IMF: Venezuela Inflation Will Increase 13,000% This Year

By Allen Cone 

UPI -- Venezuela's inflation will soar 13,000 percent this year, though other Latin American countries have much better economic prospects, the International Monetary Fund said in a revised forecast Thursday.

The increase -- 130 times greater than last year -- is more than five times the inflation previously projected by IMF.

Of course, this means the Bolivar is rapidly becoming worthless. In 2008, Venezuela issued new Bolivars - Bolivares Fuertes which was worth 1000 of the original Bolivars. Rampant inflation made it necessary, and will probably make it necessary again.

Last year, price increases were 2,400 percent -- the biggest in the world.

The IMF wrote in the report that the rise is "fueled by monetary financing of large fiscal deficits and the loss of confidence in the nation's currency."

President Nicolas Maduro's government has attempted to control inflation by refusing to loosen foreign-exchange controls and price caps that have increased the short supply of all sorts of products, including food to medicine.

Also, Venezuela's real gross domestic product is projected to fall by about 15 percent for a cumulative GDP decline of almost 50 percent since 2013. The growth forecast for 2019 is a 15 percent decline and 6 percent drop in 2019.

"This trend is the result of significant micro-level distortions and macroeconomic imbalances compounded by the collapse in oil exports -- initially from the sharp fall in oil prices in mid-2014 and, more recently, from the collapse in domestic oil production," the IMF said in the report.

The United States last month sanctioned Venezuela government and military officials accused of having associations with corruption and repression. The Treasury Department said "corruption and repression" has continued to grow under Maduro's regime.

The IMF revised its projections of other nations in Latin America with the GDP predicted to increase 1.9 percent in 2018 and 2.6 in 2019 after it was 1.3 percent last year.

Other Latin Americans in Central America and parts of the Caribbean will benefit from stronger U.S. growth, the report said. And South America's economy has increased due to the end of recessions in Brazil and Argentina, as well as higher prices for the raw materials to export, according to the report.

"Recent trends in the world economy and financial markets are good news for Latin America," Alejandro Werner, head of the IMF's Western Hemisphere department wrote in the report. "Global growth and trade are on an upswing, and we expect the momentum to continue in 2018. Stronger commodity prices have also helped the region rebound."

The IMF specifically was high on Ecuador after coming off its recession because of higher oil prices and greater acceptance to financial markets. IMF boosted its 2018 GDP outlook to 2.2 percent from 0.6 percent.

And the IMF cited Chile's growth prospects because of continued improvement in copper prices and business sentiment -- 2.2 percent in 2018.

Mexico's GDP is predict to grow 2.3 percent in 2018 and 3.0 percent in 2019 on the strength of higher growth in the United States, now pegged higher at 2.7 percent in 2018 and 2.5 percent in 2019.

Desperate Venezuela Tried to Buy Medicine with Diamonds, Gold

Venezuelan currency is bordering on worthless and it's just

getting worse as the economy appears to be in full collapse

By Sara Shayanian 

A group of people walk in front of a liquor store that was looted in Caracas, Venezuela.

Photo by Miguel Gutierrez/EPA

UPI -- Venezuela's struggles to front $5 billion in debt to pharmaceutical companies have gotten so dire the government tried to swap diamonds and other precious items for medical supplies.

The cash-strapped country proposed an exchange of diamonds, gold and coltan, a rare metal used to make cellphones, for medicines from foreign suppliers to combat a shortage of medical items in the nation's hospitals.

According to the Wall Street Journal, it's not clear the the pharmaceutical companies accepted the deal, but they told government officials they didn't have rules saying whether they could fill non-monetary purchases.

Nevertheless, the proposed exchange illustrates the struggle of Venezuela's President Nicolás Maduro to pay for goods as the country's economy collapses.

Venezuela, which has the largest known oil reserves in the world, is running out of money due to years of negligence and corruption that have resulted in $141 billion in debt to international bondholders and creditors.

The Venezuelan Bolivar weakened over 97 percent in relation to the U.S. dollar and inflation in the country has increased to 4,115 percent.

Bartering has become commonplace in Venezuela, especially in transactions between Venezuelans trying to acquire sought-after staple items.

Caracas store

"Money was created so that we could avoid having to barter for basics," Omar Zambrano, a Caracas-based economist, said. "But we've fallen so far that we're now going back in time."

According to Caracas-based economic consultant Orlando Ochoa, using commodities to settle debts to pharmaceutical companies is extremely rare.

"It feels like a bluff," Ochoa said. "It's as if they want to show off their assets to give the illusion that there's still an intention of paying even though they can't pay."

Economists are warning that the economic situation could get worse, as hyperinflation may pass 30,000 percent in 2018.

"Those who are now predicting that Venezuela will close 2018 with an inflation rate of 5,000 don't really understand what is happening," Francisco Ibarra, head of the Econometrica company, told the Miami Herald. "We could hit that 5,000 mark already in February."

Venezuelan Government in Debt Default

This would be cause for a responsible government to resign, but

the power hungry Maduro will see it as a need for more power.

