After reading this morning’s interviews with Central Bank Director Domingo Maza Zavala in today’s El Universal and El Nacional (by subscription only page A-14) I was planning to do very much what Tal Cual did in its front page today of highlighting Maza Zavala’s criticism of the Government’s economic policy, item by item. What is interesting is that the statements are made by a one time Chavez sympathizer, who used to be considered a Marxist economist and is now the leading critic of the Government’s economic policy. I am amazed at the fact that I agree so much with Maza’s statements these days. During the Caldera exchange controls in 1995, when Maza was first named to the Board of the Central Bank, we used to have the “Maza Zavala weekly Award” given to the Government official who made the most stupid comment on the economy during the week. How times change! today Maza criticizes the Government regularly with great precision and today he slammed the Government, making very straightforward observations about its erroneous economic policies. Here is Maza’s list:
-There is an attempt to transform PDVSA into a different organization, whose destiny we do not know, in such a way that our oil potential could decline.
-Oil potential needs investment, if not, it drops, which is what is happening. Oil should contribute 30% to GDP and that contribution has dropped to 23%.
-Last year imports were US$ 9-10 billion and over half of that was financed outside the controlled exchange market.
-The parallel market grows because of the official restriction, the problem is not lack of foreign currency, the Central bank assigns the exhange control office US$ 1.5 billion a month and the office returns half of that.
-It is dangerous to submit the country to shortages of medicines, foodstuffs…
-The Government proposes to increase expenditures to extraordinary levels putting money in circulation in a profusive and diffusive way.
-An effective recovery rests on the private sector, we gain nothing by recovering to fall again.
-He criticized the growth in internal debt which went from 2 trillion Bs. to Bs. 22 trillion.
-Internal debt is a risk to the banking system at 25-30% of assets (it is more!!).
-We are facing an increasing inefficiency of public expenditure, the multiplication of administrative institutions, and growth without organization.
-Private investment has been at a rate of 8% of GDP, it should be at 25%.
-There is no such thing as excess international reserves.
-The parallel exchange rate of Bs . 2700 per US$ is the one used in fixing prices and thus inflation.
Wow! No wonder Chavez does not like the Central Bank.