February 09, 1998

Regardless of whats being whispered in international financial markets, the Venezuelan economy still has some major problems. Last year's annual rate of inflation was 37.6%, significantly lower than 1996's rate of 103%, but estimates for this year are still in the 30% range. That means inflation has exceeded 30% for more than 10 years. And interest rates are negative despite an increase since the end of January. In short, monetary policy is a disaster. The purchasing power of the public has been severely diminished. At least 70% of the population is impoverished. The small middle class that has managed to survive struggles to pay for bare necessities. The educational, health, electric, and water services provided by the government are unreliable.

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