LatinNews Daily Report - 10 December 2013

ECONOMY | Arreaza calls for debate on gasoline prices. On 9 December Vice President Jorge Arreaza called for the start of a debate on the price of gasoline in Venezuela, which is so heavily subsidised it’s cheaper than bottled water.  In an interview with the private TV channel Venevisión, Arreaza stated: “There needs to be big debates in Venezuela, for example about the fiscal [situation], about the price of gasoline”. He added that the government was going to open consultations with "all sectors, including the business sector", to “discuss actions and policies to definitively balance the economy in Venezuela”.  A litre of petrol in Venezuela costs just over one US dollar at the official exchange rate, and the fuel subsidy costs the government some US$1.5bn a year. However, Venezuelans consider cheap fuel a birthright and memories are still fresh of the fatal riots against government austerity measures – including a controversial fuel price rise – in the 1989 ‘Caracazo’. With oil prices at a record high from 2004 on, the late president Hugo Chávez (1999-2013) had no need to touch the fuel subsidy. However his legacy is a ballooning fiscal deficit (of anywhere between 7% and 15% of GDP, depending on the estimate), after years of uncontrolled spending (and alleged widespread official corruption). This time last year, the former finance and now planning minister Jorge Giordani had also said that Venezuela had to put an end to ‘giveaways’ (‘lo regalado’), including gasoline. However such a move at a time of runaway inflation and a severe domestic economic crisis would be very difficult to sell to Venezuelans of all stripes.

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