VenEconomy: Lies, damn lies and statistics
Planning and Finance Minister Jorge Giordani rivals his colleague Rafael Ramírez when it comes to brazenly telling whoppers.
Here are just some of the lies he told the National Assembly on February 24:
He stated, for example, that inflation is an “effect of the inflationary inertia” from the presidential terms prior to Hugo Chávez's. Even if one were to accept that this as gospel, the question still remains, haven't 12 years with total power over the economy been sufficient for this Chavista administration to bring inflation to heel?
While it is true that during the second terms of Pérez and Caldera the country posted high inflation, it is also true that both implemented policies that managed to reduce inflationary pressures before the end of their five-year terms. In the case of Pérez, inflation during his first year in office reached 81%, but when he was removed from office in 1993, he had brought it down to 45.9%. And while inflation reached 103.2% (1996) during Caldera's second term, when he handed the presidency over to Chávez, it had fallen to 30%. Apart from that, the impact of Caldera's good anti-inflation policies managed to bring inflation down to 12.3% in 2001.
What Giordani did not explain is why the sensible policies of the second Caldera administration were abandoned, as result of which inflation began to climb again. In the nine-year period 2002-2010, inflation rose to an average of 24.2% a year, peaking at 31.9% in 2008 and continuing still very high in 2010 with 27.4%.
It is worth remembering that Pérez and Caldera brought down inflation by lifting price controls and encouraging production, whereas during the Chávez-Giordani administration, inflationary pressures are being contained by controls.
The other whopper Giordani told was that the public debt represented 18.6% of GDP in 2010; in other words, Bs.F.186.5 billion (equivalent to US$43.4 billion at the Bs.F.4.30:US$ exchange rate). It would seem that Giordani does not have access to the figures of the Finance Ministry, of which he is the head, because according to those official figures the public debt is nearly three times the amount he mentioned. According to official figures, the public debt is broken down as follows: domestic public debt, Bs.F.83 billion; foreign public debt, US$37 billion; PDVSA's long-term debt, US$30 billion; debt with China (payable with oil) and an undetermined number of other debts incurred by the basic industries in Guayana, US$26 billion, making a total of between US$110 billion and US$120 billion.
Without a shadow of a doubt, the conclusion that can be drawn from Giordani's rendering of accounts before the National Assembly is that the country's economy is being managed with an explosive cocktail of incompetence and lies.
VenEconomy has been a Venezuela's leading specialized publisher on financial, political and economic data since 1982. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.
Editor's Note: This commentary was originally published by Veneconomy , on February 25, 2011. Petroleumworld reprint this article in the interest of our readers.
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Petroleumworld News 02/28/2011
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