Peace talks between President Maduro’s government and the Venezuelan opposition are scheduled to continue today, while the Mesa de la Unidad Democrática’s (Democratic Unity Roundtable—MUD) opposition coalition calls for the Central Bank to release March’s official inflation data. The bank generally releases the datain the first 10 days of the month.
The MUD claims that country’s inflation is 60 percent, an increase of 2.7 percent since February. Opposition leader and former presidential candidate Henrique Capriles announced via Twitter that inflation increased more than 4 percent in March—higher than the annual inflation for several other Latin American countries. While no agenda has been set, financial transparency is expected to be a one of the topics in the peace negotiations that will continue today.
The country’s high inflation was one of the factors that sparked the deadly protests that erupted across the country in February killing at least 41 people. Venezuela’s military strategic command chief, Vladmir Padrino, recently admitted to “excesses” in policing, but maintains that less than one percent of security forces were responsible for the “cruelty and torture.”
Venezuelan Health Minister Eugenia Sader announced during a televised news conference yesterday that the country’s private hospitals will not raise fees for the next three weeks. The freeze is meant to give lawmakers and representatives of the private health care industry time to strategize on ways to keep hospital costs down. The measure is part of a multi-sector effort to curb Venezuela’s 25.1 percent annual inflation rate—the highest in Latin America. This has led to sharp increases in the fees for visits and treatments.
President Hugo Chávez has long criticized the private health care industry for charging excessive fees and denying access for the poor and uninsured. But Hipolito Garcia of the Association of Private Clinics, who joined Minister Sader at the conference, said that hospital representatives also promised to guarantee care for patients needing emergency medical care even if they lack full insurance coverage.
Throughout his presidency, President Chávez has sought to improve Venezuela’s public health system. Due to close ties with Cuba’s Fidel Castro—and in exchange for shipments of Venezuelan oil—thousands of Cuban doctors have come to the slums of Venezuela to provide health care to the poor. However, underfunding and a limited number of physicians in public hospitals means that many Venezuelans prefer private clinics despite the high costs.
With inflation this month reaching a projected 6.3 percent per year and a currency that has increased 47 percent against the dollar since the end of 2008, could the Brazilian economic miracle be just a bubble? Though there are warning signs, there are also positive signals that indicate Brazil be able to power through--though at significant cost.
First the negative signals. Chief among these is the signs of an overheating economy. In June the Central Bank’s adjusted, upward, the rate of inflation to 6.3 percent--slightly over its target. Add to this near full employment, the limited efforts to reduce the Brazilian government’s stimulus (through BNDES and federal spending--especially in preparation for the World Cup and Olympics), and the promise to increase the minimum wage by 14.5 percent next year and it looks like a pressure cooker. Granted it doesn’t approach Argentina or Venezuela, but 6 percent-plus inflation touches the upper limits of the government’s comfort level and is Brazil’s highest rate since 2005.
Second is the overvalued Brazilian real. High interest rates (an effort by the Central Bank to contain inflation), record high commodity exports, and a flood of foreign investment have swollen the value of the real. The appreciated value of Brazilian currency against the U.S. dollar and the renminbi has hurt exports and undercut domestic manufacturing. And in an economy in which corporations have come to rely on foreign credit, the appreciated exchange rate has led many to take out dollar-denominated loans. A drop in the value of the real relative to the dollar would place a serious crimp on those corporations. Any sort of devaluation in Brazil’s floating exchange rate will be tough on the economy.