Central Bank Exchange

So a devaluation of the exchange rate would increase the incomes of the country, measured in local currency thus allowing coverage of budgetary expenditure. The need for devaluation exchange rate to achieve the budgetary objective is supported by the poor prospects for the price of the barrel of oil which can hardly achieve the value provided in the budget of this year. The average of the market does not expect that the value of a barrel of oil exceed $45 by the end of this year. Yesterday Texas crude was trading near US $35 barrel. Different measures are being analyzed from the Chavez Government to close the fiscal gap without having to resort to devaluation of the currency.

Decision not to assign the exchange rate devaluation responds more to political issues than to logical reasoning. Perhaps achieve postpone exchange-rate adjustment, but This will produce greater negative consequences. Although the exchange rate problem is a matter of concern to the Venezuelan Government, the main problem lies in the current economic model, which has given clear signs of exhaustion. The Venezuelan economy runs serious risk of contraction this year. For the former manager of economic research for the Central Bank of Venezuela Jose Guerra, the country entered phase of stagflation (recession with inflation acceleration mixture). War estimated a contraction of GDP in Venezuela between 1.5% and 2.5% and the rate of retail inflation to reach 35%. According to war: Runs a model based on the business role of the State.

Before the exhaustion of the model of corporate status, a general weakening of the power of Chavez and the major risks that this situation entails for the stability of the economy, the President of Venezuela must take urgent steps to reduce the tensions that have exhibited the same. On measures to You must apply the Government anticipates Guerra: to apply a model of adjustment not announced. When even it is not clear what position shall be imposed in the Sunday referendum, yes there is total clarity and coincidence that the Venezuelan economy needs changes and urgent reforms that will prevent that it faces a crisis. It will be Chavez decided to do it or will remain inflexible deaf to a situation that already cannot withstand much more?

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