Venezuela hiked gasoline prices for the first time in almost two decades and devalued its currency as President Nicolas Maduro attempts to address triple-digit inflation and the economy’s deepest recession in over a decade.

The primary exchange rate used for essential imports, such as food and medicine, will weaken to 10 bolivars per dollar from 6.3, Maduro said in a televised address to the nation. The government will also eliminate an intermediate rate that last sold dollars for about 13 bolivars and improve an alternative “free-floating, complementary” market that trades around 203 bolivars per dollar.

The devaluation will ease the drain on government coffers by giving state oil company Petroleos de Venezuela SA more bolivars for each dollar of oil revenue, while higher gasoline prices will reduce expenditure on subsidies. At the same time, the devaluation will probably force the government to raise the cost of staple foods such as rice and bread that most of the country now depends on to eat.

“Faced with a criminal, chaotic inflation induced a long time ago, we must act with the power of the state to control and regulate markets,” Maduro said below a portrait of South American independence leader Simon Bolivar.

While Maduro’s measures may fall short of fully addressing Venezuela’s ailing economy, the announcements may “bring some relief that it’s something after months (years) of nothing,” Sibohan Morden, head of Latin America Fixed Income at Nomura Securities International, said in a note to clients published prior to Maduro’s speech. “It is also important that Chavismo shifts toward pragmatism and finally realizes that the Bolivarian revolution has failed.”

‘Necessary Measure’

Something had to change after the bolivar lost 98 percent of its value on the black market since Maduro took office in 2013. The government was hemorrhaging funds as it struggled to meet international debt obligations and maintain the supply of essential items amid the collapse in oil prices.

By long subsidizing the cost of fuel, the government has ensured that Venezuelans enjoy the cheapest gasoline in the world. Gasoline prices on Thursday will leap more than 60-fold to 6 bolivars a liter from 9.7 centavos. That’s equal to about 11 U.S. cents per gallon using the weakest legal exchange rate of 202.94 bolivars per dollar, up from about 0.2 U.S. cents per gallon. The price of 91-octane gasoline will increase to 1 bolivar a liter from 7 centavos. Even after these increases, Venezuela still has the lowest gasoline prices in the world.

Fuel prices in Venezuela hadn’t budged in almost 20 years. Food and gasoline price increases in February 1989 sparked nationwide protests and ultimately paved the way for the late President Hugo Chavez’s rise to power. Fearing a repeat of the so-called Caracazo riots, and labelling the measure typical of neoliberal economics, Chavez never raised gas prices during the 14 years he held office.

“Venezuela has the cheapest gasoline in the world,” Maduro said before announcing the new price. “This is a necessary measure, I assume the responsibility.”

‘Economic War’

Venezuela’s economy is mired in its worst recession in more than a decade as the price of oil, which accounts for 95 percent of its export revenue, fell more than 75 percent since a peak in June 2014. While Maduro maintains his country’s hardships are the result of “economic war” waged by political foes, growing discontent over soaring prices and empty shelves allowed his opponents to sweep congressional elections last year.

To finance the shortfall in revenues, the government has turned to the printing presses, pushing inflation to 141 percent as of September last year. The International Monetary Fund has forecast it will reach 720 percent by year end.

The only measures that could reduce a fiscal deficit that is now almost 25 percent of gross domestic product include a “sharp” currency devaluation, a hike in gasoline and electricity prices and spending cuts, Barclays Plc wrote in a note to clients last month.

Maduro also announced a 20 percent increase to the country’s minimum wage effective March 1.

Gasoline Subsidy

Caracas-based state oil company Petroleos de Venezuela SA incurred $15.2 billion in expenses and costs in 2013 to maintain the country’s domestic fuel subsidy. PDVSA, as the Caracas-based company is known, spends about 2.7 bolivars a liter to produce gasoline domestically, ex-company President Rafael Ramirez said in late-2014 prior to his departure from the company.

Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, reduced fuel subsidies last month after last year’s plunge in oil prices eroded state income. The Persian Gulf kingdom increased retail gasoline prices by about 50 percent to 0.90 riyals per liter, or about 91 U.S. cents a gallon.

U.S. consumers are paying an average near $1.71 a gallon, according to the American Automobile Association.

“You can’t continue to sell gasoline at a loss, which is the current scenario. The gasoline subsidy is a huge financial burden on the company, so from the point of view of PDVSA and its cash flow situation, any type of relief is important and positive,” Luisa Palacios, managing director at New York-based consultant Medley, said by phone.