And our illustrious and rarely seen Minister of Planning came out today to tell us about the 8% growth in the first quarter. Of course, he said nothing abour the 47% drop in the current account surplus, or the US$ 8 billion deficit in the capital acount, or the contraction in oil GDP. More ominously, he was Minister of Planning the last time liquidity and reserves began looking like this, which led to a maxi devaluation in 2002:
On the left, you can see that ominously, international reserves have dropped significantly and there is more to come, while on the right you can see that monetary liquidity has stabilized due mostly to the issuance of debt. Minister Cabezas says reserves will be back up to US$ 30 billion by the end of the year, which is possible, but liquidity is likely to be up by at least 40% by then, igniting the fuse for a big devaluation, just like in 2002.
The Devil's Excrement
Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.
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