The unrest that has left at least 20 people dead goes on in Venezuela. Over the weekend, protesters were confronted by security forces while attempting to make an “empty pots march” on the food ministry in Caracas, fed up with worsening shortages that have left one in four basic goods missing from the city’s shops.
One cause is a chronic, government-imposed shortage of dollars to pay for imports. While resisting calls for wholesale reform, on Monday officials are set to launch a new, less stringent system of foreign exchange controls that, it is hoped, will provide some relief. Continue reading »
Investors in Ukrainian bonds have heaved a collective sigh of relief over the past few days – or, if not that, they have at least moved further away from the threat of default, if the recent retraction in bond yields and CDS spreads is any guide. But even in the darkest days of last week when Ukrainian yields soared to panic levels, investors could have taken one grain of comfort. Things, after all, could have been worse: they could have invested in Venezuela. Continue reading »
When 1m protesting Brazilians took to the streets last year, Dilma Rousseff, the president, sought to defuse their complaints by promising to fix ailing services and make changes to the political system. In contrast, as Venezuelan students and opposition activists have taken to the streets this month, president Nicolás Maduro has responded by calling them “fascists” and “coup-mongers” who want to bring back neo-liberalism and kill off the country’s vaunted social services.
In whose hands, however, are Venezuela’s social advances safest? Continue reading »
Demonstrators are still out in the streets of Caracas venting anger over a raft of problems, including rampant shortages of basic goods, which economists say are a by-product of foreign currency restrictions.
Unrest has been mounting in Venezuela, as pro-and anti-government groups keep clashing. Amid such mayhem, the government took some time to fiddle, once again, with its foreign exchange system, this time introducing the new “Sicad 2.” Continue reading »
For how much longer can the crazy story of Venezuela’s currency market continue to play out? For Toyota de Venezuela, the answer is “no longer”. On Thursday, workers at its factory in Cumaná will down tools for an indefinite period. The reason: it has run out of imported parts – or, rather, of the dollars with which to pay for them.
How did a country that claims to have the biggest oil reserves on the planet and which is reckoned to earn $80bn-$100bn a year from oil exports manage to run out of dollars? Continue reading »
Amid a heavily distorted economy battling a spiralling black market rate for greenbacks, Venezuela on Wednesday finally unveiled plans to reform its tight currency control system that has been in place for more than a decade, a move that market watchers say amounts to a stealth devaluation.
“We are creating a system of bands in a new currency system,” said Rafael Ramírez, the president of the state oil company PDVSA, who is also the energy minister and vice president in charge of the economy, during a news conference. He insisted that, “this is not a devaluation, but a different foreign exchange system, with bands.” Continue reading »
No devaluation here?
As growing distortions wreak havoc in Venezuela’s economy after a decade of price and currency controls, there have been many calls for the government to make an aggressive adjustment, a real devaluation.
Well, according to Wednesday’s state of the union speech by president Nicolás Maduro, it is not going to happen, not this year, not for many years, as he confirmed the current exchange rate of 6.3 bolívars to the dollar. But amid a reshuffle of some of his top economic aides, the president announced what some economists are calling a “disguised”, “gradual”, “implicit” or even “incomplete” devaluation. Continue reading »
By Arturo C. Porzecanski of American University
The Inter-American Development Bank is the oldest regional development institution, established in Washington DC in 1959 to help address the economic and social needs of Latin America and the Caribbean. However, the bank has not always made decisions that are in the best interests of its shareholders – or of the people in the region. The time has come for the Latin American and Caribbean shareholders of the IDB to join the ongoing effort to strengthen and professionalise the bank, especially by raising its lending standards. Continue reading »
More tragic news from the frontline of Venezuela’s crime scene: the murder in front of their five year-old daughter of Mónica Spear, a former beauty queen and soap opera star, and her British-born ex-husband at the hands of a gang of armed robbers this week.
It is doubtful that the assailants had much on their mind beyond armed robbery – which they knew could end in murder, an outcome not unusual in a Venezuela ravaged by violence. In that sense, the deaths are just more statistics in a country with one of highest murder rates in the world, up there with Honduras, El Salvador, Ivory Coast and Jamaica. Continue reading »
The New Year has come but the same uncertainty as last year is still looming over Venezuela. Particularly, the genuine currency devaluation that many economists agree could correct the country’s deep economic distortions and narrow the budget gap is, so far, nowhere to be seen. Continue reading »
Venezuela used to be a telenovelas superpower. Soap operas such as Abigail, Cristal and others were hits all over Latin America back in the 1980s and 1990s. The industry lost some of its shine in the past decade, and a nascent film industry gave birth in recent times to epic movies about South American liberators.
Now, determined to ramp up its production industry, the Venezuelan government is seeking advice from no other than the world’s film superpower: Bollywood. Continue reading »
By Francisco Toro
As far as anyone can tell, Venezuela is on track for twin fiscal and inflationary crises of unprecedented proportions, as the government monetises debt at breakneck speed, exacerbating already deep monetary imbalances. The trouble is that, in Venezuela, “as far as anyone can tell” isn’t very far at all: working in an extraordinarily data-poor setting means forecasting in the dark.
Nearly every data-stream an analyst would need to make a serious forecast is either artlessly manipulated or just not published. The challenges this creates are not always fully appreciated. So let’s start with a brief survey of what we don’t know. Continue reading »
With Nicolás Maduro, president of Venezuela, engaged in an “economic offensive” against what he calls “capitalist parasites”, it may come as a surprise to hear that Banesco, the country’s biggest private-sector bank, has seen off some muscular competition to take control of Spain’s nationalised NCG Banco in a €1bn deal.
An encouraging sign of the vigour of Venezuela’s banking sector, perhaps? Or evidence that Venezuelan banks must hunt overseas for healthy operating environments? Continue reading »
Many have been saying it is about time Venezuela devalued and loosened a strict exchange rate regime that has been in place for a decade.
In the meantime, the government appears to be making some moves amid a shortage of greenbacks by broadening the secondary currency auction system, known as Sicad. Continue reading »
By Mark Weisbrot of CEPR
Felipe Pérez Martí criticises me on beyondbrics for my article in the Guardian on Venezuela’s economy, for claiming that “the Venezuelan economy is not headed for collapse,” and for a number of things that I did not say (see below).
My difference with Felipe, as with those who have incorrectly predicted an economic collapse in Venezuela for nearly 14 years now, is that I think that the most urgent problems can be fixed with a change in the exchange rate regime. Continue reading »