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Currency Abuse Driving Venezuela's Inflation: Central Bank Printer friendly page Print This
By Staff Writers, teleSUR
teleSUR
Saturday, Jan 16, 2016

The BCV says hoarding of basic goods like food is part of an "economic war" against the country. | Photo: AVN

Venezuela's central bank says the country is facing an “economic war.”
More than half of Venezuela's inflation is being caused by currency manipulation, the country's central bank said Friday.

“Preliminary estimates find … close to 60 percent of inflation registered in 2015 is the result of foreign exchange incidents, associated with the exaggerated depreciation of the Bolivar (currency),” the Central Bank of Venezuela (BCV) said.

The bank specifically referred to “websites” that have played a key role in currency “distortions.”

The government of President Nicolas Maduro has long accused the website DolarToday of negatively influencing the value of the Bolivar.

The BCV also pointed to other efforts to “destabilize” the economy, including broader currency speculation and product hoarding and smuggling.

The conclusions were included in the latest economic report from the BCV. The report found Venezuela's inflation rate hit 141.5 percent in 2015. Some of the highest price rises were reported in food costs, which rose by 55.7 percent in the third quarter. Food goods are among the most smuggled and hoarded products in Venezuela.

“Venezuela is suffering a new generation economic war,” the bank warned.

The data also shows the country's GDP contracted by 4.5 percent in the first nine months of the year, with a 7.1 percent drop in GDP in the third quarter from the previous year.

The BCV noted falling oil prices also played a role in 2015's poor economic performance. The bank reported a US$782 million national trade deficit in the third quarter, at a time when falling oil prices had left Venezuela's average petroleum exports valued at roughly US$45 a barrel. This year, Venezuela's basket of oil exports has hovered at an average of US$26 a barrel.

In a speech to the National Assembly Friday, Maduro described the BCV figures as “catastrophic.”

“What we want for the year 2016 is that our country enters down a path of development and economic growth that generates wealth and employment," Maduro stated.

In efforts to achieve this, the president announced the implementation of an “economic emergency” decree.

The “economic emergency” involves making resources from the 2015 financial year available, assigning extra funds to health, education, food, and housing; designing and implementing measures to prevent tax evasion; and giving the executive the “authorization to address the causes of the current situation.”

The measure also allows the administration special temporary powers to boost production and ensure access to key goods, including taking over private companies' resources, imposing currency controls and "other social, economic or political measures deemed fitting."


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