April 2017 marked the 4th anniversary of Nicolás Maduro’s presidency. By almost every economic and social measure, Maduro’s administration has been a catastrophe for Venezuela.
Since Hugo Chávez’s death, I have studied the Maduro government’s economic and social policy, looking for any sign of significant public policy progress. It hasn’t gone well.
At the time of the transfer of power from Chávez to Maduro, Venezuela’s Chavista elite seemed prepared to ensure the successful transfer of power to Chávez’s chosen heir. Fast forward to the four years since Maduro took office. The Venezuelan political machine has ground to a halt, policy has gone off the rails and the country is in a full-blown humanitarian crisis.
Has Maduro’s administration addressed the country’s inflation crisis? No. On the contrary, since 2013, Venezuela has experienced price increases leading toward hyperinflation. According to the Central Bank of Venezuela, in 2013, Maduro’s first year in office, the country had an annual inflation rate of 56.2 per cent. By February 2017, according to Torino Capital, the yearly inflation had reached 455%, the highest inflation rate in the world—and according to the International Monetary Fund (IMF) that’s just the start of a hyper-inflationary spiral.
Has the Venezuelan economy grown under Maduro? Again, no. In 2013, the Gross Domestic Product (GDP) increased 1.3 per cent, the last year of economic growth in Venezuela. Without any official GDP performance data, journalists and analysts have relied on estimates by the IMF, revealing the extent of the country’s economic contraction. IMF figures show Venezuelan’s economy shrunk by 3.9% in 2014 and 6.2 % in 2015, leading to the largest GDP fall experienced by any country in 2016, a staggering 12 percent.
Has the Maduro administration strangled the economy? Yes. In fact, Maduro’s government has taken Chávez’s economic legacy to the extreme. In his 22 first months as president, Maduro created 16 specific controls, justified as measures to fight against the economic war against Chavismo’s mortal enemies: the United States and capitalism.
Some divisions within the Chavista elite have begun to admit what many of us have suspected for a long time—controls over Venezuela´s economy is not an ideological matter. Rather, government regulations are just a facade to hide massive corruption (such through government’s the foreign exchange controls).
According to data by former Chávez ministers Jorge Giordani and Hector Navarro, the Chavista government officials have embezzled $300 billion through a decade of imposing byzantine exchange rates. Maduro has not only avoided investigation over government complicity, he has ensured policies to maintain governmental control over exchange policy completely opaque—better to enrich his allies.
During Maduro’s administration, Venezuela has suffered a complete economic meltdown, with social consequences that will affect Venezuelan society for decades to come. The economist Omar Zambrano has argued that, “from 2013 to 2016 Venezuela experienced the biggest and abrupt economic contraction in modern times.”
The results of the Survey of Living Conditions (ENCOVI in Spanish) conducted by researchers from three Venezuelan universities—Central University of Venezuela (UCV), Andrés Bello Catholic University (UCAB), and Simón Bolívar University (USB)—demonstrate the Maduro administration’s social failure. Since 2013, the “non-poor” rate diminished dramatically from 44 % to 16.4%, while “chronic poverty” rate nearly doubled from 16.1% to 31.09 percent.
Under Maduro’s watch, the economic and social crisis in Venezuela has gone from acute to chronic. In his first two years in office, Maduro struggled to reverse the downward slide of his country. But since then, his administration has maintained a pattern of inaction, seemingly unable to stem an economic and social meltdown.
Under the constitution and electoral laws, Maduro will remain in office until 2018. But if the country continues its profound political and policy dysfunction, Venezuela seems destined for complete collapse well before then.