The people are hungry and in need of medications and the

lunatic responsible for it is concerned about himself.

By Danielle Haynes 

Venezuelan President Nicolas Maduro (R) and Venezuelan Vice President Tareck El Aissami (L)

attend a ceremony near the Supreme Tribunal of Justice in Caracas, Venezuela, on January 15.

Standard & Poor's said the country is officially in default after it failed to make a debt payment.

File Photo by Miguel Gutierrez/EPA

UPI -- Venezuela and its state-run oil company, PDVSA, are in default after falling behind on debt payments, multiple credit agencies declared.

Standard & Poor's Global Ratings, Moody's Investors Service and Fitch Ratings declared the South American country in default all within a period of 24 hours, Bloomberg reported Tuesday.

S&P said Venezuela failed to make $200 million in payments on its foreign debt.

S&P defined Venezuela as being in "selective default," when a country fails to make a debt payment when it's due. The $200 million payment was due Sunday. The country also is overdue on about $420 million in bond payments but a 30-day grace payment has not yet expired on that amount.

Venezuela owes an estimated $140 billion in external debt.

Caracas officials met with investors Tuesday in an attempt to renegotiate the country's debt, BBC News reported. Investors said, though, the government of President Nicholas Maduro did not make any proposal on how to restructure its debt.

Vice President Tareck El Aissami read a statement during the meeting blaming U.S.-imposed sanctions on Venezuela. In July, the U.S. Treasury specifically named El Aissami and a dozen other current and former officials in sanctions for allegedly being involved in Maduro's violent suppression of protests, corruption and currency manipulation.

US sanctions on Venezuela do not prohibit the export of their oil but are focussed on access to capital markets like bonds making it difficult for Maduro to keep floating checks.

Venezuela - Videographer Chronicles Countries Descent into Hell

Empty supermarkets, drug stores with no drugs, hospitals with no supplies and the man responsible has succeeded in consolidating his power. He has totally destroyed his country and believes he deserves to be its leader forever.

It's a good thing he is broke or he would be another Kim Jong Un.

video 12:34

Venezuela to Leave ‘Interventionist’ OAS Group Amid Deadly Anti-Govt Protests

© Carlos Garcia Rawlins / Reuters

Caracas has decided to withdraw its membership from the Organization of American States after the body voted to “breach sovereignty” and convene an emergency meeting over the ongoing violent crisis in Venezuela that has already resulted in 29 deaths.

The Venezuelan Foreign Minister, Delcy Rodriguez, announced that the Latin American country will begin the process of exiting OAS after the organization convened a meeting of foreign ministers to discuss Venezuela.

The decision by the OAS' Permanent Council was passed by 19 votes to 10, with one abstention and one absence.

The foreign ministry and President Nicolas Maduro will forward a letter to the OAS on Thursday stating that "Venezuela will not participate in any activities that promote interventionism," Rodriguez said, adding that the exit process will take 24 months.

Addressing the nation that has been engulfed in violence, Rodriguez asserted that the OAS seeks to criminalize the Venezuelan government and destabilize its constitutional democracy in order to facilitate foreign intervention. The country's chief diplomat said that OAS does not have the consent of the affected country to intervene in domestic affairs.

Samuel Moncada, Venezuela’s representative to the Organization of American States, said that the fate of the South American nation will never be decided by institutions such as the OAS or Washington.

Protests in the country have been ongoing in Venezuela since March 29, after the Supreme Court ruled to take over the duties of the National Assembly, a ruling many saw as undemocratic. Although the Supreme Court repealed the ruling three days later, this was not enough to assuage anti-government protesters.

The opposition has demanded the government hold fresh elections as soon as possible. President Maduro has agreed but a date has yet to be set.

At least 29 people have died in clashes so far this month, according to Reuters, as many of the rallies erupted in violence and vandalism.

Clashes erupted in Caracas again on Wednesday after National Guard troops and police blocked a highway in the area of the capital where thousands demonstrated. Venezuelan police fired tear gas at stone-throwing anti-government protesters as masked youths picked up tear gas canisters to hurl back at security forces.

While police stopped protesters advancing, government supporters staged a counter-rally near the presidential palace in central Caracas.

Maduro's opponents are demanding the release of imprisoned protesters, humanitarian aid to help with food and medicine shortages, as well as autonomy for the opposition-led legislature.

Maduro claims recent protests are nothing more than opposition efforts to stir up violence and topple his government. Bolivian President Evo Morales agrees with his counterpart that the anti-government protests in Venezuela are “a coup d’etat, driven by the right.”

There could be some truth in what he is saying, but it's more likely that it is just socialist paranoia. The Venezuelan economy is collapsing and Maduro's response is to entrench himself in power. He is incompetent and probably corrupt (who in South America isn't), and he is the last person Venezuela needs in power to fix the economy. The people are getting hungry and Morales blames outsiders for stirring up the people. 

“I feel sad that the Organization of American States [OAS] keeps on its tradition of coups, which is the primary means of the North American empire,” Morales said in an interview with RT.