Tuesday, March 11, 2003

Monday 10, March 2003

Today I will be brief. I am going to present the numbers emitted by the Venezuelan Central Bank as reported by El Universal on March 8. Semi independent Central Banks have a way to make up numbers to favor one side. El Universal is not known for favoring Chavez economic policies. I think that this makes for a good balance.
After each year you can find the percent Variation in Gross National Product (%GNP) and the infaltion for the year (%I).

1998...%GNP + 0.2...%I 29.0
1999...%GNP - 6.1....%I 20.0
2000...%GNP + 3.2....%I 13.4
2001...%GNP + 2.8....%I 12.3
2002...%GNP - 8.9....%I 31.2

1998: the rise of Chavez in the polls coincides with a drop in the price of oil. This triggers a pre election recession that the now lame duck government of Caldera cannot fight efficiently.

1999: Chavez call for a constituent assembly with a further decline of the price of Venezuelan oil create what was considered as one of the worse economical crisis so far.

2000: Chavez marshalling of the OPEC since he came to office pays off. Oil prices rise. The approval of the constitution leaves many unknowns. Revamping of the judicial system. If the capital flight slows down some, none of the economical policies seem able to reverse the tie.

2001: Chavez picks up a fight with trade unions. His candidates lose many of the union elections. This does not contribute at all in quieting the atmosphere. Chavez manages to put many of his supporters in positions were independents would be better suited (High Court, some judicial appointees). Capital flight goes up again, to levels never seen. The year ends up with the first business/union strike ever seen, on December 10.

2002: The year starts with Chavez locking horn with business and refusing any revision to some of the laws. In February, veiled threats to the state oil company PDVSA increase tensions. Also in February Chavez floats the currency which loses 30% in a few days. When the PDVSA threats become reality in March, the result is another general strike and the 2 days overthrow of Chavez April 11. Since Chavez return no serious effort is made to quiet the tensions. This allows a reinvigorated opposition to launch the December 2 general strike.

2003: the country starts the year with over a 100% increase in the exchange rate against the dollar since February 2002. The inability to reach the oil returns of November brings the government to Currency Exchange Control on January 22. A further 15% drop in the GNP is predicted for this year if no political accord is reached soon. Accumulated inflation for the first two months pass the 7% mark for an expeced 50% for the year.

The question is how come Chavez administration manages to survive such a terrible management of the economical factors. Inflation and drop in GNP affect the poorer classes the most. Any normal government in a normal country would have resigned, or been thrown out.

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