In a recently published report by the international monetary Fund predicts Venezuela the inflation by the end of 2016 at the level of 720%. This is the highest rate in the world. But that’s not the worst, compared to the forecast of leading economists.
Deputy Director of 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 lead to a complete collapse of the economic system.
“Venezuela has taken the path of hyperinflation, starting in 2015. According to my calculations, in 2017, inflation will be 2.2 thousand per cent, in case of unfavorable development 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 certain that no government in Latin America are unable to stay in power at this rate of hyperinflation.
“Hyperinflation means that the national currency of the eyes loses its value, people have to go to the shops with bags of money, because prices are rising every hour, said Rennhack. — In the future, based on past experiences in Latin America, and the consolidation of political forces and economic policies”.
When I asked Rennhak about how he was able to determine that within 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 nicolás Maduro ends in 2019. The opposition bloc “Round table of democratic unity” stands for the resignation of President Nicolas Maduro.
Many Venezuelans believe that in the country there will be a social explosion long before promised by economists of economic collapse. The prices of products and goods are rising daily, supermarket shelves are almost empty, blackouts have become the norm. Venezuelan President Nicolas Maduro has made Friday a day-off, reducing the number of working days in the country to four for the sake of saving electricity. Crime in the country has reached astronomical proportions.
The Venezuelan currency, the Bolivar, has depreciated so much that even thieves her disdain. Recently in the local press there was information about how the robbers broke into the home of the famous Venezuelan engineer Venero Pedro (Pedro Venero) and refused to take the 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, nicolás Maduro the fall in GDP in 2016 was 8 %. The poverty level in the past three years increased from 23% to 73%.
My opinion is that If Venezuela will continue its “hyperinflationary path of development”, it is likely that Maduro will finish his term much earlier than 2019.
It is possible that in the country there will be a military coup or former supporters of Chavez, dissatisfied with the policy of Maduro, or under pressure from regional leaders, Maduro will be forced to hand over the reins to opposition forces, which have a majority in the National Assembly.
It should be noted that many Venezuelans doubt in the ability of the opposition of Venezuela to obtain a sufficient number of votes in the Organization of American States (OAS) in order to achieve the Maduro restore 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 out of the situation 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 through a military coup. A military coup would mean a return to the darkest days of Latin American military dictatorships.
Democratic community in Latin America should make every effort in the coming months, member countries of the OAS brought the matter to a vote. There is no other alternative. If nothing is done, it can lead to a complete collapse of the economic system of Venezuela and a military coup.
