CARACAS, Venezuela – According to the vice-president in charge of economic affairs of the United Socialist Party of Venezuela (PSUV), Jesús Faría, the right-wing attacks Venezuelan President Nicolás Maduro to reestablish a political system led by large corporations.
“The right-wing attacks against the government is to reestablish a political system where those in power are the same big corporations that in the past not only obtained oil revenues but also established the rules for the functioning of the economy according to their interests,” the legislator said.
Venezuela is an importing country of consumer goods, and this requires foreign currency, which mostly comes from the oil industry, and in that dependence on the dollar, said Faría.
A large exchange control has entered into force in the Latin American country since 2003, with all transactions being made by the government. This led to an increase in the illegal exchange market, which in August and November reached 268%, according to the latest report by the Economic Commission for Latin America and the Caribbean (ECLAC).
Because the economy is influenced by the price of the US currency, “when prices rise, the value of [local currency, the bolivar] depreciates,” according to the analyst. “Faced with this, we have an obligation to stop the price increase so that the bolivar regains confidence and can be used in a much safer way as a means of payment.”
The constituent explained that the most affected are the small and medium traders, while “very powerful economic agents take advantage of this situation to make huge profits and at the same time destabilize the economy.”
Under this scenario, along with US sanctions and its “financial harassment,” Faria said, the Venezuelan government has managed to create an instrument to address what it calls an “economic war.”
“For the first time in four years, we have a solid platform to deal with the economic war and its consequences, which is a deep crisis with a devastating social impact,” he added.
The International Monetary Fund (IMF) has indicated that Venezuela has gone into hyperinflation by the end of 2017, and is expected to close 2018 with 1,370,000%. This high inflation is one of the main challenges that the government will face in 2019.
“Our great challenge is that policies, as they were designed, will develop fully from next year, and that it will be the first year of stabilization and the second year of growth,” he said.
The expert stresses that no matter how efficient the Maduro program is for economic recovery, financial stabilization will not occur automatically because there are a number of factors that can hinder its prosperity.