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BUSINESS GUARDIAN guardian.co.tt JANUARY 12 • 2017
minimum wage 50%
How did Venezuela get into such deep debt?
Venezuela's minimum wage keeps rocketing sky-
ward as the country grapples with insane levels of
President Nicolas Maduro hiked the minimum wage
another 50 per cent on Sunday, the fifth increase in the
past year. That sounds like a big raise, but it pales in
comparison with the dizzying increases in prices that
have made food too expensive for many Venezuelans.
Inflation is expected to surge to 1,660 per cent this
year and 2,880 per cent next year, according to fore-
casts by the International Monetary Fund.
Maduro on Sunday repeated his claim that his coun-
try is the victim of an economic war waged by his
opponents, according to state-run news agency AVN.
The government has resorted to increasingly ex-
treme measures to try to combat the economic chaos,
which has left people facing severe shortages of food
The country's plunging currency and runaway in-
flation have made its banknotes virtually worthless.
Maduro announced plans last month to print new bills
in far higher denominations to replace the old ones,
including a 20,000 bolivar note (200 times bigger
than the largest note previously in circulation).
But the currency exchange got off to a chaotic start,
with the new notes failing to arrive on time and huge
lines forming at banks.
Venezuela joined a "Rogues Gallery" of countries
suffering from hyperinflation in December, according
to Steve Hanke and Charles Bushnell, two economists
who track the phenomenon.
Maduro said Sunday that the minimum wage in-
crease was an effort to protect the incomes of Ven-
ezuelan citizens. It follows a hike of 40per cent less
than three months ago.
After the latest raise, the minimum wage stands
at 40,638 bolivars a month. That works out at just
US$12.14, according to the popular, unofficial ex-
change rate on DolarToday.com. If you add in food
stamps, the Venezuelan wage rises to 104,358 bo-
livars. That's still only US$31.17. Food stamps and
worker bonuses make up most of workers' total pay
in Venezuela. Reuters
More painful fiscal
to avoid devaluation
The Central Bank of Barbados is issuing
yet another warning of the need for
further "painful" fiscal measures to
stave off currency devaluation.
In his January economic letter re-
leased on the bank's website Wednes-
day, Governor Dr Delisle Worrell said Barbados had
repeatedly failed to achieve the balance between its
foreign exchange outflows and inflows, necessary for
a stable economy.
He is therefore recommending further restrictions
on spending in order to protect the country's foreign
"The reserves are what protect us against the de-
valuation of our currency," the bank chief stressed.
He repeated a previous caution that the road to a
promising future would be a painful one.
"The future is exceptionally promising, but it will
not happen unless we make it happen, and like all
worthwhile objectives, realising the vision will not
be painless," he added.
In an effort to strike a note of reassurance, however,
Worrell said the Central Bank remained in a position
to provide US dollars at the current exchange rate of
Bds$2 to the US dollar to meet all "legitimate" needs,
if no other source was sufficient.
He suggested that the country has had to draw from
the Central Bank's reserves of foreign currency, simply
because of a failure to strike the right fiscal balance
over the years.
"We know when we have achieved that balance
because in that case we do not have to dip into the
Central Bank's reserves of foreign currency to make
up the difference. The country has failed to achieve
that balance since 2013 and there remains a need
to dampen spending further in order to protect the
country's reserves of foreign exchange," he wrote in
the economic letter.
Government's chief monetary adviser also said the
Freundel Stuart administration was committed to a
further reduction in the massive fiscal deficit in order
to relieve pressure on the foreign exchange reserves.
"The immediate objective is to set the debt to GDP
[gross domestic product] ratio firmly on a downward
path by achieving a deficit which is lower than the
increase in the GDP forecast for 2017," he said, adding
this would serve to boost confidence and give access
to funds from banks and other investors whose con-
tribution to Government financing had not risen in
On a slightly brighter note, he contended that
this country's leading sector, tourism, was among
the most competitive in the Americas, except for the
US, Canada, Mexico, Brazil, Costa Rica and Panama.
