Dollarization is advancing and Venezuela is excited to wake up from the nightmare of hyperinflation
Venezuela It has been in the nightmare of hyperinflation since November 2017, a period of startling numbers that led to spontaneous dollarization as a lifeline.
However, in recent months, the rise in prices in bolivars – the devalued local currency – seems to have started to slow down, which nurture the hope of leaving the bad dream behind. Meanwhile, the greenback is entering the country.
According to the Venezuelan Observatory of Finances (OVF), inflation in May was 19.6%, while in April it closed at 33.4% and in March it was 9.1%.
For its part, the Central Bank of Venezuela (BCV) announced inflation in May of 28.5%, 24.6% in April and 16.1% in March. Official figures, however, generate mistrust of the opposition, which handles much more pessimistic data.
Thus, according to data from the government of NicolÃ¡s Maduro, inflation has been three consecutive months below the 50% that marks hyperinflation. The OVF reported 50.9% in February, although the BCV put it at 33.8% that month.
Between enthusiasm and prudence
Faced with these data, the dean of the Faculty of Economic and Social Sciences of the Catholic University AndrÃ©s Bello (UCAB), Ronald Balza, warns that relief may be just an illusion.
The expert explained to the EFE agency that hyperinflation begins when in a month it exceeds 50% and only it can be terminated when an entire year has elapsed below this percentage.
“It’s been twelve months without having 50% again in a month because, once we exceed 50%, the distortions that exist in the fiscal and monetary system are so serious that we must make sure to correct them in order to say that hyperinflation has ceased, “details.
For this reason, while waiting for a year to pass, Balza stressed that “unfortunately nothing has been seen to suggest that it will come out of hyperinflation because there is no budgetary correction in sight. “.
To his caution is added that, “more than once has happened”, since November 2017, that a month of inflation exceeds 50%, “then there are three months when this is not the case. , and in the fourth month it increases again because the machine that generates hyperinflation is still active. “
This machine is the “serious budget mismatch which ends up being resolved with the monetary issue â.
“The government has an amount of expenditure that we do not know because we do not know the budget, but we see that it receives an amount of bolivars from the BCV of which you do not know what is the destination and, this amount of bolivars who go to the government, we don’t know how it is entering the economy, we don’t know by what means, and prices are continually under pressure, âhe said.
Balza compared the situation to that of Bolivia in the 1980s, when, to overcome hyperinflation, “they decided to increase the price of gasoline”, as the government of NicolÃ¡s Maduro did in 2020. , which allowed the executive to collect revenues and financing with the central bank.
To this they added international loans so that “the fiscal gap that had been closed with internal and external revenues and the Central Bank ceased to be used”, which ended the hyperinflationary cycle.
“Everything goes up”
In the streets, this little respite is barely noticeable, especially since, as Balza puts it, the majority of the population has suffered a “sudden impoverishment” due to hyperinflation, despite the fact that the Chavista regime has increased. the minimum wage this year of 300%. .
Retired waiter Alex Niebles complains: âEverything is going up, nothing is going down, everything is inflation.
“Currently I do not see any stability, everything is the opposite, an inflation that I think everyone here is complaining about, the salary is not enough to buy anything, nothing, nothing”, he confides at EFE.
Niebles explains that “the dollar has been taxed” as the currency of payment, and “everything” produced has its prices expressed in dollars.
Of course, his pension is still in bolivars, seven million or $ 2.1, so he has to resort to street sales to supplement his income.
Edith Aponte agrees with him, a housewife who, although she observes that the prices of basic commodities like a bag of rice or corn flour – staple in the Venezuelan diet – have remained at a dollar for months, she considers everything to be “extremely expensive” and the salary is “not enough for absolutely nothing”.
âWe eat and we reduce ourselves, I am a housewife and I buy a flour and I have to try to bring it back; (the prices) are crazy, the eggs not to mention, the cheese for breakfast, âhe says.
It is the seed that sowed hyperinflation for over three years and that sprouted with a generalized pauperization which sums up Maikel Lugo, unemployed and father of a two-month-old baby: âIt’s fatal, every day the situation in the country is getting harder.
The nightmare promises to be long still.