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Is Venezuela living the end of its hyperinflation?

Caracas, Jul 2 (.) .- Venezuela has been immersed in the nightmare of hyperinflation since November 2017, a time of dizzying figures that has led to spontaneous dollarization as a buoy of salvation. However, in recent months, price increases have started to slow down, fueling the hope of leaving the bad dream behind.

According to the Venezuelan Finance Observatory (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) reported inflation in May of 28.5%, 24.6% in April and 16.1% in March.

Thus, inflation has been three consecutive months, according to both sources, below the 50% that marks hyperinflation, since the OVF reported 50.9% in February, although the BCV estimated it at 33.8% in that month.

BETWEEN CAUTE AND MIRAGE

Faced with these data, the dean of the Economic and Social Sciences faculty of the Andrés Bello Catholic University (UCAB), Ronald Balza, explained to . that hyperinflation begins when it exceeds 50% in a month and can only be concluded when twelve pass below that percentage.

“It’s twelve months without having 50% again in a month because, once you exceed 50%, the distortions in the fiscal and monetary system are so severe that you have to make sure to correct them to say that hyperinflation has stopped” , details.

For this reason, while waiting for a year to pass, Balza stressed that “unfortunately nothing has been seen that makes us think that it is going to get out of hyperinflation because there is no fiscal correction in sight.”

Added to his caution is that, “more than once it has happened”, since November 2017, that one month inflation exceeds 50%, “then there are three months in which it does not, and in the fourth month it rises again because the The machine that generates hyperinflation is still active. “

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This machine is the “severe fiscal imbalance that ends up being solved with monetary issuance.”

“The Government has an amount of expenses 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 that you do not know what the destination is and, that amount of bolivars that goes to the Government, we do not know how its entry is. to the economy, we do not know by what means, and prices are continually pressuring, “he said.

Balza compared the situation with that of Bolivia in the 1980s, when, to overcome hyperinflation, “they decided to increase the price of gasoline,” as the Government of Nicolás Maduro did in 2020, which allowed the Executive to receive some income and “stop financing with the central bank.”

To this were added international loans that made “the fiscal gap that existed was filled with internal and external income and the central bank ceased to be used”, which put an end to the hyperinflationary cycle.

“EVERYTHING GOES UP”

In the streets, that little respite is hardly noticeable, especially since, as Balza says, the majority of the population has suffered a “sudden impoverishment” due to hyperinflation. The retired innkeeper Alex Niebles confirms it to .: “‘Above everything, nothing has dropped, everything is inflation.”

“Currently I do not see any stability, everything is the opposite, an inflation that I believe that everyone here is complaining, the salary is not enough to buy anything, nothing, nothing,” he emphasizes.

Niebles explains that “the dollar has been imposed” as the payment currency, and “all” products have their prices expressed in dollars. Of course, his pension is still in bolivars, seven million or 2.1 dollars, so he must resort to street sales to complete his income.

Edith Aponte agrees with him, a housewife who, although she observes that the prices of basic products such as a bag of rice or corn flour -basic in the Venezuelan diet- have remained at one dollar for months, she considers that everything it is still “extremely expensive” and the salary is “not enough for anything at all”.

“We eat and we reduce ourselves, I am a housewife and I buy a flour and I have to try to yield it; (the prices) are through the roof, the eggs not to mention, the cheese for breakfast,” he emphasizes.

It is the seed that sowed hyperinflation for more than three years and has germinated with a generalized impoverishment that Maikel Lugo, unemployed and father of a two-month-old baby sums up: “This is fatal, every day the country’s situation gets tougher.”

The nightmare still promises to be long.

Gonzalo Dominguez Loeda

(c) . Agency

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