Venezuela’s central bank published comprehensive economic data this week for the first time since 2015. The report published by the regime of dictator Nicolás Maduro was not as horrifying as projections from outside observers like the International Monetary Fund (IMF), but nevertheless admits to dizzying rates of inflation and a collapsing economy.
The Central Bank of Venezuela admitted to an annual inflation rate of 130,000 percent at the end of 2018 and a current inflation rate of over 282,000 percent. As mind-blowing as those figures may be, the International Monetary fund thinks the central bank is soft-pedaling the numbers and the actual inflation rate is closer to one million percent, on its way to ten million percent by the end of 2019.
The central bank said the once-growing Venezuelan economy began contracting in 2014 and went into free-fall after 2015, with a GDP contraction of 23 percent calculated for the third quarter of 2018. The national economy is now about 52 percent smaller than it was when Maduro took power after the death of his mentor Hugo Chávez. The IMF believes Venezuela’s economy will contract by at least 25 percent this year.
Income from oil, which accounts for 95 percent of Venezuela’s export revenue, has been declining by several billion dollars per year according to the central bank, and now stands at just $29.8 billion compared to $85 billion in 2013.
“What’s really incredible is that the Venezuelan state has now confirmed that Maduro’s government has caused the economy to shrink by 50 percent. This is confirmation of what an economic disaster Maduro has been for Venezuela,” Geoff Ramsey of the Washington Office on Latin America observed, as quoted by the Epoch Times.
The Epoch Times speculated Maduro decided to allow publication of the central bank report to dampen support for Maduro’s opponent Juan Guaido at the IMF and World Bank, which are both running out of patience for Maduro keeping Venezuela’s appalling economic data secret.
The central bank is also attempting to push a narrative that hyperinflation is slowing down, an analysis the IMF does not share. Outside analysts believe inflation may have been temporarily slowed by Maduro imposing tight monetary restrictions to prevent Venezuelans from buying dollars on the black market – restrictions that would reduce inflation at the cost of slowing down the moribund economy even further.
“The Maduro regime has been quietly taking steps to liberalize the economy. It is possible that the government perceives that the posture of not acknowledging the dire economic reality being felt by the Venezuelan people is untenable,” Paula Garcia Tufro of the Atlantic Council told Al-Jazeera News last week.
“However, it is more likely that this data will be used as part of an official narrative on the part of the Maduro regime that seeks to point to external sanctions as the cause of the economic collapse,” she added.
Garcia Tufro noted the central bank’s report would weaken Maduro’s preferred narrative if studied carefully, as it shows the economic crisis was “well underway prior to the significant ratcheting up of sanctions on Venezuela, and importantly, preceded the imposition of US sanctions on Venezuelan oil in January 2019.”