Latin Business Chronicle: The Absurd Venezuelan Economy

To any observer walking through the streets of this city, the poor performance of the Venezuelan economy is a powerful revelation. The basic elements of Venezuelans’ daily diet are missing; it is hard—sometimes impossible—to find milk, chicken, or flour; and there is a shortage of medicine and other products essential to good health. But as the state budget continues to increase due to a dramatic rise in oil revenues since 2003, wages have been frozen for years despite the government’s claim to operate on the people’s behalf. In 2003, Chávez’s government established an exchange control regulating the value of the dollar and reserving the power to grant foreign currency for the state. Soon he created criminal laws strictly controlling all foreign currency transactions. Naturally, a parallel market for the dollar soon emerged; the government controlled imports, and a public organization, the Commission for Foreign Exchange Administration, was placed in charge of nearly all foreign trade.