"The quality of our international business services
is high, and our financial regulation is kept up to speed
with international standards. We export world-re-
nowned rums and other products; and we are leading
the Caribbean in the adoption of renewable energy," he
added, stressing that these foreign exchange sectors
were the drivers of an open economy.
Grenada has appointed
a Gaming Commission-
er to regulate the sector,
Economic and Planning
Affairs Minister Oliver
Joseph said Tuesday.
Speaking at the weekly
Cabinet news conference,
Joseph said "the sector
is right now unregulated
and we will be bringing it
He said the Keith
Mitchell government is
aware of slots machines
located all over the island
including small shops
with children under the
age of 18 being allowed to
play without restriction.
The Gaming Com-
mission Bill which was
approved by Parliament
last May restricts persons
under the age of 18 from
engaging in gaming ac-
'These one arm bandits
as they are called can be
found all over the place
but now we are putting
the structures in place
to control that sector. We
must bring some order
into this gaming sector,"
Joseph said that As-
of Police, Franklin Red-
head , has been named as
chairman of the Gaming
Commission with other
members coming from
the Grenada Chamber of
Industry and Commerce
and other stakeholders.
Powers of the Com-
mission include receiving
applications for licences;
tions to the Minister re-
garding the approval or
refusal of applications for
licences and conditions to
be attached to licences;
tions to the Minister re-
garding the suspension,
revocation or varying of
licences, where appro-
priate and maintaining
records surrounding the
application for, granting
of, suspension of, revo-
cation of and varying of
Under the legislation,
taxes range from 30 per
cent of gross receipts,
or EC$250 (One EC dol-
lar =US$0.37 cents) in
respect of each gaming
machine, while facilities
for betting excluding pool
betting will be 30 per cent
of gross receipts.
St Lucia wants joint
OECS initiative on CIP
The St Lucia government says it supports a joint
approach by the Organisation of Eastern Caribbean
States (OECS) to the Citizenship by Investment Pro-
gramme (CIP) that is being offered by some countries
of the nine-member grouping.
"St Lucia was already in the citizenship business;
not directly, because the fact is that a person could
buy a passport from Dominica or Antigua or St Kitts
or Grenada and have full rights in St. Lucia," Prime
Minister Allen Chastanet said.
He said his preference was for the CIP to be an OECS
initiative based at the OECS Secretariat.
"I can say to all the other Prime Ministers that
St.Lucia is willing to sign up to that," Chastanet said,
adding that the value of the programme does not nec-
essarily relate to the country offering the citizenship,
but the access that the citizenship gives in terms of
how many visa-free countries can be visited and the
ease of doing business.
He said there is a growing market of Americans who
are interested in having a second passport because
"So when they are traveling abroad and they are
in a hotel, they would rather have another passport
because they feel they are not going to be a target,"
Chastanet told a news conference earlier this week.
OECS countries, notably, Antigua and Barbuda,
Dominica, Grenada, St Kitts-Nevis and St Lucia
offer the CIP under which foreign investors make a
significant financial contribution to the socio-eco-
nomic development of those islands in exchange for
Guyana to participate in
World Bank programme
Guyana will be represented at the World Bank's
Global Secondment Programme that Georgetown
says is a peer learning initiative intended to facilitate
the sharing of technical knowledge and experiences
among peer debt managers and World Bank staff.
Minister of State, Joseph Harmon said the February
13 to March 19 in the United States "would also ex-
pose debt managers to a wide range of cross-country
practices through participation ...training and out-
"It is expected that participation in this programme
would improve the government's debt management
capacity," he said.
The government said that an economic and financial
analyst of the Ministry of Finance will be attending
The Global Secondment Programme provides an
opportunity for officials of a member country, re-
gional agency, development bank, international or-
ganisation, or private enterprise to be appointed on
a special assignment to the Bank Group for a specific
period of time.
This programme allows for skills enhancement,
knowledge sharing, strategic alliances, cultural ex-
change, and diversification to contribute to the Bank's
group work programme, a government statement
Bdos Central Bank Governor:
as hyperinflation rages
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