CARACAS – Whether it triggers a social revolution or forces the government to open the economy, one thing is for sure: Venezuela's projected 1 million percent inflation will bring more misery to an already-suffering population.
Earlier This week, the International Monetary Fund (IMF) adjusted the breathtaking projection and adjusted its previous estimate that inflation would reach 14,000 percent to more than 70-fold.
Even the million percent could turn out to be too low. The price of a cup of coffee, measured in Bloomberg's Cafe Con Leche Index, rose from 1.4 million bolivars to $ 2 million this week ($ 20). At the end of April, the price was 1
Poverty has reached unprecedented proportions, an estimated 1.6 million people have fled the country, social unrest is on the rise, salaries have become almost worthless, food and drug shortages – and yet President Nicolas Maduro is clinging to them Makes.
"Nothing surprises me," Marcos Salazar said after learning about the IMF's projection while eating a hamburger at a street stall. This burger cost 5 million Bolivars (about $ 1.50 on the black market), which is the minimum wage paid in part in meal vouchers.
"Week by week, day by day, things cost more, it's not gradual, it's exponential," added Salazar, a 31-year-old professor who wears three jobs, which is still not enough for him and his partner.
They survive thanks to money sent home by relatives
Hyperinflation has not only contributed to food and drug shortages, but also to the collapse of public services such as water, electricity and transportation.
Econometrica economics specialist Henkel Garcia believes that Venezuela urgently needs political and social reforms to "maintain a minimum of stability".
"One can escape hyperinflation only through a profound economic policy reform," he said, pointing to the examples of Germany in the 1920s and Zimbabwe in the 2000s [196592002LauteinergroupleadingerveenecolanicUniversitiesincreasedtheArmutto87percentin2017inxtremeArmut61percent
They said 6 out of 10 People claim to have lost on average 11 kg (24 pounds) because of hunger. Maduro's government refutes these figures, claiming that extreme poverty is only 4.4 percent.
Venezuela, however, relies on its oil exports, which account for 96 percent of its revenue, but production has fallen to its lowest level in 30 years – 1.5 million barrels per day, from 3.2 million in 2008 – according to the Organization of oil-producing countries.
This has prevented the country from benefiting from a rebound in oil prices, while the Maduro government's decision to spend more money due to lack of currency trading has caused economic paralysis.
The IMF justified its projection, expecting that the government would continue to print more money, which was "an acceleration of inflation with rising demand for money."
Garcia says that not only In expanding its monetary base, Venezuela must now drive the industry by 30 percent and reduce its control over prices and the exchange rate (19659002) The raising of funds is another imperative currently being imposed by sanctions United States against the government and the state-owned oil company PDVSA is prevented.
The Venezuelan economy is expected to contract by 18 percent this year As a result of bimonthly declines in a row.
According to Econometrica, the country needs $ 20-30 billion a year for the next two to three years to stop the slide.
Despite his re-election on May 20, an opinion poll condemned by, among others, the US and the European Union is a struggle for power.
Demonstrations are increasingly demanded by public sector employees, the higher Demand for wages and citizens who are tired of it
"There will be a rise in social protests," political analyst Michael Penfold said
Political scientist Miguel Martinez Meucci believes there is only one way Maduros influences weakened to power: loss of support from the armed forces, which exercise great political and economic power.
"While a social rebellion can bring about this, the regime works day and night to stifle both," said Martinez Meucci
However, there was uncontrolled dissatisfaction in the Chavista ranks, some of which recently called for economic reform.
These tensions could ignite during the United Socialist Party (PSUV) Congress starting on Saturday
"The revolution has been in existence for 19 years, we are responsible for the good and the bad," confessed Freddy Bernal, an influential Maduro Ally who recognizes that "governance has been lost".
Indeed, Maduro announced late Wednesday night the cancellation of five zeros out of the local currency more than originally planned
Maduro announced in a Cabinet meeting that on August 20, an "economic stimulus program" would begin with "currency conversion".
He said earlier that on August 8, new Bolivar bills will be circulated with three zeros less 4 – a move that had already been pushed back by banks on June 4
Maduro is turning hyperinflation to one as he calls it, "war" against the currency including export to other countries like neighboring Colombia.
Reform is not concerned with economic fundamentals or, for example, with turning away from state-run economic systems.