Lufthansa-suspends-flights-to-Venezuela-cites-poor-economy. CARACAS, Venezuela, Citing a continuing poor economy in Venezuela, German airline Lufthansa plans to suspend flights to the South American country next month.
The airline said currency controls in the nation have made it impossible for it to convert earnings into dollars and repatriate revenue., Euro News reported. Lufthansa officials said the company hopes to restore services in the near future.
The low price of oil has badly affected Venezuela’s economy, which is currently suffering triple digit inflation and a chronic shortage of even the most basic goods,BBC reported.
Just last week, Coca Cola announced a halt to some of its operations in the country due to a lack of sugar.
Lufthansa said that it “will be forced to suspend our service between Caracas and Frankfurt as of 18 June.” The airline also noted that the demand for international flights to Venezuela dropped in 2015 and in the first quarter of 2016.
The growing economic crisis has led Venezuela’s opposition to push for a petition to recall of President Nicolas Maduro. So far Madura has refused to budge, despite efforts from several former leaders, including Spain’s ex-Prime Minister Jose Luis Rodriguez Zapatero, to mediate the political stand-off.
Venezuela has sold at least $1.7 billion in gold reserves to pay debts this year, decreasing the South American country’s gold reserves to the lowest level on record.
The International Monetary Fund predicts the Venezuelan economy will shrink 8 percent in 2016 and will contract an additional 4.5 percent in 2017. Venezuela, which had the world’s 16th largest gold reserves, began selling part of its 367 tons of gold reserves in March 2015 — likely to Russia, China and Switzerland.
Venezuela and its government-run oil company, PDVSA, have about $6 billion in principal and interest debt payments this year. Inflation is forecast to exceed over 1,600 percent in 2017. Venezuela has been the biggest seller of gold out of all countries in four of the last five financial quarters.
Just last month, Maduro announced that Venezuela would cut electricity to four hours per day to contend with a worsening economic crisis.
The 40-day program, in a country already accustomed to repeated blackouts, is experiencing the cuts in 10 of Venezuela’s 23 states, including major cities, Electricity Minister Luis Motta Dominguez said.
He said the sacrifice is patriotic and a symbol of Venezuelan solidarity, and blamed a drought for reducing the water supply at Guri Dam, the massive hydroelectric dam which supplies 65 percent of the country’s power.
By Yvette C. Hammett