A tough start to the year for the people of Venezuela, hit by the crisis

Photo: Federico Parra Agence France-Presse
A protest against the food shortages had occurred in the capital, Caracas, on December 28.

After 25 years of activity, the small business print on glass of Luis Briceño could soon put the key under the door : “This is the beginning of the year is criminal “, the judge there, reflecting the anguish of millions of Venezuelans hit by a economic crisis out of control.

 

With a widespread shortage and inflation is expected to 2350 per cent in 2018, according to the IMF, the entrepreneur of 70 years is expected to difficult months. In addition to the raw material which is missing, two of its three employees are on the point of leave the country. In 2017, the price rise has been of 2616 %, according to the Parliament, controlled by the opposition.

 

In recent weeks, small protests to denounce the lack of food took place in several cities. A woman was killed by the firing of a military so that it was in the queue to buy pork at a subsidized price to the eve of the eve of the New Year. On Saturday, the government ordered dozens of supermarkets to lower their prices, causing queues monsters.

 

The last 40% increase in the minimum wage announced on 31 December by the socialist president Nicolas Maduro has just make things even more challenging, said Mr. Briceño.

 

“When I saw the announcement of the increase, I turned off the tv. I said to myself : “I don’t want to know anything about it until January.” […] Because it was to be stressed at this moment “, tells the AFP the head of the company that has had up to 10 employees. “To me this seems criminal, because if you ask the workers “do you Want to increase the minimum wage from the government ?” they will answer no, because the next day everything is growing “, he adds.

 

To try to cope with this runaway inflation, president Nicolas Maduro has increased six times the minimum wage in 2017, the last time on 31 December. The minimum income in full (salary and good food) now stands at 797 510 bolivares, or 238 US $at the official rate — in exchange offices, where the greenbacks are virtually impossible to find — and US $6 on the black market, considered as the reference rate.

 

Some 13 million of Venezuelans earn the minimum wage, on an active population of 19.5 million, according to the government. With such an income, you can buy 30 eggs, a kilo of meat, another of sugar, and one onion.

 

Inflation is in all conversations. Stunned, the Venezuelans talk about how they see their currency fall apart. “It always buys less and the budget is limited to the food,” says AFP David Ascanio, 50 years old, employee in the tourism industry.

 

The experts estimate the wage increases necessary in a context of hyperinflation, but they are ineffective if they are not accompanied by other measures, such as reducing the issuance of currency to finance public expenditure. “The problem is not the seal you take out, but the one that you don’t take [liberalize and streamline the economy and encourage the private production] “, says the economist Luis Vicente Leon.

 

For its part, the government defends the increases and attribute the hyperinflation to an “economic war” being waged by the right, and the United States to bring down president Maduro. In Venezuela, the government exercises strict control of the currency.

 

In a country where oil earns 96 % of the revenues and highly dependent on imports, the falling prices and production has led the government to strongly limit the external purchases, resulting in a shortage of food, medicines and raw materials.

 

Venezuela and the state owned oil company PDVSA have been declared to be in default of payment because of delays during the settlement of the capital interests or the interests of the debt. The employers association Fedecamaras ensures that the industry’s venezuelan works at 30 % capacity because of the controls and expropriations. According to the IMF, the GDP collapsed by 12 % in 2017 and is expected to be -6% in 2018.

 

This oil country, which was one of the richest in the region, produced up to 70% of what it consumed. In 2017, this rate was 30 % with inventories remaining of fertilizers and grains, stresses the president of the agricultural union Fedeagro, Aquiles Hopkins. “For 2018, there is nothing “, he warns.

Share