And another good article on the subject of the Millardito (little billion), this time by Gerver Torres in today’s El Universal:
A little billion of errors by Gerver Torres
The request by the President of Venezuela for the Central bank to give him “a little billion dollars” of the international reserves offers a privileged opportunity to evaluate the billion wrongs in which we are submerged.
In the first place is the topic of the autonomy of the Central Bank. At a moment in which countries make efforts to exhibit the largest possible independence from their monetary authorities, ours is under siege. The autonomy of central banks is offered as a guarantee of more price stability and thus it is good for generating confidence.
A country in which the monetary authority can match with authority and independence for the stability of prices is more attractive for investments and will thus enjoy more growth and employment. In this sense, the President’s request is a direct attack against the value of the Bolivar and aga9snt employment.
Second, is the mess of in which our public management finds itself. The Government has an instrument to define its priorities. That instrument is the national budget. The idea of a budget is that the Government propose in it its policies and priorities and they be discussed in the National Assembly. It thus happens that the President makes his request for the little billion soon after presenting and formulating the budget for this fiscal year. In this sense, the request by the President is an anthem to improvisation and disorganization.
Third, there is a total lack of knowledge about how the economy functions. Money is asked from the international reserves as if they were additional money that we had for eventual expenses. It so happens that the international reserves are an expression of the equivalence between dollars and the bolivars that are already circulating in the economy. Dollars and bolivars are sides of the same coin. We can not pretend to spend twice. It is as if someone that is told that it has two thousand five hundred bolivars wanted to spend amounts, the two thousand five hundred and the dollar. In this sense the President’s request is a demonstration of economic ignorance.
Finally, there are the contradictions in economic policy. These produce a general asphyxia of the economy when you bar rot from getting foreign currency via exchange controls, when you impose high interest rates, when you don’t promote investment. Then, using a single move, you want to revive a sector. In this sense the request by the President is an act of Government incongruence.
For all these reasons, the request for a billion dollars has to be seen with billions of reserve.