Amid a heavily distorted economy battling a spiralling black market rate for greenbacks, Venezuela on Wednesday finally unveiled plans to reform its tight currency control system that has been in place for more than a decade, a move that market watchers say amounts to a stealth devaluation.
“We are creating a system of bands in a new currency system,” said Rafael Ramírez, the president of the state oil company PDVSA, who is also the energy minister and vice president in charge of the economy, during a news conference. He insisted that, “this is not a devaluation, but a different foreign exchange system, with bands.” Continue reading »
No devaluation here?
As growing distortions wreak havoc in Venezuela’s economy after a decade of price and currency controls, there have been many calls for the government to make an aggressive adjustment, a real devaluation.
Well, according to Wednesday’s state of the union speech by president Nicolás Maduro, it is not going to happen, not this year, not for many years, as he confirmed the current exchange rate of 6.3 bolívars to the dollar. But amid a reshuffle of some of his top economic aides, the president announced what some economists are calling a “disguised”, “gradual”, “implicit” or even “incomplete” devaluation. Continue reading »
The New Year has come but the same uncertainty as last year is still looming over Venezuela. Particularly, the genuine currency devaluation that many economists agree could correct the country’s deep economic distortions and narrow the budget gap is, so far, nowhere to be seen. Continue reading »
By Francisco Toro
As far as anyone can tell, Venezuela is on track for twin fiscal and inflationary crises of unprecedented proportions, as the government monetises debt at breakneck speed, exacerbating already deep monetary imbalances. The trouble is that, in Venezuela, “as far as anyone can tell” isn’t very far at all: working in an extraordinarily data-poor setting means forecasting in the dark.
Nearly every data-stream an analyst would need to make a serious forecast is either artlessly manipulated or just not published. The challenges this creates are not always fully appreciated. So let’s start with a brief survey of what we don’t know. Continue reading »
Many have been saying it is about time Venezuela devalued and loosened a strict exchange rate regime that has been in place for a decade.
In the meantime, the government appears to be making some moves amid a shortage of greenbacks by broadening the secondary currency auction system, known as Sicad. Continue reading »
By Mark Weisbrot of CEPR
Felipe Pérez Martí criticises me on beyondbrics for my article in the Guardian on Venezuela’s economy, for claiming that “the Venezuelan economy is not headed for collapse,” and for a number of things that I did not say (see below).
My difference with Felipe, as with those who have incorrectly predicted an economic collapse in Venezuela for nearly 14 years now, is that I think that the most urgent problems can be fixed with a change in the exchange rate regime. Continue reading »
By Felipe Pérez Martí
In a recent article published in The Guardian, American economist Mark Weisbrot argues that concerns expressed by economists about the condition of the Venezuelan economy are unfounded. He claims that the Venezuelan economy is not headed for collapse, and describes those who say this is so as “Venezuela haters” allied to the opposition.
I served under President Hugo Chávez as Minister of Planning and Head of the Economics Cabinet between 2002 and 2003. I deeply believe in the ideals of the Bolivarian Revolution of creating a just, egalitarian and democratic society in Venezuela, and in Chávez’s commitment to turn these ideals into reality. Continue reading »
President Nicolás Maduro is a fraud, his government is incompetent and corrupt, most ministers should be sacked, the ruling Socialist Party’s ideological discourse is sterile, the national “Bolivarian” project is on a suicide path, and there is a growing risk of a coup from within the administration.
But don’t believe the FT on any of this. These are the words of Heinz Dieterich, a Marxist professor and former mentor of Hugo Chávez, writing in the leftist website Aporrea. Having cleared our throats before Sunday’s municipal elections, what actually is at stake at the vote — in concrete terms? Continue reading »
Over the weekend Nicolás Maduro, Venezuela’s president, announced further measures to reinforce his “economic offensive” against “capitalist parasites”. At the same time, your correspondent was on his way to cross the border from Colombia into Venezuela – overland, listening to loud vallenato and merengue in a rusted 1984 Chevrolet Caprice.
And while waiting hours on end to get his passport stamped in the sweltering heat of Paraguachón, he witnessed one of the unwanted consequences of the president’s war on free enterprise. Continue reading »
Venezuela keeps fidgeting with its tight foreign exchange controls. Earlier this week President Nicolás Maduro announced the government was restructuring the way it allocates greenbacks in its import-dependent economy.
He said the government was establishing the “National Centre of Exterior Commerce”, an umbrella organisation to oversee the main foreign exchange agency, Cadivi, as well as the country’s forex auction mechanisms. Continue reading »
New inflation data are out in Venezuela and they don’t make for a pretty reading.
Prices rose 5.1 per cent in October, the second highest monthly increase in over three years, according to the the Central Bank of Venezuela (BCV). Continue reading »
Christmas comes round pretty quickly each year – too quickly for some, given the proliferation of Xmas ads on TV. But not soon enough, it seems, for Venezuela’s President, Nicolás Maduro. Forget the calendar: over the weekend he wished his followers a “merry early Christmas”, flicking on the lights at the presidential palace and saluting the Three Wise Men.
His decision of advancing Christmas by decree means that workers will receive the first two-thirds of their bonuses and pensions next week, with the remaining in early December, and that the supply of some 50m toys will be guaranteed in a country that is battling shortages. Continue reading »
What to do if you are a president struggling with massive shortages and galloping inflation? You create a Deputy Ministry of Supreme Social Happiness, to try keep people, well, happy.
That is what Venezuela’s President Maduro announced late last week, stating that the ministry co-ordinate all the poverty alleviation programmes installed by his mentor and predecessor Hugo Chávez. Leaving aside the self-declared good intentions, some commentators smell political motives ahead of municipal polls in December already perceived as a plebiscite on Maduro’s rule. Continue reading »