Nicaragua Prices Soar After Devaluation

The cost of food has soared, some taxi drivers have quadrupled fares and two unions have demanded pay raises of 600% in the wake of last week’s introduction of free-market measures by the leftist Sandinista government.

Among the actions taken were a huge devaluation of the cordoba, Nicaragua’s currency, a near-doubling of gasoline prices and a general pay increase of 30%.

The government retained subsidies on some basic foods. But in markets where goods sell outside the rationing system at free-market rates, the price of a liter of milk has gone from 6.6 to 21 cordobas; meat from 50 to 100 cordobas a pound, and a dozen eggs from 50 to 80 cordobas.

On Friday, a dollar was worth 80 cordobas at the official rate instead of 13. On the black market, a dollar bought 250 cordobas--90 more than the market offered before devaluation.

Earlier in the week, President Daniel Ortega told domestic critics they were “playing with fire” by opposing the program and that the political opposition might “disappear if they don’t respond with the patriotism our country demands.”

So far, no public protests of the economic measures have been held.

The new gasoline prices have thrown the transportation system into disarray. Many cab drivers were ignoring the official tariff of 5 cordobas for a short trip, demanding 20. Others simply stayed home.

Two major unions controlled by the Socialist Party demanded raises of 600%. The government called the positions of the Workers’ Federation of Nicaragua and General Federation of Independent Workers “unreal” and inflationary.