By Carlos Camacho
CARACAS -- Venezuela’s international reserves closed 2016 at $10.97 billion, the lowest year end close since at least 1995, reflecting the poor economic policies in 18 years of uninterrupted chavista government.
Debt service of over $10 billion a year on a $125 billion foreign debt is what’s pushing the reserves down, Venezuelan economists say.
“Basically, the government is burning through international reserves to pay for the debt,” tweeted economist Jesus Casique Thursday morning.
Diminishing reserves, increasing foreign debt and liquidity have been concurrent, continuing and worrying trends during the 18 years of chavismo.
Liquidity increased more than nine times between 2014 to 2016, from Bs1 trillion to almost Bs10 trillion. So, with rising liquidity due to high public spending, and low reserves, caused by service on very high debt, Venezuelans have less U.S. dollars backing more and more Bolivars.
Venezuela started 2016 with reserves at $16.32 billion. That’s more than $5 billion gone in the past year, the majority of it from the sale of the gold (the same gold which Chavez made a big fuss about bringing back to Venezuela in 2011 and then had to be exported back to Switzerland). Venezuela started 2016 with $10.04 billion in gold. As of November, Venezuela reports that it had just $7.7 billion in gold left, and that is even with a year of rising gold prices.
Venezuela's reserves are now down $31.25 billion from the high they reached at the close of 2008 of $42.226 billion during record high oil prices.
Some, however, took it in stride: “Thank you, chavistas, for not stealing it all!”, tweeted political satirist @El PoliTwico, a local influencer.
Venezuela's reserves did hit a low of $9.289 in March of 2002 as PDVSA and the population went on strike against the Chavez government and Chavez burned through the reserves to maintain power. By the end of 2002, however, the reserves were at $12.005 billion -- still above where they closed this past year.WHERE DID ALL THE DATA GO?
Analysts and journalists that do not keep a copy of Central Bank reserve data, however, are in for a nasty surprise when they visit the bank’s website: most historic data, available until just a few days ago, is gone (although the Latin American Herald Tribune
and predecessor The Daily Journal
maintain our own database).
“From what I have seen, the data they still have up goes only until 2015,” a concerned financial journalist told a colleague Thursday morning, as the historical reserve data was gone from the Central Bank's website.
Hiding bad statistics is a recurrent tactic for Maduro. Venezuela's Central Bank has a mandate, by law, to publish all pertinent inflation, GDP and reserves’ level data, but they often neglect it and have in the past gone up to one year without publishing key GDP or inflation data.
Instead, using his dictatorial decree powers, Maduro just ordered the Central Bank exempt from the law.
Paradoxically, the late Hugo Chavez got first elected in 1998 because of a similarly low level of reserves: during the campaign he blasted then President, the late Rafael Caldera, for keeping reserves around the $10 billion level and promised to bolster that key measurement of the Venezuelan economy. It must be noted that, in 1998, the whole Venezuelan GDP was of about $100 billion, so the level of reserves was low, but adequate. Nowadays, Venezuela has a GDP of around $400 billion (if calculated at the official exchange rate) but the reserve level is now well below the level when Chavez got elected.