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  HOME | Opinion (Click here for more)

VenEconomy: Small Patches for the Venezuelan Crisis

From the Editors of VenEconomy

The imposed government by Nicolás Maduro is being characterized by an improvisation to handle the State’s affairs.

Maduro does not know what to do about what he has inherited from his “Supreme Commander” Hugo Chávez as to the country’s productive capacity and an excessive dependence on imports to meet more than 80% of the needs of foodstuff, medications, supplies and spare parts for all kinds of machinery and equipment demanded by Venezuelans.

After almost seven months of thinking over and over about Venezuela’s economic reality, about denying time after time there is an economic crisis in full swing and blaming the “yellow parasites” as he calls the members of the opposition, about a crisis getting out of hand, about “treacherous” business associations such as Fedecámaras, Conindustria and Consecomercio (and the “Empire”), now in the face of a municipal election on December 8 that may have a plebiscitary tone and the Christmas holiday season he is implementing a series of actions in a bid to apply a few patches to the shortages issue.

Among others, he is carrying out a “special plan” for food imports based on agreements signed with Argentina, Colombia and Uruguay establishing that part of the payments will be made through bonds. According to the Official Gazette of September 20, some 3.6 tons of various products and food will be brought into the country within 10 months, with an estimated investment of about $4.6 billion to tackle shortages.

A revolving fund was also created within this special plan with some $700 million from the National Development Fund (Fonden) in order to “keep satisfying the country’s food requirements,” said Rafael Ramírez, the president of state-run oil company PDVSA, now also incumbent of the Economic Area Vice-presidency.

He also informed he would speed up allocations of dollars at official rate to key sectors of the economy in order to tackle shortages.

It turns out that, while he harasses, controls, restricts the dollars and penalizes importers from the private sector, he now has decided to exonerate these dollars from the so-called non-national production certificates in order to speed up external purchases from the Government, at least until the end of 2013, and suspend the solvencies of such certificates for foodstuff, personal hygiene products and medications.

Besides, the Government is now allocating the dollar by production chain, thus giving priority to (through Cadivi and SICAD auctions) companies of the food and beverage, healthcare, metallurgy, paper, spare parts and (most recently) toys sectors.

Apart from this, after having encouraged the formation of bottlenecks at national customs, all of them managed without either efficiency of transparency by Bolivariana de Puertos, the country’s port authority that happens to be a “joint venture” between Venezuela and Cuba, now decided to speed up the nationalization and unloading of ships procedures. A decision that comes late after the innumerable complaints for a fair amount of ships with cargos docked in the country’s main ports for a very long time.

The public opinion fears that the hasty volume of imports may trigger another “Pudreval” case. And even more if the proposal of the Communist Party in monopolizing imports is formalized. Apparently the cure will be far worse than the disease.

VenEconomy has been a leading provider of consultancy on financial, political and economic data in Venezuela since 1982.

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