A long-proposed sale of Citgo, the US subsidiary of Venezuela’s state oil company PDVSA, is once again making some waves. Rafael Ramírez, the powerful boss of PDVSA who is also oil minister and deputy president for the economy, said this month that a sale could go ahead “as soon as we receive a proposal that serves our interests.”
But in the US on Wednesday, Joe García, an energy savvy Democratic Congressman from Miami, urged the Obama administration to block the sale. Continue reading »
For more than 50 years, citizens of Communist Cuba have been assured access to basic foodstuffs by the libreta, or ration book. But the subsidised system in increasingly controversial and last year Raúl Castro, the country’s president, rubbished it as “paternalistic, irrational and unsustainable”.
Nevertheless, across the Caribbean, Castro’s friend and colleague Nicolás Maduro of Venezuela is planning a similar system in a bid to combat the shortages that are ravaging the home of 21st century socialism. Maduro said his government would introduce a rationing system using mandatory fingerprinting in supermarkets, calling it “perfect” and an “anti-fraud blessing”. Continue reading »
There has been an outpouring of bitter comments under the hashtag #GuisoChino – “Chinese Stew”, slang for fraud and corruption – in Venezuela sparked by this week’s visit by Chinese president Xi Jinping, who granted more financial support to the cratering economy of president Nicolás Maduro.
China has granted some $50bn in loans to Venezuela in recent years according to the Inter-American Dialogue/Boston University China-Latin America Finance Database, far more than to any other country in the region. Venezuela, after all, has the world’s biggest oil reserves. Continue reading »
With Venezuela’s economy in tatters, corruption allegations abounding and political infighting the name of the game, it may be time for changes at the top.
A fortnight ahead of the ruling socialist party’s third congress at the end of July, President Nicolás Maduro (pictured) is expected to make the first announcements of a government restructuring this week. What’s at stake in the country with the world’s largest oil reserves, but where shoppers struggle to find basics such as toilet paper and powdered milk? Continue reading »
As your correspondent found out while visiting Caracas this week, it can be hard to take a shower there these days because of drought-fuelled water rationing. But it is also hard to find bottled water if you want to give yourself a splash instead. Of course, you can always just reach for the deodorant and hope it does the job in the heat of the Venezuelan tropics. Or rather, you can’t, because it is increasingly hard to find deodorant.
No hay – Spanish for “there isn’t any” – is a mantra often heard in today’s Venezuela. Continue reading »
Should one laugh or cry over Venezuela? The answer is: it depends on who you are, and when. Usually, it is investors and businesses that do the crying. That is especially so since President Nicolás Maduro (pictured) took charge after Hugo Chávez’s death last year and struggled to control chavismo’s disparate factions. As a result, policy making was paralysed. Increasingly, though, it seems that Maduro and the pragmatists are gaining the upper hand, at least over the country’s more militant radicals. They now seem to be doing more of the crying. Continue reading »
Ticket offices may soon be pushing down their blinds at Maiquetia, the international airport outside Caracas, as civil aviation in Venezuela enters a downward spiral that is symptomatic of a broader economic vortex.
Last week, Italy’s Alitalia said it was temporarily suspending services “due to the ongoing critical currency situation” preventing it from repatriating funds. Germany’s Lufthansa followed suit, halting ticket sales in the country. Weeks earlier, Panama’s Copa said it would cut routes to and from Venezuela.
That’s tough on airlines and on Venezuelans keen to get away from it all. But the malaise runs wide and deep throughout the economy. Continue reading »
Venezuela’s state-run oil giant, PDVSA, is calling on bold bond-buyers in the financial sector – and traders say they have already been receiving calls.
The company announced on Wednesday it is to issue $5bn in new bonds, that will mature in 2022, 2023, and 2024 with a 6 per cent coupon, in a private placement with the public banking sector. Continue reading »
The International Pasta Association ranks Venezuelans as the world’s second-biggest consumers of Italy’s staple food.
But Venezuela’s foreign exchange controls have forced Empresas Polar, a giant food producer and the country’s largest private company, to close down its pasta production plant. Continue reading »
Venezuela’s central bank announcement of inflation data this week was remarkable more for its rhetoric than for the figures themselves.
Announcing the numbers a fortnight behind schedule, it said monthly inflation rose to 4.1 per cent in March, up from 2.4 per cent the previous month. But it did not mention an annualised rate, which hit 57 per cent in February. Instead, it launched a rhetorical broadside against the ongoing protests in the country, which it said have unleashed a “new concrete wave of economic war”. Continue reading »
Another sign of the stresses in Venezuela’s economy: annual inflation hit 57.3 in February according to the central bank, up from 56.3 per cent in January.
The numbers were bad enough for Nelson Merentes, central bank president, to admit at the weekend that Venezuela was in an economic crisis. 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 »
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 »
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 »