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Latin America
Related: About this forumVenezuela: Of oil and coconut water - Probably the world’s worst-managed economy
http://www.economist.com/news/americas/21618782-probably-worlds-worst-managed-economy-oil-and-coconut-water?fsrc=scn%252Ftw_ec%252Fof_oil_and_coconut_waterA BIG oil producer unable to pay its bills during a protracted oil-price boom is a rare beast. Thanks to colossal economic mismanagement, that is exactly what Venezuela, the worlds tenth-largest oil exporter, has become.
At the end of the second quarter Venezuelas trade-related bills exceeded the $21 billion it currently holds in foreign assets (see chart), almost all of which is in gold or is hard to turn into cash. Over $7 billion in repayments on its financial debt come due in October. The government insists it has the means and the will to pay foreign bondholders. Few observers expect it to miss the deadline. Even so, the dreaded word default is being bandied about.
...
Even worse than inflation is scarcity. The central bank stopped publishing monthly scarcity figures earlier this year, but independent estimates suggest that more than a third of basic goods are missing from the shelves. According to Freddy Ceballos, president of the federation of pharmacies (Fefarven), six out of every ten medicines are unavailable. The list runs from basic painkillers, such as paracetamol, to treatments for cancer and HIV. One unexpected side-effect has been a sharp increase in demand for coconut water, which Venezuelans normally buy to mix with whisky. Nowadays it is sought out more for its supposed anti-viral and anti-bacterial properties.
...
The mess is a reflection not just of import-dependence and a shortage of dollars, but also the mismanagement of domestic industry. Some food producers have been nationalised; price controls often leave manufacturers operating at a loss. Some price rises have recently been authorised, but manufacturers say it is impossible to maintain normal output with such stop-go policies. For its part, the government blames what it calls an economic war and the contraband trade. It has instituted a nightly closure of the border with Colombia, and plans to fingerprint shoppers to prevent excessive purchases.
The prospects for a change of course are gloomy. On September 2nd Mr Maduro replaced the vice-president for economic affairs, Rafael Ramírez, with an army general; Mr Ramírez also lost his job as chairman of PDVSA in the reshuffle, which saw him moved to the foreign ministry. Under Mr Ramírez, PDVSA has not thrived. Oil exports have fallen by over 40% since 1997 because of lack of investment, offsetting the benefit from price gains. Nonetheless, Mr Ramírez was seen as the only man in the cabinet arguing for exchange-rate unification, a cut in fuel subsidies and a curb on the burgeoning money supply.
...
At the end of the second quarter Venezuelas trade-related bills exceeded the $21 billion it currently holds in foreign assets (see chart), almost all of which is in gold or is hard to turn into cash. Over $7 billion in repayments on its financial debt come due in October. The government insists it has the means and the will to pay foreign bondholders. Few observers expect it to miss the deadline. Even so, the dreaded word default is being bandied about.
...
Even worse than inflation is scarcity. The central bank stopped publishing monthly scarcity figures earlier this year, but independent estimates suggest that more than a third of basic goods are missing from the shelves. According to Freddy Ceballos, president of the federation of pharmacies (Fefarven), six out of every ten medicines are unavailable. The list runs from basic painkillers, such as paracetamol, to treatments for cancer and HIV. One unexpected side-effect has been a sharp increase in demand for coconut water, which Venezuelans normally buy to mix with whisky. Nowadays it is sought out more for its supposed anti-viral and anti-bacterial properties.
...
The mess is a reflection not just of import-dependence and a shortage of dollars, but also the mismanagement of domestic industry. Some food producers have been nationalised; price controls often leave manufacturers operating at a loss. Some price rises have recently been authorised, but manufacturers say it is impossible to maintain normal output with such stop-go policies. For its part, the government blames what it calls an economic war and the contraband trade. It has instituted a nightly closure of the border with Colombia, and plans to fingerprint shoppers to prevent excessive purchases.
The prospects for a change of course are gloomy. On September 2nd Mr Maduro replaced the vice-president for economic affairs, Rafael Ramírez, with an army general; Mr Ramírez also lost his job as chairman of PDVSA in the reshuffle, which saw him moved to the foreign ministry. Under Mr Ramírez, PDVSA has not thrived. Oil exports have fallen by over 40% since 1997 because of lack of investment, offsetting the benefit from price gains. Nonetheless, Mr Ramírez was seen as the only man in the cabinet arguing for exchange-rate unification, a cut in fuel subsidies and a curb on the burgeoning money supply.
...
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Venezuela: Of oil and coconut water - Probably the world’s worst-managed economy (Original Post)
Marksman_91
Sep 2014
OP
Bacchus4.0
(6,837 posts)1. The Chinese are going to provide them construction materials though so everything should be ok n/t