<a href=www.vheadline.com>Venezuela's Electronic NewsPosted: Monday, May 12, 2003 By: Jose Gregorio Pineda & Jose Gabriel Angarita</a.

VenAmCham's Jose Gregorio Pineda (chief economist) and Jose Gabriel Angarita (economist) write: The events experienced by Venezuela from December 2002 to February 2003 made clear once again the country's enormous dependence on the oil sector and the consequences of a partial shutdown of many productive industries due to the intense political conflict prevailing in the country.

This situation depressed current revenue by more than 5 points of GDP and made it extremely difficult to continue servicing the government's internal and external debt, given the rapid buildup of short terms that prevail in the first and the heavier cost of the second because of currency depreciation.

A variety of measures were taken to cope with the fiscal crisis. On the one hand, a 4 trillion bolivar staggered cutback of public spending was announced in January. The first stage amounted to 2.8 trillion bolivares, with another 1.2 trillion bolivar reduction to be made later on, as needed.

The Finance (Hacienda) Ministry subsequently asked the banks to accept swaps that would postpone public bond maturities, and the Bank Debit Tax was extended through December 31.

All these moves reflect a strategy aimed at cutting the cost of government, increasing revenue collections, and refinancing internal public debt, in spite of the heavy outlays to import gasoline needed to meet domestic demand while the oil industry was not producing.

The authorities decided to impose strict price and exchange controls (to the point where dollars are still unavailable more than 100 days after the measure was adopted). The distorting effects of these controls quickly made themselves felt: on the one hand, the negative impact on tax collections of falling imports, and on the other, impending shortages of raw materials needed by Venezuelan producers.

The controls are clearly incompatible with improved revenue flows and falling public spending.

Government spokesmen recently announced an import plan with tariff exemption to cope with the shortages provoked by the controls, which are hurting all the economic agents. As if that were not enough, the second round of spending cuts planned for this year was also ruled out. But the actions taken seem to lack fiscal coherence, and seem out of synch with prevailing conditions in Venezuela and the world.

The foreign exchange shut-off will continue strangling industry and import duties will continue to be depressed.

At the same time, oil prices are expected to decline, resulting in less revenue from oil exports. Not to mention the problems with the Andean countries that could be provoked by the tariff exemptions.

The facts indicate that the officials responsible for Venezuelan fiscal policy should be conservative and maintain tight spending controls to improve cash flow, as well as restore the supply of foreign exchange to the private sector.

Respecting international agreements and ensuring the continuity of industrial operations are needed to prevent an excessive growth of unemployment and reduce the risk of a cessation of debt payments.

If changes are not made in the rest of economic policy, the vicious circle will continue and the fiscal problem will not be overcome.

Jaime Pérez 2001.com.ve

Instalado como ha sido con todo su rigor lo que el gobierno considera como control de cambio y que para el resto del país no pasa de ser más que la congelación de toda transacción con divisas extranjeras, habría que precisar cuál fue la motivación oficial para establecer tan funesta medida y las consecuencias que ella ha procreado. Habría entonces que remontarse a aquella contundente demostración de rechazo a la política gubernamental que constituyó el paro nacional protagonizado por la CTV, Fedecámaras y la sociedad civil, que desencadenó la furia del jefe del proyecto "revolucionario", quién juró vengarse de todos los que osaron enfrentársele con esa acción cívica. Los comerciantes, industriales, empleados y obreros que paralizaron sus actividades, debían recibir una aleccionadora ración de latigazos por su conducta. Así se recurrió al control como un medio expedito para suspender el suministro de dólares a los causantes del enojo presidencial, quien había advertido que no entregaría ni un dólar para los golpistas, a excepción suya que los tendría a cántaros a pesar de su condición de golpista convicto y confeso. Esa orden resumía toda la rabia, el odio, la ignorancia y la desesperación de quien la impartía.

