Photo: José Díaz

Nicolás, disguised with an Adidas jacket (capitalism is so disgusting!) such as the ones Fidel Castro wore until his death, held a Facebook Live broadcast accompanied by Vice-President Delcy Rodríguez. According to his tale, he just had a meeting with the economic team to refine the details for the recovery plan he designed himself. Refining details hours before its application, inspiring!

Fair prices

The first payment of the Bs.S 1,800 minimum wage will be made on September 1, and he emphasized that the State will pay the difference in payrolls of small and medium companies (Pymes) and stores, ordering Economy and Finance Minister, Simón Zerpa, to report on the mechanisms for submissions of payrolls to the government, for a 90 days subsidy. Tied to this offer, he demanded that citizens defend fair prices, because “prices have been dollarized according to a fake dollar, now’s the time to set fair, real prices, based on a balance table where we put the sovereign bolivar, the minimum wage and salary rates as the core.” So, according to him, there shouldn’t be any price increases, “[prices] shouldn’t even be touched.” This colossal salary adjustment must impact the prices of goods and services; there’s no way a company or store can pay its new payroll, even with “the State’s help,” without adjusting prices. Nicolás’s proposal is as perverse and irresponsible as he is. He promised that, on Tuesday 21, they’ll announce agreed prices (agreed with whom?) of essential products and goods.

He provides everything

“We provide the work, the salary, the workers, as the core of the process of rebalancing and productive recovery, and creation of wealth for the country,” said Nicolás, as if each store and company depended on his whim and each person of productive age had to serve his plans. Perhaps that’s why he added that he does this in favor of justice, social protection and development, and that he made the decision of establishing the minimum wage’s value “because it’s necessary to force (tr. Apply force or physical violence as means to an end) the real balance, starting from the dynamic between currency value, production, offer of goods and consumption.” That’s why Nicolás will force the market to believe the petro is worth an oil barrel (which he imagines at $60), with a national value of Bs.S 3,600, or Bs.F 360 million.

Populism and apartheid

Since the new minimum wage will be paid on September 1, Nicolás understands the Bs.S 600 bonus (exclusive for carnet de la patria holders) as assistance during the period between “August 20 and 30,” claiming that he’s working so the food basket remains below half a petro (Bs.S 1,800), although its actual price for June 2018 (July is yet to be published by the Venezuelan Teachers Federation’s Center of Documentation and Social Analysis) was Bs.F 654,214,674, and the inflation rate for July was 125%, the second highest since Parliament started calculating it. “This Monday, August 20, we start a great process of economic recovery, we’re living historic days, of definitive and necessary economic change,” said Nicolás, adding (because epics will always be his forte): “Now is the time to govern the economy.” Sadly, he didn’t explain how he’ll make economy obey him; but he did wish us a happy start of economic recovery.

What he doesn’t have

Nicolás’ economic program doesn’t include anything to solve the serious foreign restrictions that the Venezuelan economy experiences. You know: without foreign investment, there are no dollars, and without them there’s no possibility of free convertibility, so foreign currency rationing and controls remain in place. With these variables, the fluctuating exchange rate announced by Nicolás will lag behind and the black market dollar will gain strength. With the new minimum wage, many companies and stores will either reduce payroll or shut down entirely, and even those who accept State subsidies for 90 days (a pre-nationalization) will be at great risk of disappearing. Therefore, fiscal measures are insufficient: the Value-Added Tax (VAT) and the Tax on Large Financial Transactions (IGTF) can’t be effective if economic activity collapses; the new minimum wage multiplied public spending (public payrolls + Pyme payrolls for 90 days), so there’s no gas increase or miracle for PDVSA’s production that can stop hyperinflation. Nicolás can inflate the minimum wage, but he can’t decree the real value of anything, including dollar prices.

Briefs

  • The National Assembly’s Board called for an extraordinary session this Tuesday 21 to discuss Nicolás’ economic measures. This calls suspends the Delegate Committee installed after the first period of ordinary sessions concluded.
  • Nicolás said that the VAT increases to 16% adding that some basic goods would be exempt. Well, they already published the 16% of tax aliquot to be applied in the remaining fiscal period of 2018 and throughout 2019. The text says that “the Executive is authorized to apply the necessary adjustments caused by the modification of the aliquot of the VAT established by this decree or originated from any other variation in the financing approved by the ANC or the TSJ.” The increase will come into force starting September 1, 2018. According to Jorge Rodríguez, medicines and food are exempt from VAT.
  • Rodríguez also claimed that the new pricing system for gasoline will be implemented in the last week of September, once the transport census is ended. Between September 1 and 20, they’ll hold “campaigns explaining the plan that will be applied gradually.”
  • The Metro system will continue working, while Óscar Gutiérrez, secretary of Miranda State’s East Bloc, said that the transport sector won’t work on Tuesday or Wednesday, because they don’t know how much they’ll charge for the bus fare with this monetary reconversion.

We, migrants

Ecuador scrapped the passports demand for Venezuelan children and teenagers who arrive with passport-holding parents or tutors, according to the Ombudsman’s Office. Meanwhile, Peru announced that Venezuelan citizens who enter their territory until October 21, will be able to request the Temporary Stay Permit (PTP) until December 31, 2018, according to a supreme decree modifying a previous regulation. With this measure, Martín Vizcarra’s government reduced the period to request the PTP to six months, because when it was approved by former President Pedro Pablo Kuczynski, it expired on June 20, 2019. Additionally, Brazilian President, Michel Temer, decided to send troops to control the situation in Pacaraima, after the attack on Venezuelan migrants.

Caracas Chronicles is 100% reader-supported. Support independent Venezuelan journalism by making a donation.