End of hyperinflation?Venezuela approaches 12 months with inflation figures smaller than 50%

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Venezuela would leave behind at the beginning of 2022 the hyperinflationary process that began in November 2017, when inflation figures were recorded for the first time greater than 50% in a single month, ending, according to official numbers, to the second longer period of hyperinflationof the history of the country, 49 months, and only surpassed by the 63 that Nicaragua lasted between 1986 and 1991.

"I can declare politically, with the result of the management of inflation between the months of September, October, November and December, which has been of a digit with a downward trend, which Venezuela leaves the state of hyperinflation," he celebrated on SaturdayPresident Nicolás Maduro during an interview with the Spanish writer Ignacio Ramonet broadcast on the Telesur channel.

The numbers of the National Consumer Price Index (INPC), the Official Meter of Inflation in the Central Bank of Venezuela (BCV), have remained in a digit since September, and do not exceed 50% since December 2020, whenThey located 57.5%.

According to INPC, inflation in November 2021 in the country was 8.4 %;While October recorded 6.8 % and September 7.1 %.

This index differs slightly from the one that calculates the Venezuelan Observatory of Finance (OVF), an organ of the previous National Opposition majority assembly that was created to offer data of the economic activity that contrast the official figures.

The OVF reported hyperinflationary figures for the last time in February 2021 (50.9%), which wouldwhich can only be considered a hyperinflation process after 12 months in a row with numbers below 50%.

Fiscal and monetary discipline: The keys to stabilize prices

Going shopping in Venezuela, be it any type of goods, is an adventure of unexpected outcome.A product will never cost the same as the previous week, even many times the same as the day before.In the months of hyperinflation, the price escalation remained above any possible adjustment or forecast.

For the economic analyst Jesús Casique, the end of hyperinflation, which can only be declared once the December figures of the BCV are published, was based on the de facto dollarization of the economy, on the one hand, and in the fiscal disciplineand monetary, on the other.

"The Venezuelan economy is dollarized in 66%, the price of any type of goods is calculated in dollars," says Casique."According to the theory of the expectations of the economic agents, there is a price adjustment if the currency is considered overvalued. The market already made that adjustment, probably in August or September, to cover itself before the December scenario, and thatHe has removed pressure at prices last months. "

Casique also points out that the Government has reduced monetary liquidity and has decreased monetization of the fiscal deficit, folding more rigorously at the constitutional disposition that prevents the central bank from the Executive, and expressly prohibits that the BCV validates or finance fiscal policiesdeficit.

Economic problems in Venezuela continue

The economist José Guerra, former deputy and one of the directors of the OVF, warns that the end of hyperinflation will not mean a closure for the instability of prices in Venezuela: "We will technically leave hyperinflation, but equal a figure of inflation of inflation of inflation of6 or 7% monthly is very high, dechicant, "he says.

"The BCV has lost almost 600 million dollars of the (international) reserves in 2021, because the government is selling dollars to stabilize the exchange rate and thus reduce pressure on prices, but that policy kills the economy. There is noCredit and therefore there is no demand and the economy is still paralyzed, "says Guerra.

His appreciation contrasts with Maduro's in the interview with Ramonet in Telesur, where he assured that Venezuela entered 2022 with "growth and generation of wealth."

It will be necessary to see in the coming months if state policies are sufficient to achieve a regulation of the national economy, after years of the deepest crises that Latin America has witnessed.

With Efe

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