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MIAMI – When the International Monetary Fund predicted earlier this year that the hyperinflation in Venezuela could reach 13,000%, it seemed that the economic prospects of the South American country could not worsen.
The situation in the country deteriorating faster than expected, the IMF has unveiled a new and much more severe prognosis, saying that the hyperinflation of Venezuela is about to shoot for the stars of here the end of the year, reaching an annualized rate of $ 1 million.
This rate of inflation is intended to catapult Venezuela's socialist higher in the list of gallery rogue countries that have suffered the worst inflation rates in history.
Venezuela "is one of the most serious hyperinflationary situations we have seen since the beginning of the 20th century," said Robert Rennhack, deputy director of the Western Hemisphere's Department of the Western Hemisphere. IMF.
According to a study by Steve H. Hanke, professor of applied economics at Johns Hopkins University, the Venezuelan inflationary spiral was ranked 23rd in May. But it is increasing rapidly. The worst case remains Hungary after the Second World War, when inflation was so widespread that prices doubled every 15 hours. More recently, Zimbabwe in the late 2000s and the former Yugoslavia in the mid-1990s saw peaks requiring calculators to sort snowball rates.
[Maduro faces reelection as Venezuela deteriorates]
Venezuelan inflation fled while the economy is shattered by extreme corruption, the failure of socialist policies and the collapse of the economy. oil industry where the lack of spare parts and expertise has caused production to fall to levels not seen since the 1950s. In addition, President Nicolás Maduro – the sacred successor of Hugo Chávez, who died in 2013 – sought to cling to power by destabilizing institutions, harassing the courts and, according to his critics, stealing elections.
The almost valueless local currency banknotes, bolivars, are incredibly rare – the government struggling to pay for the paper needed to print them. Instead, the government simply creates tons of e-money paid into bank accounts, which means that even small transactions are increasingly made by credit card and money transfer rather than in-house. species.
Maduro tried some repairs to the proverbial wall to see what could stick. He even created a cyber-currency, the Petro, which is theoretically supported by oil supplies. But nothing has worked, in part because hyperinflationary spirals are notoriously difficult to stop once they have begun.
The most extreme solutions in the past have been to completely abandon local currencies and adopt, for example, the US dollar. Yet such a move may be considered anathema in Venezuela, where Maduro decried the United States as "the empire" to destroy his nation.
[Venezuela’s economy is so bad, parents are leaving their children at orphanages]
The country may be lacking options. The inflation rate is so bad that Venezuelans are abandoning their nation en masse. It is estimated that 2 million will come out this year, bringing to 3.8 million the total number of those who have left since 2016. A week ago, the dishwasher soap cost 3 800,00 bolivars; today, it is 4,900,000. One kilogram of chicken – or 2.2 pounds – cost $ 3,300,000 last week; today, 4,200,000.
Yaimy Flores, a 30-year-old caracas housewife whose husband, a janitor, earns the minimum wage of 5 196 000 bolivars a month – about $ 3 at the black market rate – says family income can be Extend to only two pounds of rice and one pound of cheese each month. They receive lentils, corn flour and some other items through a government program. But with very high prices, the family has mostly cut up proteins and can no longer afford soaps and shampoos.
"Now we have some soap left," said Flores. "What we do is split it into several parts so that we are aware of what we should be using, I do not know what our plan is when we finish this soap, I have not bought any shampoo since Last year. "
With hyperinflation rising, Maduro is right to worry. The story indicates that episodes of hyperinflation can be dangerous to the health of dictators and strong men, leading to revolutions, coups and other forms of violence. eviction. But the leader of Venezuela can also be comforted by the longevity of Zimbabwean Robert Mugabe, who has been in power for a good decade after his country's epic battle against inflation, which reached such a peak. in 2007 that prices doubled every 24.7 hours. The IMF may even underestimate the severity of Venezuela's hyperinflation. Ecoanalitica, a financial company based in Caracas, predicts that the inflation rate will reach 1.4 million in December.
For a country that was once the richest country in South America, "it means a brutal cycle of impoverishment," said Asdrúbal Oliveros, director of Ecoanalitica. majority of Venezuelans who depend on their work and have no savings in dollars or do not get help from family members abroad, inflation like this, which reaches more than 1 million, drastically condemns them to poverty.
Rachelle Krygier contributed to this report
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