Opposition slams Chavez allies over Venezuelan devaluation

Sat Feb 9, 2013 1:14am EST
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By Andrew Cawthorne and Girish Gupta

CARACAS (Reuters) - Opposition leaders derided another currency devaluation by President Hugo Chavez's government as evidence of economic incompetence, while some anxious Venezuelans packed stores in fear of price increases.

Though unseen in public since cancer surgery two months ago in Cuba, government ministers said Chavez personally ordered the fifth devaluation of the bolivar in a decade of socialist economics in the OPEC nation - this time by 32 percent.

"The Maduro-Cabello duo are finishing off our Venezuela, we must not allow it!" said opposition leader Henrique Capriles, accusing Vice President Nicolas Maduro and Congress head Diosdado Cabello of squandering revenue from high oil prices.

"They spent the money on (election) campaigning, corruption and gifts abroad. What a lying government!" Capriles said on Twitter.

The measure was announced before a four-day weekend for Venezuela's Carnival holiday to minimize political or market repercussions. It had been widely forecast by economists as a way of redressing distortions including a black market rate for dollars at four times the old official level of 4.3 bolivars.

Raising the rate to 6.3 bolivars will boost state finances by providing more local currency for each dollar of oil export revenue. But it also hikes prices for imports crucial to the oil-dependent economy, potentially fueling inflation - though the state will seek to brake that using price controls.


Maduro, who is Chavez's preferred successor should his cancer force a new presidential election, said the move was needed to optimize revenues, including to fund flagship social programs that are wildly popular among Venezuela's poor.   Continued...

Venezuela's Finance Minister Jorge Giordani talks to the media during a news conference at the headquarters of the Central Bank in Caracas February 8, 2013. Venezuela on Friday devalued its bolivar currency in a widely expected move that will ease pressure on government finances after President Hugo Chavez's heavy campaign spending last year, but is likely to spur the OPEC nation's inflation. REUTERS/Carlos Garcia Rawlins