Wednesday, May 06, 2009

You do not need to be an economist to know that things are not going well in Venezuela

A few interesting facts that tell you more than any scholarly paper. Or as they say, the Devil is in the details.

Inflation climbs again

In spite of a recessive economic climate and a drop in consumption, the Venezuelan inflation which was for March already an unacceptable 1.2% went up to 1.8% for April. True, we must factor an increase in sales tax of 3%, but we can also write that this increase will reverberate through the cost system for at least 2 or 3 more months until a new "equilibrium" is reached. But then again we can also factorize in that we are into a price control system and that the government last month decreed that some prices had to go down. It does not matter how you slice it, inflation is headed for an official end of year total of 30%, leaving us second only to other successful economies like Zimbabwe.

Banco Venezolano de Credito first bank in stopping CADIVI cards

Since currency control exchange was set in Venezuela in 2003, to travel outside of the country you need to register with CADIVI. If approved you were allowed to charge up to 5,000 USD on your credit card. Well, when trouble started to brew Chavez ruthlessly cut down to 2500 USD your travel allowance (at 2.15 per dollar; if you go to street value you pay around 6 to the dollar today). In a way we naively thought that, well, Chavez is not letting us travel as we were but at least we would still get 2,500. You know, in Cuba they get zilch.

Think again.

Banks have been reporting that CADIVI is getting later and later with the payments of credit card use, payments done by APPROVED CADIVI cards. Already in April some banks had to stop paying for miscellaneous expenses announcing to their card holders that they would only honor bills for lodging and food, within that 2,500 grant. But CADIVI got further behind and now the BVC is the first one to announce a simple suspension of its credit cards for travelers. Period.

Why? Because when CADIVI is late it is the bank that must pay the due VISA/MC bill in dollars that it does not have unless it goes to the parallel market and buy then at three times the official value. Banks are not into that type of business, in addition to all the other shackles imposed by chavismo.

The question here is simple: if CADIVI is unable to pay what is a relatively a small dollar expense, how do you think it will find the dollars to pay for major ticket expenses? How come CADIVI is short of money when Chavez claims that we have all sorts of safeguards and savings? Are we being told the real truth about the oil income (the only one we have in USD, it must be noted)?

A Russian bought army helicopter crashes

This week end Chavez himself announced that a Russian bought helicopter crashed near the Colombian border killing its 18 passengers including the local general in charge.

That by itself could be seen as a miscellaneous news, notwithstanding its tragic content. Unfortunately for us it turns out that it is the 4th of such problem with Russian helicopters in the last year, the first three fortunately having not produced victims. Many questions are raised.

Did Venezuela bought garbage to the Russians? Yes of course! Rumors of hefty commissions have swirled around these purchases. And we all know that European or US helicopters are just better, more up to date than outdated Russian ones which ARE NOT designed for jungle landing.

Why the string of problems? Is it lack of maintenance? Lack of proper training for the pilots? In other words is it due to lack of "financial" prevision or simply neglect? I would go for both.


See? You do not need an MBA or equivalent to sense that something is not right in Venezuelan finances, nor that they were ill managed when dollars still flooded us as late as early 2008

-The end-

No comments:

Post a Comment

Comments policy:

1) Comments are moderated after the fourth day of publication. It may take up to a day or two for your note to appear then.

2) Your post will appear if you follow the basic rules. I will be ruthless in erasing, as well as those who replied to any off rule comment.

Do not be repetitive.
Do not bring grudges and fights from other blogs here (this is the strictest rule).
This is an anti Chavez/chavismo blog, Readers have made up their minds long ago. Trying to prove us wrong is considered a troll. Still, you are welcome as a chavista to post if you want to explain us coherently as to why chavismo does this or that. We are still waiting for that to happen.
Insults and put downs are frowned upon and I will be sole judge on whether to publish them.