Angel Garcia Banchs: Venezuelan Oil Economy in Emergency.

I insist on the need to alert Venezuelans about the economic emergency facing our country. The economy is in a situation characterized by chaos, disorder, confusion and widespread panic breeding ground for social upheaval that looks increasingly harder to avoid. The reason would be the lack of courage, for making basic decisions of economic policy by the national government, decisions are not taken immediately lead, according to our estimates, the widespread disappearance of inventories (general corporate disinvestment) in the month April.

It is well known that he will not, because his hands tied mobsters and corrupt. But still it must be emphasized recommend to the national government to immediately lift exchange controls and price, if indeed you want to avoid a crash. Doing it in February and would be very late, so it is suggested to do it now. Otherwise, shortages in the country today will look like child's play compared to what could be experienced in the months of March and April. In that case, it would not be specific or particular set of goods, but widespread, massive, not only in the regions, but in the capital.

To lend attention, lifting of exchange control is recommended to be primarily via a total adjustment in the exchange rate, minimizing adjustment via the real interest rate.

Anyway, controlling change and prices will explode, because that is the only way to replenish inventories and recapitalize companies, via an abrupt decrease in aggregate (ie the consumer) demand, so as to accommodate the scant offer.

There is the possibility to prevent the emergency, the economy through intensive therapy. In plain words, there is minimal chance of avoiding a shock or social unrest. Given its refusal to act, apparently, only a timely political change could be achieved.

Ángel García Banchs, PhD.

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