Venezuela are still ongoing "dream" of becoming a not dependent. ( Photo: Seb )
To reduce oil dependency, Caracas devalues its currency. If the outbreak is countered speculative, inflation would still increase.
January 8 last Venezuelan President Hugo Chavez announced a devaluation of the currency. The bolivar, which previously traded at a rate of 2.15 per dollar, is now subject to a dual exchange rate. Priority sectors receive a report of 2.60 Bolivars / dollar, this is the case mainly products related to health, nutrition, public sector imports, equipment, etc.. For areas deemed "non-essential", the dollar is trading 4.30 bolivars cons now. This rate applies to the rest of the economy (automotive, trade, telecommunications, construction, textiles, drinks, etc..).
Rather than devaluing, the Bolivarian government prefers officially speak of "revaluation" or "adjustment" of the bolivar. Moreover, according to President Hugo Chávez, this measure was not taken to "face a fiscal crisis, or to pay domestic debt or external," but to "curb the flood of imports ". In fact, Venezuela depends for example 70% from abroad for its food. "With the dollar 'cheap', businesses have focused on imports and domestic production dropped," says Hugo Chávez.
A dollar subsidized
In the words of Economist Victor Alvarez, former Minister of Basic Industry and Mines, the overvaluation of the bolivar, kept up to date by the exchange control was necessitated devaluation. "This adaptation of the exchange rate has also been long delayed, it should be applied only detected the first signs of overvaluation," said he.
By overvaluation means that the purchasing power of the bolivar is more important in international markets on the local market. "And this is due to higher inflation in Venezuela that found in other countries including our major trading partners, "says Alvarez.
The fixed exchange rate, controlled by the state since 2003 and maintained since 2005 to 2.15 , argued, in fact, the bolivar at a rate unreal in practice and was a subsidy to imports. "While Venezuela has consistently criticized the international institutions like the WTO, the subsidies granted by the United States and EU exports (especially in agriculture), the overvaluation of the bolivar was in fact a terrible contradiction of the government, " says the former chairman of the Foreign Trade Bank.
A paradoxical situation has greatly affected the productive capacity that the government of Hugo Chavez claims not develop to counter the historic dependence on oil.
Given the willingness of the executive, however, many wonder about the ability of industry to export Venezuelan while often barely cover the national market. "Companies in difficulty as exchange controls and currency overvaluation do bloom again from one day to another, they do not suddenly transform into efficient enterprises. Venezuelan companies are structurally inefficient, they have a very low technological level and are no economies of scale. I s will be very difficult to be competitive in the global market "analysis for its part, the economist Manuel Sutherland, the Latin American Association of Marxist political economy (ALEM).
Spectre of inflation
For now, the main apprehension of the population and analysts is that devaluation helps to increase inflation which is already around 25% per year. Following the announcement of the measure, several appliance stores were stormed by consumers worried about a possible surge in prices of imported products. But the situation remained under control, the facts were not extended.
"The government talks about 'curb imports not necessary." But these imports will not decrease, they will simply become more expensive, "warned however Sutherland. The economist also believes "totally arbitrary" the established difference between the property known as "necessary" and others. "Shoes, clothes, a phone are the property necessary for the population but it will all become more expensive and this will impoverish workers," he argues.
Expropriations
Raise the productive effectively take some time. In the immediate future, the government launched a major awareness campaign to combat and control speculation and cons against what he considers excessive price increases, even calling consumers to report abuse and threatening expropriation of businesses suspected of speculating. January 20, Hugo Chávez has also joined the call to action by signing the decree of expropriation of Exito hypermarkets, majority owned by French group Casino and accused of illegal .
To minimize possible effects of the devaluation, the government announced two major complementary measures. The first is to increase the minimum wage by 25% between March and September. The second consists of notes issued by the Central Bank (for $ 140 million to present) to provide foreign exchange rate-regulated firms and individuals and thus discourage them from resorting to black market higher and considered one of the factors favoring the i nflation.
Investing the surplus tax
From Victor Alvarez, these measures are necessary but not sufficient. The economist thinks that we should strengthen and complete the adjustment of the exchange rate by a set of macro and microeconomic measures, such as ensuring that the increase in tax revenue to the state (due to the sale dollars at a higher price) be reinvested in improving infrastructure and productive not only in current expenditure, "These additional funds should be invested in the revival of agriculture, industry, creating jobs productive and able to finally realize this dream to transform Venezuela into a rentier economy productive economy exporter.
Articles published in the Swiss daily Le Courrier January 26, 2010
January 8 last Venezuelan President Hugo Chavez announced a devaluation of the currency. The bolivar, which previously traded at a rate of 2.15 per dollar, is now subject to a dual exchange rate. Priority sectors receive a report of 2.60 Bolivars / dollar, this is the case mainly products related to health, nutrition, public sector imports, equipment, etc.. For areas deemed "non-essential", the dollar is trading 4.30 bolivars cons now. This rate applies to the rest of the economy (automotive, trade, telecommunications, construction, textiles, drinks, etc..).
Rather than devaluing, the Bolivarian government prefers officially speak of "revaluation" or "adjustment" of the bolivar. Moreover, according to President Hugo Chávez, this measure was not taken to "face a fiscal crisis, or to pay domestic debt or external," but to "curb the flood of imports ". In fact, Venezuela depends for example 70% from abroad for its food. "With the dollar 'cheap', businesses have focused on imports and domestic production dropped," says Hugo Chávez.
A dollar subsidized
In the words of Economist Victor Alvarez, former Minister of Basic Industry and Mines, the overvaluation of the bolivar, kept up to date by the exchange control was necessitated devaluation. "This adaptation of the exchange rate has also been long delayed, it should be applied only detected the first signs of overvaluation," said he.
