At some point soon, the urgency of thinking about the need to organize the Venezuelan economy will inexorably prevail. Not addressing the issue now only weakens your chances of dealing with it successfully. The recent official hiring of the European company Rothschind and Co. as a financial advisor could illustrate the dimensions of commitments that far exceed the limits of what the country is in a position to assume. With the quantification of the debt, the alternative of a refinancing program seems to be imposed as a necessity
The history of refinancing programs normally refers to the recipes of the IMF and the WB. The analysis of the results proves in many cases that the demands for economic adjustments recommended by these institutions have not always led to the expected results. There are several economic thinkers for whom the application of these adjustments, far from favoring greater prosperity and the reduction of inequality, has certainly served to strengthen the economy of some sectors, but with little effect on the well-being of the majority and, in general, some cases, to the detriment of their conditions and aggravation of phenomena such as inequality. The emphasis on economic statistics has diverted attention from the true interests of people and society.
It is imperative, therefore, to review the premises that inspired some of the recommendations of large financial institutions. Ishaan Tharoo, foreign affairs columnist at The Washington Post, points out that “as globalization weakens, the world continues to become more unequal.” A year ago, the White House’s own national security advisor, Jake Sullivan, said that the United States “wanted to move from decades of economic orthodoxy and unrestricted globalization to a different agreement between nations and their societies.” The slowdown in growth, however, has had important effects for rich Western countries, but, as Ishaan Tharoo points out, “it is even more worrying for the poorest nations of the developing world.” IMF Managing Director Kristalina Georgieva herself acknowledges this: “As growth is slow, the chances of catching up actually get worse.”
In the case of Venezuela, the recent Venezuela Situation Report April 2024 from the Institute of Economic and Social Research of the UCAB leaves evidence of the magnitude of the problems to be resolved in terms of financing. The study also highlights indices that reveal the effects on the population in terms of inequality and quality of life. It warns, for example, that in 2023 no progress was recorded in reducing poverty and that redistributive public policies continued to have structural flaws. The weakness in the level of economic activity, the distortions in the structure of the labor market and the deficiencies in social and redistributive policies will continue to be factors that prevent substantive improvements in the level and distribution of income and wealth. It makes no sense to expect relevant progress in reducing the weaknesses that place Venezuela as a society and economy with very poor performance. The research recalls that Venezuela continues to be the most inflationary country on the continent and highlights that more than income poverty, it is multidimensional poverty, all the more reason to think about the other dimensions of inequality, those that touch on opportunities, access to education, health, well-paid work, cultural goods.
It is urgent to think about the need to have talented experts to negotiate the external debt in the midst of conditions that, without a doubt, will worsen the problems. When the country manages to recover its institutions and the necessary political maturity is reached, organizing the economy should be a central issue. To do so, the country will need the concurrence of top-level actors and skills, capable of understanding and resolving resistance to initiatives and programs aimed at bringing order to national finances.
The entry The difficult task of organizing the economy was first published in EL NACIONAL.