Bolivia Devalues Peso, Raises Prices
LA PAZ, Bolivia (AP) _ Bolivia sharply devalued its currency and raised the price of food, gasoline and other commodities Saturday in a bid to stem the threat of an economic collapse.
In the sweeping restructuring plan, the official peso exchange rate jumped from 9,000 per U.S. dolar to 50,000 per dollar. On the black market, one U.S. dollar still fetches 120,000 pesos.
A series of small devaluations in the future will bring the official and black market rates closer together, Planning Minister Fredy Justiniano told reporters.
The government also increased the price of gasoline by 575 percent and food by an average 400 percent.
To compensate for the increases, workers were given a weekly increase that raises their wages by 340 percent.
The minimum monthly wage had been worth the equivalent of $100 under the old official exchange rate. Justiniano said the government would not grant any further wage hikes beyond those announced Saturday.
Leaders of the powerful Bolivian Labor Confederation did not respond immediately to the new austerity measures. It has reacted to previous devaluations by calling general strikes and forcing the government to increase wages.
Inflation during January was 80 percent, and if that continues unchecked, the 1985 rate could reach 115,000 percent, Central Bank and U.S. officials said.
″At the current rate of inflation, the country’s economy could come to a complete standstill in a few months with unpredictable social consequences,″ said Juan Cariaga, a banker and president of the Bolivian College of Economists.
Justiniano said the measures were needed to control inflation and stimulate industry. He maintained the government had fixed realistic prices that will be adjusted periodically to foster production.
″This program is totally different to previous ones because it confronts the country’s most serious problems and opens the real possibility of solving the crisis,″ Justiniano said.
The Labor Confederation, which represents almost all workers, called about 400 strikes last year, including several nation-wide strikes that paralyzed the country for 31 days.
Teachers demanding higher wages walked picket lines much of the year, and schools were in session only 100 days.
″We are raising a generation of illiterates,″ said Cariaga.
In recent weeks, bread has dissappeared from virtually all market shelves, beef and poultry are rarely available and then beyond the reach of the average worker.
The San Calixto soup kitchen, run by the Roman Catholic church, now serves as many as 5,000 low cost meals a day, compared to 500 two years ago, church officials said.
Conservatives in Congress have demanded that President Hernan Siles Zuazo call elections for June 16, a year ahead of schedule. They blame him for the economic crisis while he says it is because he inherited a $4 billion foreign debt and an economy ruined by a series of corrupt military dictators.