Y comenzó el gobierno "revolucionario", "made in Cuba" a aplicar la parte más aberrante de eso que los economistas definen como neoliberalismo, consistente en inundar al país de mercancía extranjera a punta de billete. El Gobierno se olvidó de la cacareada defensa de los puestos de trabajo, del incremento de la producción nacional y el logro de precios asequibles para los artículos de consumo popular. Cadivi, esa piedra de tranca dirigida por un hombre que jura que la divina providencia nos ayudará a lograr los recursos necesarios para regularizar nuestra actividad de importación, se ha convertido en la profunda fosa común donde son enterradas todas las solicitudes de dólares al cambio oficial. Ahí es donde la gata se subió a la batea para pedirle a los intrépidos peticionarios de divisas destinadas al pago de las mercancías que requieren importar que presenten hasta el resultado negativo del examen del HIV. La gente de Cadivi experimenta una como sádica sensación de felicidad cuando señala los 28 requisitos que han de satisfacer los posibles beneficiarios de la gracia gubernamental, siendo el primero de ellos la constancia del Ministerio del Interior y Justicia y de la directiva de Pdvsa de que no participó en el paro golpista, fascista, terrorista y desestabilizador de Fedecámaras, la CTV y los trabajadores petroleros.

Y es este gobierno, bribón, pícaro y maula como ningún otro en nuestra historia republicana, que no paga sus obligaciones a los particulares que negocian con él, que debe a la Cantv, a la Electricidad de Caracas, al Seniat, al Seguro Social, al INCE, y a los trabajadores a su servicio, el que, sin embargo, goza de dólares sin requisito alguno para traer invitados extranjeros que vienen a cantar loas al régimen revolucionario del megalómano que funge como nuestro presidente y para que sus funcionarios allegados viajen al exterior venezolano a hablar mal de la oposición. El gobierno, que es un insolvente rebelde en el pago de sus obligaciones legales es el mismo que en forma enristrada le pide a los particulares las pruebas de que está al día en sus compromisos con los organismos oficiales. Tal actitud nos recuerda aquello de que "todo mal pagador es un excelente cobrador". Y cómo alza la voz el presidente cuando llama tramposos a los empresarios y particulares que acusan algún retraso en sus pagos al fisco, porque al fisco se le paga siempre y no se le discute nunca, y a quien discute se le añade multa e intereses moratorios. Se paga primero y se averigua después. Duele pagar a un estado que nada nos retribuye a cambio y que mete codiciosamente la mano en nuestros bolsillos para llevarse hasta el pañuelo.

En la Tesorería Nacional hay constancia del orangután que en el renglón de deuda interna ha criado y mimado el Gobierno. Por vía de ejemplo cito el caso de un constructor italiano que en días pasados se halaba los pelos de la desesperación en esa oficina, reclamando la cancelación de un trabajo realizado al Estado. La secretaria que le atendía, tratando de calmarlo, le recomendó que llamara al día siguiente porque ella le tendría una información, pero el hombre lloroso le aclaró que el teléfono de su casa se lo habían cortado por falta de pago y el celular tuvo que venderlo para comer unos días.

Pero, ¿qué digo, que Cadivi no entrega dólares? Es una falacia, y el presidente de ese organismo lo aclara cabalmente. Entregó (y aquí debe haber una confusión pitagórica) ocho mil dólares (supongo que ocho millones por lo menos, para evitar el ridículo). Son billetitos verdes que el feliz adquiriente va a pagar a mil seiscientos bolívares por dólar, bueno, siempre habrá unas piedrecillas en el camino: Que dame la planillita y toma; que pásamela rapidito y ahí tienes; y déjame pasar y aquí tienes para que te comas una arepa pepeada y su chocolatico para la secretaria, si es que no surge una roca voluminosa que complique las cosas.

Con su política de control, el gobierno prueba su ubicación clara en el campo del neoliberalismo vituperado por el Sr. Chávez, porque resuelve todo trayendo productos terminados para la competencia desleal con el comercio e industrias nacionales. La fórmula del presidente es sencilla y preconcebida para arruinar nuestra economía. El dice: "No doy dólares a la empresa privada para así asfixiarla hasta que llegue la parca. Al no poder producir nada escasearán en el mercado los artículos requeridos por el pueblo, y eso sería una acción clarísima de saboteo del proceso revolucionario, y yo, en defensa del pueblo, tengo que traer los productos de fuera". Colosal la estratagema, pero brutal y fácil de descifrar.

Y, finalmente, hay una cuestión que despierta mi curiosidad: ¿Cuál es la razón para que sea Cuba el que nos facture la harina de trigo, supuestamente de procedencia italiana? ¿Cuál es el negocio que se oculta en este extraño manejo? El Gobierno verá pronto que esa silenciosa miseria que él ha fomentado levantará su voz enérgica de protesta. Ustedes, gente del Gobierno, disfruten hoy lo mejor que puedan de su día, porque mañana ineluctablemente tendrán su fin.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Friday, May 09, 2003 By: VenAmCham

The Venezuelan Revolution's plans do not include a return to free currency convertibility ... Cadivi president Edgar Hernandez Behrens has told national radio and television that foreign exchange restrictions will not be lifted in the near future. He said that once the current stage is completed, Venezuela will move towards "a comprehensive exchange control system such as many countries have, to make rational and efficient use of foreign exchange."

