With each passing day, it is getting harder and harder for Hugo Chávez’s remaining political and journalistic allies to defend his policies. Last week, the Venezuelan president announced a significant devaluation of the bolívar, Venezuela’s national currency, thereby making a major inflation problem even worse. “Latin America learned in the 1980s that policies like this do not work,” Harvard economist Ricardo Hausmann, who served as Venezuela’s minister of planning in the early 1990s, told Bloomberg News.
Venezuela already has the highest inflation rate in Latin America, thanks to the gradual Cubanization of its economy under Chávez. Annual inflation (the official rate calculated by the central bank) was 25 percent in 2009; it could be higher — perhaps much higher — this year. Even before the devaluation, the Associated Press was reporting that “some Venezuelan analysts estimate prices could rise by more than 35 percent.”
