Tue. Apr 23rd, 2019

World Bank prepares an "ambitious" plan to help Venezuela without a fixed date

World Bank prepares an "ambitious" plan to help Venezuela without a fixed date


The chief economist of the World Bank for Latin America and the Caribbean, Carlos Végh, announced on Thursday that the multilateral organization is preparing an "ambitious" social assistance plan to be launched in Venezuela when there are "adequate conditions".

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"The bank is preparing a highly ambitious social assistance plan, which will be made available to the Venezuelan authorities as soon as the right conditions are met," Végh said at a press conference when presenting the WB forecast report for Latin America.

The chief economist regretted not being able to give an exact timetable for the launch of this program, which would aim to fix a "terrible" humanitarian situation.

"It is impossible, unfortunately, to establish a fixed date," he said when asked about respect.

However, Végh drew the strategy that multilateral institutions should follow, such as the WB itself, the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB), to rescue Venezuela.

First, the agencies should help Venezuela "with the necessary funds to completely eliminate the fiscal deficit" accumulated in that South American country.

In addition, Végh considered necessary to implement a fixed exchange rate, linking the Venezuelan peso to the dollar, a strategy that has been used to stop "all hyperinflations" in the region.

Finally, the economist stressed the importance of increasing oil production, which has been halved since 2014.

In the report presented Thursday in Washington, the WB considered that Venezuela is experiencing "the worst crisis in the modern history of the region", predicting that its GDP will contract this year an additional 25%, after a fall of 17 , 7% in 2018.

"Nothing could prepare the region for the escalation of the economic, social and humanitarian crisis in Venezuela, by far the worst crisis in the modern history of the region," the WB experts said in their biannual analysis.

The World Bank noted that Venezuela's socioeconomic conditions "continue to deteriorate rapidly" due to the fall in the price of oil, the government's "highly distorting" policies, a disorderly fiscal adjustment and poor economic management.

Real GDP in Venezuela contracted by 17.7% in 2018 and is likely to fall by 25% in 2019, according to the WB forecast, which would imply a cumulative GDP fall of 60% since 2013.

The annual inflation rate reached 1,370,000% at the end of 2018, due to the cumulative effect of a monthly rate of 121%, according to the World Bank, which calculates that this year the increase in prices will reach 10,000,000%.

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