4.

Government measures to control inflation

4.1. About inflation

The Venezuelan government is still gradually planning plans to prevent hyperinflation

 Limit printing more money and change monetary policy

Venezuela's government has made changes in monetary policy to make people in the
country and the world have "belief" in the Bolivarian currency when they started to
have active interventions in the value of this currency. On August 20, 2018, the
government of this country decided to issue a banknote (Sovereign Bolivar - VEF
instead of the old Bolivar - VEB) with the removal of 5 zeros on its new banknote to
control inflation, the largest denomination. on this new coin is 500,000 Bolivar
compared to 5,000,000 Bolivar as before. The purpose of this is to normalize daily
transactions. But this move proved futile as the inflation rate remained in the 5-digits.

 Unleash exchange rates in financial markets

This makes foreign exchange easier to access without government restrictions. In early
September 2018, Venezuela decided to apply free currency conversion across the
country, expanding their monetary management system, which has been strictly
maintained for the past 15 years, for the purpose of boosting production of businesses.
Thereby individuals and businesses can buy foreign currency through private banks
and foreign exchange conversion points instead of being forced to depend on the
country's central bank. Gold is also increasingly used as a vehicle to obtain foreign
exchange, with the mineral also being used as collateral for financial operations, but
more recently in direct sales.

As occurred with the monetary aggregates, in 2020 there was a decrease in the rate of
depreciation of the bolivar against the dollar: from a depreciation of the official
exchange rate of 7,205% between December 2018 and December 2019 to a
depreciation of 2,274% during 2020. In the first six months of 2021, the exchange rate
continued that trend so that depreciation was 1,525% with respect to June 2020 and
190% with respect to the close of December 2019. The dynamics of the parallel
market exchange rate were very similar, with year-on-year depreciations of 7,394% as
of December 2019, 1,796% as of December 2020 and 1,488% as of June 2021. A
noteworthy development is the increasing use of foreign currency, particularly the
dollar, to carry out transactions in the country.

 Adjusting fiscal policy

The state has set a fiscal deficit target of zero. Establish prepayments for income taxes
and taxes for large financial transactions. To compensate for diminishing revenues and
limited access to foreign markets, the Venezuelan finance ministry has decided to use
additional monetary funding in its fiscal management. From 2016 to 2018, corporate
taxes and other taxes are estimated to average more than 20% of GDP

 Raise wages, increase subsidies, encourage production

To overcome inflation, the government of this country has encouraged increasing

diversification of the supply of essential products. In addition, they also try to
encourage domestic businesses and increase the import of necessary necessities.

The government has also increased the minimum wage for workers by 34 times. On
January 8, 2017, the Venezuelan government announced an increase in the minimum
wage for pensions by 50%, the minimum salary of a month increased to 40,000
Bolivar (about 60 USD at the exchange rate of 12 USD on the black market).

In addition, the government thoroughly uses measures to control inflation such as

controlling government spending, reviewing and cutting investment in unnecessary
projects, improving the state apparatus, etc...

On January 19, 2016, Venezuela established the National Council on Production

Economy, with the participation of many heads of states, districts and districts to
encourage the development of the economy join hands to solve the economic crisis.

 Adjustment of petroleum policy

In early June 2020 the government announced a new mechanism to fix petrol prices by
keeping subsidies unchanged and reducing the government's tax burden on purchases.
Publication of 3 prices:

- 100% subsidy for freight and public transport.

- Support 5000 Sovereign Bolivars per liter for personal vehicles
- Sell gas with dollar or cryptocurrency at a price of $ 0.5 per liter
  Coping with the Covid-19 pandemic

In 2020, when the COVID-19 pandemic reached this country, the government
thoroughly implemented isolation and social distancing measures, blocked cities, and
mobilized the entire political apparatus to participate fight against COVID-19. In the
context of inflation, Venezuela is fortunate to have medical support and necessities
from friends such as China, Cuba, Iran, Russia, Vietnam,...

Tham khảo:

https://repositorio.cepal.org/bitstream/handle/11362/47193/90/
EI2021_Venezuela_en.pdf

https://www.bloomberg.com/news/articles/2022-01-14/venezuela-breaks-one-of-
world-s-longest-hyperinflation-bouts#xj4y7vzkg