The daily concern of the vast majority of Venezuelans is what they will be able to buy with the little money they manage to earn. During the last four years, Venezuela It has been mired in one of the longest hyperinflations in its history, but everything indicates that at least in the first quarter of 2022 this stage will be behind us, although that does not mean an improvement in the quality of life of citizens.
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Although the Central bank of Venezuela (BCV) has said that the nation has already left behind the hyperinflationary scenario since December 2021 by adding, according to its figures, 12 months with one digit of inflation, for the Venezuelan Observatory of Finance (OVF) the last price variation above the 50 percent was in February 2021, so the road is not yet complete.
In August, the OVF reported a percentage of 10.6, while in September it stood at 9.7 percent and from there it began to decline until it reached 6 percent.
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The Observatory explains that this is due to the fact that the stability of the exchange rate has had a decisive influence, but that in turn this dynamic has meant a fall in the liquid international reserves of the BCV to 171 million dollars due to the intervention in the foreign exchange market to be able to offer Dollars cash.
In this sense, the OVF, which is an independent body, warned that the currency (the bolivar) is entering a process of overvaluation that is equivalent to higher prices for Venezuelan goods, which means that sectors such as manufacturing and agriculture have lags in all their activities.
“We’ll probably get out of the hyperinflation between February and March 2022, which is good news,” former deputy and university professor José Guerra, also a member of the OVF, tells EL TIEMPO. “However, the rates recorded in recent months remain high by international standards,” he added.
And it is that even if there is no hyperinflation in the first quarter, inflation will remain high and “purchasing power will remain depressed in 2022,” confirmed Guerra.
On December 17, President Nicholas Maduro He said that this year had been the best in a long time in “economic, commercial, social and political matters.” But, although there was certainly an economic respite, not less poverty.
Annualized inflation, according to the OVF, was 769 percent until November 2021, which when compared to the same period in 2020 suffered a significant decrease, since in the same month of that year it stood at 4,087 percent. All of this translates to it being the ninth month in a row trending down and below 50 percent.
In that sense, the BCV has also reported low numbers on inflation and the issue is that reaching 12 months with the figure below 50 percent is saying goodbye to four years of hyperinflation.
projections
One of the important aspects in this possible economic recovery in Venezuela is that it will not be easy. The GDP fell around 80 percent added to the exodus of migrants that exceeds five million. “Any indication that says that Venezuela was arranged must take into account that there was a previous destruction. Saying that hyperinflation has stopped occurs in a country that should never have had it,” economist Ronald Balza told this newspaper.
Balza believes that it is not only about getting out of hyperinflation statistically, but also that the country’s problems of infrastructure and lack of fuel must be taken into account. “That dollars circulate does not mean that the economy is recovering. It is possible that it is about savings and that is an indicator of the impoverishment of the population. That apparent recovery should be viewed with caution.”
Precisely, the bolivars that citizens have are used to buy dollars and protect savings. People have various jobs and help themselves with remittances. According to the Center for Documentation and Social Analysis of the Venezuelan Federation of Teachers (Cendas), to access the November family basket, 396.19 dollars were needed, despite the fact that the minimum wage is only 1.45 dollars.
From the National Assembly (AN) elected in 2020, with an official majority, the annual budget for 2022 was approved in about 62,379’454,806 bolivars, and according to the Legislative Power, of the total amount, 76.4 percent is allocated to social investment.
The OVF has said about this that the country needs a “realistic” budget with concrete measures to boost the economy.
The amount presented in bolivars means 13.3 billion, of which 84 percent will come from oil and mining income with a debt of 6.6 billion.
For her part, the Vice President of Venezuela, Delcy Rodríguez, told the AN at the end of December that 2021 had been a “turning point” in the rentier model and that, precisely for this reason, 2022 was shaping up to be a period of economic growth. . This added to the fact that, according to Rodríguez, there will be an expansion in mining, social activity and the production of medicines and agri-food.
But, faced with this prosperous “expansion” in areas of the economy, the economist José Guerra is reserved and believes that the prospects are conditioned by the improvement in oil production, which, although it has been recovering slowly, “has not been as it was expected”, regrets the expert.
While government figures pointed to a production of 1,500,000 barrels per day, 2021 closed at about 700,000 barrels per day. “So development will depend on oil production,” said Guerra.
The oil economist Rafael Quiroz Serrano believes that although production has closed with a recovery, there is a variable to consider and it is the possible surplus that could arise due to the omicron variant of covid. In addition, it asks the Executive to be realistic regarding the goals to be achieved in the production of Petróleos de Venezuela (PDVSA).
“At that time we told them that this was utopian and impossible. Venezuela had never had, not even in the most flourishing years, such a high year-on-year growth”, explained Quiroz Serrano.
“The truth is that the rampant hyperinflation, which began in 2017, shortly after the Government began financing public spending in bolivars through the Central Bank of Venezuela, which placed that monetary base in PDVSA, and this company at its Once he spent it,” recalls Professor Balza, “it will come out at the expense of the same government that started it. With such arbitrariness, it is clear that he could have stopped her long before.
Not a minor indicator, when Venezuela ranks second in the world to stay in hyperinflation for the longest time -the first is Nicaragua, with 58 months-, a time in which not only its infrastructure collapsed, but it also generated a strong impact on various sectors such as trade, health, education and tourism.
Until 2019 alone, according to the Federation of Chambers and Associations of Commerce and Production of Venezuela, some 370,000 companies closed, just over half of those that had existed for 20 years.
ANA RODRIGUEZ BRAZON
Correspondent of THE TIME
CARACAS
On Twitter: anarodriguez_b
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