The official responsible for distributing the Republic's dollars indicated that one of the basic goals is "to stimulate and strengthen national tourism" and give priority to imports of raw materials and inputs that will cause domestic production to grow "over and above the imports of finished products."

Economist Luis Zambrano Sequin says that if PDVSA and foreign reserve statistics are true, there's no reason to limit foreign exchange purchases. He asserts that there is a political component to current policy. As reported in El Universal, the anti-globalization movement, of which the Chavez administration is a participant, firmly believes that free currency exchange is an imposition of "neo-liberalism" and has a deadly effect on developing economies.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Friday, May 09, 2003 By: Jose Gregorio Pineda & Jose Gabriel Angarita

VenAmCham's Jose Gregorio Pineda (chief economist) and Jose Gabriel Angarita (economist) write: The Foreign Exchange Administration Commission (CADIVI) set up on January 21, 2003 continues to be at the center of a debate among national and international analysts, who worry that the reasons for its behavior may be political rather than economic. The government is viewed as trying to gain political ground and channel foreign exchange in a discretionary form to alternative productive enterprises politically allied with it.

There are no good reasons for the exchange controls to continue in force, or in their present form at any rate. The main argument against the inefficient foreign exchange restriction lies in the 3.353 billion recovery of foreign reserves since January. This is, in any case, a fairly small growth considering that oil exports have reached 3.2 million barrels per day.

Why have the reserves not grown more rapidly?

One of the factors the advocates of these government interventions in the economy may be underestimating is the terrible damage being done to the economy as a whole. They are provoking an enormous contraction of productive activity, raising unemployment, and generating shortages of staple foods and medicines.

A great many recommendations have been made to the government and Cadivi regarding the undesirability of keeping the exchange controls in force. Spokesmen for the Central Bank of Venezuela (BCV) and he Venezuelan Banking Association (ABV) have expressed concern about the Commission's delay in distributing foreign exchange; US$1.2 billion are available but only about 100 million have actually been authorized.

Commission members and the President of the Republic himself have spoken out in favor of the controls and ruled out any possibility of lifting them, in the short term at least. There is no clear posture regarding a potential relaxation of the supply of dollars.

A great deal of controversy has been generated in the national private sector, which tends to believe the controls are intended only to punish the opposition by preventing trade with the rest of the world in the goods and inputs needed for import and export operations. If the foreign exchange market is not opened up and dollars distributed to the different sectors of the economy, this argument will become ever more convincing. But the controls do not only harm the opposition; they injure all participants in the national economy, and especially the population by raising unemployment and provoking shortages of goods.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, May 08, 2003 By: Patrick J. O'Donoghue

The government has launched a counter-attack on Venezuelan ranchers, agricultural producers and agribusiness leaders, accusing them of deliberately creating an artificial scarcity of products to undermine price controls and exchange rates.  The attack comes after the discovery of 100,000 kilos of chicken allegedly hoarded at the Souto Brothers industry in Bejuma (Carabobo). 

Industry Minister, Victor Alvarez says the agribusiness offensive is part of a plan to blow a hole in the government's economic policies. "There is no reason from an economical point of view that justifies outbreaks of speculation or scarcities." 

Alvarez claims that agribusiness sector is fishing for too much profit but has promised to review customer prices and alleged low profits.

However, newspaper reports indicate that people are finding it difficult to obtain maize bread powder (harina pan), white cheese, chicken and other basic products at local  markets and supermarkets. 

Federation of Chambers of Industry & Commerce (Fedecamaras) deputy president, Albis Munoz says the government wants to eliminate the private sector and its policies are distorting the market. 

Venmaiz executive president, Gisela Serrano argues that the industry has enough to cover demand till  September and blames the distortion on  scarcity. "The price of regulated maize bread powder is far too low  ... it's being produced at a loss ... industrialists are covering the surplus demand generated by the low price compared to other basic foods. 

Serrano says the product costs double in Colombia and what should go to the domestic market is being smuggled into Colombia ... "then there is the problem of getting hold of government dollars!"