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  HOME | Venezuela (Click here for more Venezuela news)

VenEconomy: Venezuela Is One Step Away from the Ravine

From the Editors of VenEconomy

While Venezuela is still troubled by the brutal repression and blind violence that has been the answer from the Government to the legitimate protests of students and other sectors of the civilian population, the country continues the ordeal that started fifteen years ago.

For starters, the foreign exchange nightmare that started with Cadivi in 2003 and the drought of dollars that has the nation nearly paralyzed keep going. Regardless of whether the new SICAD II will give the battered private business sector a small break, the drought of foreign currency will continue to affect the supply of basic – and not so basic – goods and products, as well as the provision of vital services to citizens.

The crisis becomes more evident after each announcement from different sectors describing the particular situation they are going through. From a bird’s eye view, reports over the last three weeks have shown the following:

  • That telecommunications companies are in crisis and on the brink of collapse for being strangled by a huge debt that exceeded $600 million by December of 2013, because non-domestic production certificates for infrastructure imports and inventory replenishment have not been approved since June of last year.

  • That shopping centers are in a situation that makes unsustainable the continuance of their operations after a Law that regulates rents and operations was passed, as well as by the devastating effects of the so-called “Dakaso” by the end of last year, which is putting at least 600,000 jobs at risk.

  • That the situation of the automotive sector has reached a critical point, making it unable to continue assembling vehicles in the country while inventories of auto parts may last until the month of May – at best. A fine example of this is that Chrysler shut down its operations for 60 days as of March 14 due to a lack of supplies; the local offshoot of the automaker employs about 1,150 workers. In addition, there is a situation with auto parts dealers with an outstanding debt of more than $200 million to foreign suppliers and an average payment delay of between 300 and 500 days, as well as a decline in production, orders and inventories that will last until the end of March.

  • That the healthcare sector is plagued with serious problems from all sides. Medical supplies are running out at public hospitals and outpatient center networks, including Barrio Adentro. Nuclear medicine centers are closing their doors due to the lack of radioactive isotopes, which have not made it to the country because it hasn’t been possible to pay off outstanding debts to suppliers in South Africa, Argentina and England. For the very same reasons active pharmaceutical ingredients for the manufacturing of high-consumption drugs have run out.

Not to mention a crisis of epic proportions on the basic food supplies side, where the Scarcity Index rose to 28% in January of this year. The severity of this situation is clearly beyond the capability of the hands of the Government, which has led it to launch a rationing card, inappropriately named “electronic system of supplies.”

Today, when the country’s businesspeople have been summoned for talks at economic round tables, it would be timely to begin dismantling all the Government’s populist propaganda, which is a irrefutable proof of its blame for the disaster resulting from the imposition of a communist model in Venezuela.

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

Click here to read this in Spanish

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