Wednesday, April 27, 2016

Venezuela's Got No Electricity or Money

Nicolás Maduro announced that Venezuelan public sector workers will only work on Mondays and Tuesdays. The headline in the national news agency was that public services would be "guaranteed" on the other three days, but it's not clear what or how, especially if there is no electricity. The government is also considering fiddling around more with the time of day, which Hugo Chávez famously did back in 2007.

Meanwhile, inflation is increasing so rapidly that the government cannot print money quickly enough to make up for it.

Last month, De La Rue, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News. 
“It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker and former director of economic research at the central bank. Late last year, the central bank ordered more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year for an economy many times the size of Venezuela’s. 

The IMF forecasts inflation in 2016 to exceed 700%. It's an economy held together with duct tape.


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