Yesterday I saw a tweet that I knew was wrong stating that American Airlines had stopped selling tickets in both local currency and dollars, which sort of implied the airline was leaving Venezuela. I knew the tweet was wrong, as that same morning both my travel agent in Caracas and American Airlines in the US had called me to tell me that the airline had opened for sale tickets in US$ until the end of July. I checked in the website and indeed, for the day I was looking for a CCS-MIA flight in July, there was plenty of available flights and tickets, as promised, if you paid in US$. Thus, when I saw the tweet with information that I knew to be wrong I corrected it, mostly because I know the sense of anguish that many people with relatives abroad feel thinking that they may become isolated in Venezuela if the airlines leave.
What I got in return was tweets saying that I was a minority with a credit card in US$, that I worked with the stock market, Cadivi rules and the like and beware about bond prices when American announces that is leaving Venezuela, which had nothing to do with my correction. Later the person apologized, but I think this demonstrates how charged and emotional this topic is.
But it also shows, how somehow people think that the Government is not paying airlines because it does not care, or, as some have suggested, this is all being done on purpose to isolate the country. People also blame the airlines for abusing the system. But the reality is much different, the airlines have been naive in thinking they would be paid eventually. And Venezuelans have yet to face the reality that, much like Greeks three years ago, the time is coming to pay for the errors of the Government of the past few years. The cheap travel, the Cadivi subsidies, all subsidies, have to be paid down the line with expensive travel costs and no subsidies. There is simply no money to pay the airlines.
Or the pharmaceutical companies, or the food companies, or the oil service companies…
Perhaps no headline describes this more clearly than that of the President of the Venezuelan Airline Association (ALAV) saying “The debt with the airlines is more than the operating international reserves of the country”
That simple statement summarizes the problem quite clearly, how can the Government pay its debts, when all of its operating (Not liquid, operating!) international reserves are not enough to pay the debt with the airlines?
But think about it, the Government also owes the pharmaceutical sector US$ 4 billion, and more billions here and there. And the days go by and it does not pay any of it (The debts actually increase). Why? Because there is no money to pay the debts. In fact, CADIVI approvals, which pay for current and future imports, were also sharply down in the first four months of the year.
The Government keeps trying to stretch it. But at some point, it will have to do something about it. It will have to stop subsides to Petrocaribe and Cuba, or not pay external debt, or devalue, or increase the price of gas, or some of the above or all of the above. But no matter which solution is decided on, it will be Venezuelans that will have to pay in the future for the errors of their Government. Someone has to pay the subsidies and the excesses and it will be all of Venezuelans, whether by paying much higher prices for everything, including flights abroad, or not having goods to purchase or reducing their purchasing power. It is a sad prospect, but it is reality.
Ask the Greeks, they lived through it three years ago, after years of living it up beyond their means.
And, of course, people worry about not being able to travel, but think of the horrors that people go through because they can not find pharmaceutical products to treat cancer, or diabetes or even simple antibiotics for infections. Or think about not having parts for diagnostic machines.
And if the Government is not paying either of them, it is because it does not have the money for either of them. Period. It is not even trying to choose one sector over the other, it is paying none of the debts. In fact, this week PDVSA announced with “bombos y platillos” (drum rolls and cymbals) lines of credit with three oil service companies. These are really no new lines of credit, they are simply converting the money PDVSA already owes these companies into formal lines of credit, so as not to affect the balance sheets of these companies that are owed money.
And the longer the Government tries to stretch it, the worse it will be in the end. The numbers just don’t add up. Unfortunately, the future is bleak for Venezuelans, unless oil dramatically jumps up. Oil has saved the day before, but this looks unlikely at this time.