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Monday, March 20, 2017

Argentina-Venezuela: A Tale Of Two Stories


In Venezuela, Nicolas Maduro’s government, in power since 2013, has pursued an external strategy in which the structural shortage of dollars is managed through a system of multiple exchange rates, one that is as complex as it is ineffective, while giving preference to bilateral sources of financing (China, Russia) in a vain attempt to curtail the haemorrhaging of central bank reserves. Domestically, year after year, the government has become increasingly financially dependent on PDVSA, the national oil company, and has used and abused devaluation in another vain attempt to balance its accounts. This has triggered a totally uncontrollable inflationary spiral and a widespread shortage of goods, including basic necessities. Lastly, PDVSA’s financial troubles have resulted in production cutbacks due to a lack of investment. More…

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