An article published in El Carabobeño today warns of the possibility of the country’s inflation crisis spiraling out of control and leading to hyperinflation in 2016. The article points to a “perfect storm” of conditions as creating a favourable environment for a hyper-inflationary spiral: low oil prices and continued inefficiency at PDVSA along with upcoming debt payments.
Economist Jesus Casique told the newspaper that while the National Assembly does not have the power to dictate economic matters, it is in a position to draft laws to affect the economy, something he considers to be a “game changer”. However, Casique considers that the executive branch still has the ability to seriously hinder economic recovery, as is the example of recent changes to the Banco Central de Venezuela‘s (BCV) mandate that now require it to publish official economic statistics only when the Executive requires. The change appears to be a solidification of the status quo, since the BCV had not published official economic statistics since the end of 2014.
The article also points out that the country’s fiscal deficit currently sits at around 20-25% of the GDP, meaning that Venezuela spends 20-25% more than it produces. Casique believes that the PSUV’s unwillingness to admit that the country’s economic problems are the result of its own failed policies means that it will continue to finance its unsustainable spending by printing more and more money, possibly leading to hyper-inflation.
Every time that there are more bolivares in circulation chasing fewer goods and services – along with a dollar that is scarce due to an exchange system that forces this currency to have an elevated price in the black market – the value of the bolivar in terms of purchasing power will be lower.
Bolivar’s (Classic} Portrait Returns to National Assembly
A classic image of Simon Bolivar has returned to the National Assembly following the removal of a rendering of the Venezuelan hero produced by the PSUV in 2012. Two large posters bearing Bolivar’s likeness were placed inside the courtyard of the National Assembly, as seen in the imagine below:
The artist of the painting appears to be Jose Gil de Castro, a 19th-century painter who became famous for his portraits of famous people of the time.
The PSUV’s 2012 version of Bolivar was rejected by many Venezuelans as being gaudy and life-like to the point of being disturbing:
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