From the Editors of VenEconomy

One way or another, most Venezuelans are experiencing first hand the harmful effects of the Chavista administration’s policy of controls and restrictions.

Price controls on basic goods have led to shortages, to people changing their consumption habits, and to them spending more money in order to keep a stock of those goods.

Controls on rental housing means that, today, it is more difficult to find a house or apartment for rent than the proverbial needle in a haystack. The supply of housing for rent has fallen from 40% of total housing stock in 1998 to only 1% today.

Worse still, the policy of controls has a pernicious multiplier effect that leads to new regulations and restrictions.

Such is the case, for example, of the nearly 1,200 pharmaceutical products that have been regulated since 2003, whose prices are now lagging behind by 500% thanks to accumulated inflation and devaluations. The result is that these medicines are becoming increasingly scarce as the cost of producing them goes up daily, and this generates losses for the laboratories. This Tuesday, El Nacional reports that, according to sources at the Health Ministry, based on the assumption that this situation is due to “over-consumption, smuggling, and low prices,” they are now apparently looking at the possibility of requiring people wishing to obtain these medicines to present a prescription issued by a doctor. The result of such a measure will be to hit the consumer, who could end up prey to unscrupulous and corrupt doctors who would sell them these prescriptions.

Another case is the excessive regulation of mortgages under the government’s Housing Policy Law scheme. According to the Gaceta Oficial of March 23, the new compulsory mortgage portfolio of 15% now establishes nine different types of loans, which go from 0.8% to 1.78% of the total portfolio, thus making this compulsory portfolio an administrative nightmare for any bank.

VenEconomy has been a leading provider of consultancy on financial, political and economic data in Venezuela since 1982.

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