In its most recent report, the Cenantillas economic
\nresearch center of the Pontificia Universidad Catolica Madre y Maestra (PUCMM)
\nindicates that the present economic difficulties are primarily due to the
\ninappropriate domestic financial and monetary policies implemented by the Mejia
\ngovernment. Cenantillas says that unbridled fiscal expansion caused real public
\ninvestment to grow 35% in 2001 and 36.6% in 2002. At the same time, however, the
\nprivate sector scrimped, with private investment falling 2.5% and 1.8% during
\nthe same years. "This crowding out of the private sector as a consequence of the
\nincrease in taxation eroded macroeconomic stability and created extremely
\nadverse conditions for the foreign exchange market and the banking sector,"
\nCenantillas says in its analysis, as reported by Hoy newspaper. According to
\nCenantillas, fiscal pressures, monetary policy and erratic exchange market
\nintervention created the conditions for a confidence and credibility crisis that
\ndegenerated into an exchange and banking calamity. The government then resorted
\nto the standby arrangement with the IMF to restore faith, but shortly after, new
\nbank failures were made known, the government took on additional debt with the
\nrenationalization of the power distributors, and the political crisis
\nintensified, prompting disputes within the ruling party itself. Cenantillas
\nfeels that the worst is yet to come, however, despite the marked drop in
\neconomic growth, high levels of inflation, unprecedented devaluation and
\nincrease in unemployment.<\/p>\n","protected":false},"excerpt":{"rendered":"
In its most recent report, the Cenantillas economic research center of the Pontificia Universidad Catolica Madre y Maestra (PUCMM) indicates that the present economic difficulties are primarily due to the inappropriate domestic financial and monetary policies implemented by the Mejia government. Cenantillas says that unbridled fiscal expansion caused real public investment to grow 35% in … <\/p>\n