Hyperinflation Accelerates

Your daily briefing for Thursday, January 25, 2018. Translated by Javier Liendo.

Photo: A Todo Momento

93 minimum wages are required to purchase the Basic Food Basket in Venezuela, more than three minimum wages per day, according to Cendas’ estimates. But that was in December 2017, when the basket’s price was Bs. 16,501,362.78, 129.5% more than in November and 2,927.8% more than in December 2016. The price of all items rose and even the least expensive rose by 50%.

The gap between controlled and market prices is 140,433%.

As if that was not enough damage, Conindustria chairman Juan Pablo Olalquiaga cautioned that nearly 40% of companies associated with that organization could shut down in 2018 for the insurmountable lack of raw materials, the drop in production and dwindling sales, which will further intensify the already considerable supply crisis. Economist Michael Penfold estimates that annual inflation in the first two weeks of January reached 150%.

Fret not, Dicom’s here

Vice President Tareck El Aissami announced yesterday that Dicom’s currency auction system – suspended since August 2017 – will be reactivated today, with modifications that will make participation more attractive, according to him: bands system so that the private sector can make offers “through a transparent regulatory mechanism,” advantages for exporters and incentives for auctions. Strangely, he didn’t talk about euros, yuans or rubles; but he did talk of the role played by economic Vice President Wilmar Castro Soteldo, to explain how the system works.

On Twitter, economist Asdrúbal Oliveros commented:

“Venezuela’s foreign context is so unfavorable that without paying debts or allocating foreign currency to the private sector, international reserves can’t catch up. The ‘new’ Dicom won’t do much.”

El Aissami didn’t say a word about FX controls which must be lifted.

Padrino decides

Defense Minister, and also Sovereign Supply Mission Chief, Vladimir Padrino López, issued a resolution published in Official Gazette with which he restricts the authority of governorships and mayorships and urges them to “abstain from carrying out actions of food control and supply that involve the percentage retention of items to products, distributors and service providers,” because those are his office’s responsibilities. Additionally, the previous Official Gazette shows a joint resolution of the Economy VP, the Sovereign Supply Mission and the ministries of Agriculture and Fishing that bans agro-food product exports for six months. More controls on top of controls.

From anointed to self-proclaimed

While news spread that CNE will block MUD’s revalidation in the seven states with active trials for alleged fraud in the signature collection process for the recall referendum of 2016, Nicolás proclaimed himself the presidential candidate.


He couldn’t wait for February 4 and, breaking his word, he succumbed to the joy of making promises he won’t fulfill, bonds to accelerate hyperinflation and even a bank for transport workers, those who can’t even pay for car oil right now. Curiously, he promised that he won’t fail them, as he already did; he repeated that he’s never aspired to a post, while he tries to run for re-election, and he discredited opposition pre-candidates as bates quebrados, when, well… you know. He didn’t forget to add another oxymoron to his long list: “We’ll run a love-filled campaign, we’ll sweep the floor with the oligarchic  candidates!”, and ignoring the hate law, he once again bet on polarization. He appointed the criticized minister Carlos Osorio as chief for the recovery of the automotive industry. Don’t forget that due to complaints against him, Osorio filed lawsuits against three lawmakers and with the support of Omaria Escalona, they were banned from issuing statements about him and they were ever forced to compensate him.

The opposition

Many opposition politicians focused their statements yesterday on the importance of unity in the decision of how to tackle early presidential elections. Andrés Velásquez said that the opposition must focus on positioning a single ballot, because he thinks it’s unviable that five parties manage to complete revalidation in two days, as the CNE demanded, and restated that these electoral conditions are even worse than on gubernatorial and mayoral elections. Henri Falcón presented his candidacy, dismissing the possibility of holding primaries and urging a consensus. Interestingly, he let slide that he’d only back away in favor of Lorenzo Mendoza, but it was even more interesting that his announcement was covered by VTV.

NGO Súmate chief Francisco Castro explained that the call for an election “before April 30” will leave Venezuelan citizens abroad unable to register in the Electoral Registry.

Abroad: nations

All of minister Jorge Rodríguez’s condemnation for the Lima Group didn’t prevent other nations to issue statements regarding the announcement of presidential elections.

  • Germany expressed concern and asked the government to guarantee that the election be held with enough time to accomplish “a fair and transparent electoral procedure.”
  • The United States condemned the “illegitimate” call by the National Constituent Assembly (ANC), stating that it wouldn’t be a free or fair election, that it wouldn’t reflect people’s will and that the international community would deem it anti-democratic and illegitimate.
  • Colombian Treasury Minister Mauricio Cárdenas cautioned about Venezuela’s imminent collapse and asked for an urgent economic plan for “the day after” with the involvement of bilateral institutions such as the IMF or the CAF, to provide the country with pharmaceutical products, supplies and raw materials.
  • Foreign Minister Heraldo Muñoz said that Chile’s involvement in negotiations is in question.

Abroad: figures

While the judges of Brazil’s appeals court unanimously sentenced former president and candidate Luis Inacio Lula Da Silva, to 12 years in prison for crimes of corruption, OAS chief Luis Almagro denounced Venezuela in the World Economic Forum, remarking the implementation of new “stronger, broader” sanctions that include the families of the officials responsible for the crisis and the political system.

Aside from this, Spanish president Mariano Rajoy said that he couldn’t care less for Nicolás’ criticism, restating that he believes EU sanctions to be well-deserved: “The only thing I want for Venezuela is democracy, freedom, human rights, respect for the people and the release of political prisoners” he said.

Hours later, Foreign Minister Jorge Arreaza announced that he called Mario Isea, ambassador in Madrid, for consultation. U.S. Senator Marco Rubio made headlines once again after asking president Trump for sanctions against Diosdado Cabello, but he also requested the Justice Department –along with democrat senator Robert Menéndez– to investigate an alleged link of high-ranking Venezuelan government officials with drug trafficking.

The black market dollar reached Bs. 261,517 and the euro, Bs. 323,166. No Dicom, old or new, can match that.

Naky Soto

Naky gets called Naibet at home and at the bank. She coordinates training programs for an NGO. She collects moments and turns them into words. She has more stories than freckles.