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CARACAS – That it triggers a social revolution or forces the government to open the economy, one thing is certain: the projected inflation of 1 million percent in Venezuela will worsen misery from a population that is already suffering.
This week, the International Monetary Fund (IMF) made an astonishing projection by adjusting its previous estimate that inflation would reach 14,000%, a figure more than 70 times higher.
Even the figure of millions could prove too low. The price of a cup of coffee measured in Bloomberg's Cafe Con Leche index climbed to 2 million bolivars ($ 20) this week from 1.4 million bolivars the previous week. At the end of April, the price was 190,000 bolivars. Already, poverty is reaching unprecedented levels, an estimated 1.6 million people have fled the country, social unrest is on the rise, wages have become almost worthless, there is President Nicolas Maduro. grips to power
"Nothing surprises me," said Marcos Salazar after being informed of the IMF's projection while he was crunching a hamburger while he was standing near a stall of street. This burger cost 5 million bolivars (about $ 1.50 on the black market), the equivalent of the monthly minimum wage, which is partly paid for in food coupons.
"Week after week, day after day, things are more expensive, it's not progressive, it's exponential," said Salazar, a 31-year-old teacher who works three jobs. who is not enough to support him and his partner.
They survive thanks to the money sent by relatives who fled
Hyperinflation has not only contributed to food and medical shortages but also to the collapse of public services, including water, electricity and transportation.
Henkel Garcia Specialist Econometrica Economist's Cabinet believes that Venezuela desperately needs reforms political and social "To avoid coming out of hyperinflation, just a deep reform of economic policy," he said, highlighting the examples of Germany in the 1920s and the Zimbabwe in the 2000s. [19659002AccordingtoalargegroupofVenezuelanpovertyhasgrownto87%in2017andpovertyexceeds61%
According to them, 6 out of 10 people say they have lost an average of 11 kg (24 pounds) due to hunger. The Maduro government refutes these figures, claiming that extreme poverty is only 4.4%
Venezuela depends on its oil exports which account for 96% of revenues, but production has dropped to its lowest level level in 30 years – 1.5 million According to the Organization of the oil-producing countries, this figure rose from 3.2 million in 2008
which prevented the country from benefiting from a recovery of oil price, while the Maduro government has decided to print more money for lack of The IMF has justified its projection saying that it expects the government to continue to print more money, fueling "an acceleration of inflation as the demand for money continues to collapse."
Garcia says that in the expansion of the monetary base, Venezuela needs to boost the industry, which currently operates at a capacity of 30 percent, and dismantle controls over prices and the exchange rate , which
Attracting funds is another imperative, currently thwarted by US sanctions against the government and the state-owned oil company PDVSA.
The Venezuelan economy is expected to contract by 18% this year, the third According to Econometrica, the country needs to inject between 20 and 30 billion dollars a year for the next two or three years to stop the fall.
Despite his reelection on May 20 A vote largely condemned as a sham by, among others, the United States and the European Union, Maduro is facing a battle to keep power.
Demonstrations are becoming more common among public sector employees demanding higher wages
"There will be an increase in social protests," said political analyst Michael Penfold
. However, political scientist Miguel Martinez Meucci thinks there is only one. Maduro's hold on power will weaken: loss of support from the armed forces, who exercise great political and economic power. "While a social rebellion could precipitate this, the regime works night and day to smother the two," Martinez Meucci
However, there have been rumblings of dissatisfaction within the Chavist ranks, some of whom have recently called for economic reforms
These tensions could arise at the congress of the United Socialist Party (PSUV) to begin Saturday.
"The revolution has been going on for 19 years now, we are responsible for the good and the bad," admits Freddy Bernal, an influential Maduro ally who admits that "governance has been lost."
Indeed, last Wednesday Maduro announced the removal of five zeros from the national currency – two
Maduro announced at a Cabinet meeting that an "economic stimulus" program involving the "Monetary reconversion" will begin on August 20th.
He previously said that new bolivar banknotes with three zeros would come into circulation on the 4th – a measure already postponed from June 4th at the request of the banks
Maduro accuses the hyperinflation of what was going on. it calls a "war" against the currency, including exporting to other countries like neighboring Colombia.
the reform does not address economic fundamentals or, for example, does not distance itself from the state-run economy.
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