Venezuela’s National Nightmare is Over
Via the BBC: Venezuela aims to end toilet paper shortage
Venezuela’s National Assembly has backed plans to import 39 million rolls of toilet paper, in an effort to relieve a chronic shortage.
Lawmakers voted to approve a $79m credit for the country’s ministry of commerce, which will also be used to buy toothpaste and soap.
The products are currently in short supply in Venezuelan shops.
The oil-rich nation relies on imports, but currency controls have restricted its ability to pay for foreign goods.
May I humbly suggest that sad policy isn’t working too well?
And, further, I don’t figure that the following hypothesis is correct:
President Nicolas Maduro, who won a narrow majority in April’s presidential elections, maintains that the country’s periodic shortages of basic goods are the result of a conspiracy by the opposition and rich sectors of society.
More likely, the problem is more along these lines:
analysts say that the government’s attempts to impose state control on the economy have created huge imbalances that have led to the shortages.
"Price controls, for example, act as a disincentive to local producers, forcing them to cut output," says the survey organisation Consensus Economics.
"The resulting scarcity forces up inflation, defeating the entire purpose of price controls in the first place."
Venezuela’s inflation is the highest in Latin America and is currently running at about 25%.
Things are going to be ugly down there when PSVDA declines to the point where they simply do not have the revenue to funnel into vital imports without effectively shutting down oil production and losing the revenue stream. The company has been in decline for years.