is given away is an understatement, we pay to throw it out (…), we have to move to a rational use (…) and this will impact changes in all the automotive transport,”
said the president during the Socialist Party (PSUV) forum.
Venezuela has the cheapest gasoline in the world: with a dollar you can pay more than three million liters and the socialist government denounces that mafias smuggle it to other countries.
Maduro announced on Wednesday that on August 20th he will eliminate five zeros from the currency -two more than expected- and a new monetary cone will come out amid an inflation that, according to the IMF, could reach 1,000,000% this year.
With the new currency of lesser value, 0.5 bolivars (50,000 bolivars today), pay for 50,000 liters of naphtha. Analysts believe that this distortion makes it very likely that the government will be forced to adjust fuel prices.
The increase in gasoline is a taboo subject in the oil country. On February 17th, 2016, Maduro raised it for the first time in two decades to 1 bolívar per liter.
In the forum, which at the request of the president will run until August 30th, the possible elimination of controls on the economy is being debated, which according to analysts generated the serious crisis that triggered poverty and pushed hundreds of thousands to emigrate.
Minister of Education Elías Jaua confirmed that they will address two proposals on the cost of gasoline: a progressive increase in the price of fuel and a policy of internationalization of prices.
Jaua added that another sensitive issue will be discussed: the exchange rate regime, since the State monopolizes foreign currency since 2003.
While the government controls the currencies of the economy, dependent on imports and in serious crisis – with shortages of food and medicines – the black market marks the price of several basic products.
On Saturday, president Maduro, who says that inflation is part of an “economic war” of the opposition and Washington to try to overthrow him, recognized the serious production failures in state companies.
Chavismo leaders have called for an economic turnaround, including Freddy Bernal – the president’s colleague – who said last week that “the revolution” is responsible for “the good and the bad” that happens in the country.