Some 850 Venezuelans join government payroll each day
Venezuela's fiscal deficit is among the highest worldwide
High oil prices and tax collection have failed to meet skyrocketing public spending, including the growing number of pensioners and civil servants, the allocation of US dollars at a low foreign exchange rate, and subsidized food, gasoline, and public utilities.
Based on data compiled by the National Statistics Institute (INE) and the Venezuelan Institute of Social Security (IVSS), at the end of 2002 the number of civil servants and pensioners was 1.9 million. By the end of September 2012, the number jumped to 4.89 million.
Consequently, the number of public servants and pensioners soared 156% over the last 10 years. On average, 850 people joined the government payroll each day.
To make ends meet, the Venezuelan Government has pondered some moves, including devaluation as a means to obtain more bolivars per petrodollar, an increase in public utilities rates, and a tax reform.
However, such measures may undermine people's purchasing power.
In the meantime, since President Hugo Chávez is facing cancer again, there is the possibility of holding a new presidential election in the medium term. Additionally, the economic cabinet is considering taking on further debts, issuing more bolivars via the Central Bank of Venezuela (BCV), and using some funds deposited abroad.
Should the Government take such actions, inflation will escalate, the GDP-debt ratio (currently at 50%) will increase, and the structural imbalance will remain the same.
Translated by Jhean Cabrera
A group of some 60 Venezuelan economists from across the country and from different generations and backgrounds, has met regularly in the past couple of years and now has brought forth a document explaining the reasons of the current emergency and outlining specific proposals on how to address the serious economic crisis the country has plunged into over the last three years.