A funny way to beat inflation
From The Economist
Hugo Chávez invites the private sector to help him build socialism
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TO BUILD his promised socialist revolution, Hugo Chávez seems to have concluded that he needs the help of capitalist businessmen. Earlier this month he invited a handpicked group of captains of finance and industry to the presidential palace. He lectured them about the imminent demise of capitalism, but then proceeded to offer them cheap credit and joint ventures to “reactivate” production.
That such efforts are needed is at first sight odd. Although it sells at a discount because much of it is heavy and sulphurous, the price of a barrel of Venezuelan oil recently topped $120. This year, Mr Chávez says, oil will contribute $75 billion to government revenues, up from $43.5 billion last year and only around $7 billion when he came to power in 1999.
Nevertheless, the economy slowed sharply in the first quarter of this year (see chart). That came as a surprise to the planning ministry, which had forecast growth of 6.7%. To make matters worse, the government's inflation forecast of 12% for this year has proved even more wildly optimistic. This is particularly bad news for the poor, Mr Chávez's main constituency. The price of food is rising faster than the overall index. According to the Centre for Documentation and Analysis (CENDA), a group linked to the trade unions, the cost of feeding a family of five rose by 2.4% in May and stands some 60% higher than the minimum wage, even though this was recently increased. For the first time in the past three years, the living standards of ordinary
From The Economist
Hugo Chávez invites the private sector to help him build socialism
Get article background
TO BUILD his promised socialist revolution, Hugo Chávez seems to have concluded that he needs the help of capitalist businessmen. Earlier this month he invited a handpicked group of captains of finance and industry to the presidential palace. He lectured them about the imminent demise of capitalism, but then proceeded to offer them cheap credit and joint ventures to “reactivate” production.
That such efforts are needed is at first sight odd. Although it sells at a discount because much of it is heavy and sulphurous, the price of a barrel of Venezuelan oil recently topped $120. This year, Mr Chávez says, oil will contribute $75 billion to government revenues, up from $43.5 billion last year and only around $7 billion when he came to power in 1999.
Nevertheless, the economy slowed sharply in the first quarter of this year (see chart). That came as a surprise to the planning ministry, which had forecast growth of 6.7%. To make matters worse, the government's inflation forecast of 12% for this year has proved even more wildly optimistic. This is particularly bad news for the poor, Mr Chávez's main constituency. The price of food is rising faster than the overall index. According to the Centre for Documentation and Analysis (CENDA), a group linked to the trade unions, the cost of feeding a family of five rose by 2.4% in May and stands some 60% higher than the minimum wage, even though this was recently increased. For the first time in the past three years, the living standards of ordinary
