The letter of the former Minister of Planning Jorge Giordani, and the most recent report by investment bank Bank of America / Merrill Lynch on Venezuela , have publicly formalized the existence of a confrontation over economic policy within the Cabinet of Ministers the area.
This is a (non-exhaustive) timely overview of the issues at stake and the positions of the "radical" and "pragmatic" wings.
1) Adjustments macroeconomic The two wings agree on the need for adjustments in economic policy. Obviously the approaches differ in the specifics.
2) Public expenditure Giordani's vision focuses on reducing public expenditure by way of a scheme that "increasingly against a grant expenditure schedule accompanied by success indicators that would facilitate a gradual expansion and curb expenditure not fulfill their commitments achievements. " The pragmatic wing, as reported by the Bank of America, prefers monetary policy actions that, in this way, restrict the flow of resources to the public sector.
3) Exchange rate policy Giordani favors a strict control mechanism by the state allocation of foreign exchange, with emphasis on combating corruption. The letter maintains prime rate Cadivi (with a high-level committee to authorize sector allocation) and the outline of Sicad (only one version). While the pragmatic wing prefers the option of exchange correction through unification in the market rate defined by the Sicad II. This would be seen as a "desirable" as in the medium and short term.
4) Price adjustments Giordani is in favor of a price adjustment (no doubt by way of reduction of subsidies) "which accommodated defense priorities purchasing power of the most vulnerable groups." The pragmatic wing would be more willing to widespread price adjustment resulting from the migration of imported products to Sicad II rate. These adjustments are being made through the measures taken by the Superintendence of Costs, although at a slower rate than expected.
5) Indebtedness Giordani firmly warned against the growth of external indebtedness derived from auction mechanism with dollar securities established in SITME. That was arrested in early 2013. Yet the pragmatic wing could encourage external financing under that "continued reliance on bonds rather than cash sales to feed SICAD II is a sign that the increase in external liabilities could emerge as the path of least resistance. "
6) Privatization While the former minister claimed the productive role of the state and does not address the possibility of privatization, the Bank of America document reveals the pragmatic wing layout to integrate the private sector. This would not be open to privatization but with joint ventures and other strategic alliances with the private sector.
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Source from: http://la-tabla.blogspot.com/2014/06/conozca-los-puntos-de-la-confrontacion.html
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