By overvaluation means that the purchasing power of the bolivar is more important in international markets on the local market. "And this is due to higher inflation in Venezuela that found in other countries including our major trading partners, "says Alvarez.
The fixed exchange rate, controlled by the state since 2003 and maintained since 2005 to 2.15 , argued, in fact, the bolivar at a rate unreal in practice and was a subsidy to imports. "While Venezuela has consistently criticized the international institutions like the WTO, the subsidies granted by the United States and EU exports (especially in agriculture), the overvaluation of the bolivar was in fact a terrible contradiction of the government, " says the former chairman of the Foreign Trade Bank.
A paradoxical situation has greatly affected the productive capacity that the government of Hugo Chavez claims not develop to counter the historic dependence on oil.
Given the willingness of the executive, however, many wonder about the ability of industry to export Venezuelan while often barely cover the national market. "Companies in difficulty as exchange controls and currency overvaluation do bloom again from one day to another, they do not suddenly transform into efficient enterprises. Venezuelan companies are structurally inefficient, they have a very low technological level and are no economies of scale. I s will be very difficult to be competitive in the global market "analysis for its part, the economist Manuel Sutherland, the Latin American Association of Marxist political economy (ALEM).
Spectre of inflation
For now, the main apprehension of the population and analysts is that devaluation helps to increase inflation which is already around 25% per year. Following the announcement of the measure, several appliance stores were stormed by consumers worried about a possible surge in prices of imported products. But the situation remained under control, the facts were not extended.
"The government talks about 'curb imports not necessary." But these imports will not decrease, they will simply become more expensive, "warned however Sutherland. The economist also believes "totally arbitrary" the established difference between the property known as "necessary" and others. "Shoes, clothes, a phone are the property necessary for the population but it will all become more expensive and this will impoverish workers," he argues.
Expropriations
Raise the productive effectively take some time. In the immediate future, the government launched a major awareness campaign to combat and control speculation and cons against what he considers excessive price increases, even calling consumers to report abuse and threatening expropriation of businesses suspected of speculating. January 20, Hugo Chávez has also joined the call to action by signing the decree of expropriation of Exito hypermarkets, majority owned by French group Casino and accused of illegal .
To minimize possible effects of the devaluation, the government announced two major complementary measures. The first is to increase the minimum wage by 25% between March and September. The second consists of notes issued by the Central Bank (for $ 140 million to present) to provide foreign exchange rate-regulated firms and individuals and thus discourage them from resorting to black market higher and considered one of the factors favoring the i nflation.
Investing the surplus tax
From Victor Alvarez, these measures are necessary but not sufficient. The economist thinks that we should strengthen and complete the adjustment of the exchange rate by a set of macro and microeconomic measures, such as ensuring that the increase in tax revenue to the state (due to the sale dollars at a higher price) be reinvested in improving infrastructure and productive not only in current expenditure, "These additional funds should be invested in the revival of agriculture, industry, creating jobs productive and able to finally realize this dream to transform Venezuela into a rentier economy productive economy exporter.
Electricity rationed
This power shortage may affect the economy: core firms have also had to drastically reduce their production . ( Photo: Seb )
"If we do nothing, we risk seeing the collapse of the national electricity system." This statement President of the Federation of Workers in the electricity sector, Angel Navas, dated October 2009. At the time, workers complained of poor planning and mismanagement of the National Electrical Corporation (Corpoelec). Today, the public company is obliged to initiate a plan for rationing throughout the country and the system might actually collapse in mid-April if drastic measures are not taken to reduce demand of 1,600 megawatts (MW).
For breaches reported by workers was supplemented by a particularly dry year 2009. In a country which depends to 70% of hydropower generation, the combination of two factors becomes explosive. Under the direction of the Guri Dam, which depends on the bulk of hydro generation, reach the critical level would involve the shutdown of eight turbines. This would mean the loss of 5000 MW, that is to say the equivalent of two and a half Caracas without electricity.
The "drastic measures" have already begun. The government has reduced the hours of administration officials who work longer than 8 am to 13 pm, for an expected period of 150 days. Moreover, the shortage of electricity may affect the economy: companies base (steel, metallurgy, brick, etc..) Also had greatly reduced their production. To overcome this, President Hugo Chávez has announced an investment of 200 million dollars to buy the Russian company Gazprom four power stations.
Finally, a plan for rationing in Caracas was suspended within 24 hours for being "poorly executed". This poor maneuvering has cost his post recently appointed Minister of Power generation, Angel Rodríguez.
This power shortage may affect the economy: core firms have also had to drastically reduce their production . ( Photo: Seb ) For breaches reported by workers was supplemented by a particularly dry year 2009. In a country which depends to 70% of hydropower generation, the combination of two factors becomes explosive. Under the direction of the Guri Dam, which depends on the bulk of hydro generation, reach the critical level would involve the shutdown of eight turbines. This would mean the loss of 5000 MW, that is to say the equivalent of two and a half Caracas without electricity.
The "drastic measures" have already begun. The government has reduced the hours of administration officials who work longer than 8 am to 13 pm, for an expected period of 150 days. Moreover, the shortage of electricity may affect the economy: companies base (steel, metallurgy, brick, etc..) Also had greatly reduced their production. To overcome this, President Hugo Chávez has announced an investment of 200 million dollars to buy the Russian company Gazprom four power stations.
Finally, a plan for rationing in Caracas was suspended within 24 hours for being "poorly executed". This poor maneuvering has cost his post recently appointed Minister of Power generation, Angel Rodríguez.
Articles published in the Swiss daily Le Courrier January 26, 2010
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