In the article from BBC entitled “What was Black Friday and why it marked the end of ‘Saudi Venezuela’‘”, historians and economists marked the 40th anniversary of the devaluation of the bolivar announced on February 18, 1983 by the then president Luis Herrera Campíns. Until that day, a fixed parity of 4.3 bolivars per dollar was maintained for a whole decade. At that time, the savings of the financial system were liquefied when they lost their value by 70%. From that measure, currency controls were introduced with three types of exchange offices.

The article explains that “the devaluation showed that the growth recorded in previous years was sustained by public spending, which promoted the port’s economy, based on the import of goods. And that millions of investments aimed at diversifying the production apparatus did not achieve their goal”.

News about Venezuela

When President Herrera Campíns came to power, he said he got an “unbalanced economy.” He exclaimed: “I am taking Venezuela as a mortgage!” According to economist José Guerra, the seeds of disaster were in the previous administration, that of Carlos Andrés Pérez. The social democratic leader nationalized oil in 1976 and this meant a significant injection of funds for the state. With his “Gran Venezuela” project, infrastructural megaprojects and huge state industrial complexes were built, the bureaucracy and a series of subsidies provided by the government increased significantly. All this was made possible by the jump in oil prices. When the oil fortune ended, the Pérez government resorted to borrowing and tripled the public debt. Sounds familiar?

Puppets of the Venezuelan PDVSA mafia: models and businesswomen in public life and recruiters for legitimizing capital and money laundering in private life

(…) the root of the current problems is to keep waiting for the Savior to save us…

Herrera Campíns tried to correct course by cutting spending between 1979 and 1980. But nobody wanted to hear about austerity. Without a majority in the assembly and without the support of unions or businessmen, Herrera Campíns stopped. External factors such as interest rate hikes by the Federal Reserve in 1979 and 1981 made financing and servicing the existing public debt more expensive. Add to that the fact that Mexico’s 1982 bankruptcy, which also had its own pre-debacle populist leader in Luis Echeverría, punished other Latin American debts. The devaluation of 1983 led to high levels of inflation and greater discontent.

That, in short, is the story of the collapse of the most prosperous nation in Latin America until a few decades ago. In this story, we can replace our own names and tell the same story of various peoples in the region. Above all, Ecuador can look in that mirror, given that we too have suffered the maddening consequences of the oil booms. Before the rise and fall of Venezuela, we saw the rise and fall of Argentina. After the history of Venezuela, in recent years we have seen what appears to be the beginning of a decline in Chile.

Here in Ecuador, the story is already repeated that we need to return to the ‘good’ times of the great leader, ignoring, once again, that the roots of the current problems are the continuation of the hope that the Redeemer will miraculously save us, without our effort and sacrifice. Let others pay, let others work, let others take responsibility. (OR)