CHAVEZ'S LEGACY: VENEZUELAN CURRENCY DEVALUATED ONCE MORE
courtesy nytexaminer
Where is Venezuela headed now that Chavez seems to be exercising control of the country remotely?
As Chavez languishes in a Cuban clinic, new questions arise on the soundness of Chavez' economic policies.
It's not that Venezuela is poor: its oil riches are immense. And Chavez has divided some of the bonanza with the poorest people, through some program or another. Most of his critics have complained. They say his offerings are designed only to win him votes. But the poorest section of the population has reason to support him. In many cases their lot has been improved.
Venezuela has been beleaguered by violence mostly, but economically its fortunes have improved.
How is it then, that its currency keeps falling in value? One of the reasons is that Chavez has ordered the lowering of the exchange rate to reduce his mounting budget deficit. Since its oil exports remain strong, the drop in the exchange rate would bolster the amount of money received from its oil exports. This however is a perilous inflationary move.
The recent news that the country is in a downward deficit spiral has played in the hands of the opposition, who are eager to unseat the Chavez government. Elections could be called if confidence falls.
Opponents of the Chavez government blame the deficit on the Chavez practice of overspending in campaigns and in gifts and bribes to foreign government and widespread cronyism. One recipient of the profligate habits of the lider is Cuba, who receives oil supplies at a fraction of its real market price.
Opponents indeed are appalled that Venezuela is in an inflationary trend, when the price of oil has topped 106$ per barrel.
Chavez has not been seen for two months, and there is a near complete blackout of news about him. This is seen by the opposition as a manouever to stall the inevitable. If Chavez is dead or has to step down, elections would be called immediately, giving the opposition a good position from which to launch their platform.
Source: Bloombert 2.9.13
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