In a recently published report by the international monetary Fund predicts Venezuela inflation by the end of 2016 at 720%. This is the highest rate in the world. But that’s not the worst, compared to the forecast of the world’s leading economists.
Deputy Director, Department for monetary issues and capital markets, IMF Robert Rennhack (Robert K. Rennhack) in conversation with me said that Venezuela is on the verge of hyperinflation. If the Venezuelan government changes its economic policy in the country over the next 12-18 months may occur a complete collapse of the economic system.
“Venezuela has gone the way of hyperinflation, starting in 2015. According to my calculations, in 2017, inflation will be 2.2 thousand percent under an adverse scenario — 13.8 thousand percent,” said Rennhack.
A senior official of the IMF avoids addressing the political aspects of the economic situation in Venezuela. However, it is well known that no government in Latin America are unable to stay in power at these rates of hyperinflation.
“Hyperinflation means that the national currency of the eyes loses its value, people are forced to go to the shops with bags of money, as prices are rising every hour, said Rennhack. — In the future, based on past experience in Latin America, and the consolidation of political forces and changing economic policy.”
When I asked Rennhak about how he was able to determine that over the next 12-18 months in Venezuela can happen economic collapse, he told me that based on the study of previous experience. So, a similar situation was in Bolivia (1982-1984), Argentina (1989-1990), in Brazil (1989-1990). Currently, Venezuela is in the same position.
The presidential mandate of Nicolas Maduro ends in 2019. The opposition bloc Round table of democratic unity” stands for the resignation of President Nicolas Maduro.
Many Venezuelans believe that the country’s social explosion will occur long before promised by economists of economic collapse. The price of food and goods are rising every day, supermarket shelves are almost empty, blackouts have become the norm. Venezuelan President Nicolas Maduro made Friday a day off, reducing the number of working days in the country to four for the sake of saving electricity. The crime rate in the country has reached astronomical proportions.
The Venezuelan currency, the Bolivar, has depreciated so much that even thieves her disdain. Recently, the local press reported about how the robbers broke into the home of the famous Venezuelan engineer Venero Pedro (Pedro Venero) and refused to take bolivars, demanding from the owner a dollars in exchange for life.
According to research of experts of the Central University of Venezuela and University. Simon Bolivar, after coming to power in 2013, Nicolas Maduro, the fall of GDP in 2016 to 8 %. The level of poverty in the last three years increased from 23% to 73%.
My opinion: If Venezuela will continue its “hyperinflationary path of development”, it is likely that Maduro will finish his term of office much earlier than 2019.
It is possible that in the country there will be a military coup or former associates of Chavez, unhappy with the policies of Maduro, or under pressure from regional leaders, Maduro will be forced to hand over the reins to the opposition forces, which have a majority in the National Assembly.
It should be noted that many Venezuelans doubt the ability of the opposition of Venezuela to obtain a sufficient number of votes at the Organization of American States (OAS) in order to make Maduro the restoration of full democracy in the country through the implementation of the provisions of the inter-American democratic Charter.
Venezuela currently has lost its former influence in the region, which was based on the use of petrodollars to Fund the loyalty of its allies. After the fall in oil prices political map of Latin America is changing very quickly.
For Latin America the best way out would be the decision of regional leaders to demand Maduro to put an end to the constitutional crisis on the basis of the inter-American democratic Charter, and not by a military coup. A military coup will mean a return to the darkest days of Latin American military dictatorships.
The democratic community in Latin America should make every effort in the coming months, the member countries of the OAS put the issue to a vote. There is no alternative. If nothing is done, it can lead to a complete collapse of the economic system of Venezuela and a military coup.
