Everyone was a little puzzled by Minister of Finance and Planning Jorge Giordani emphatically saying that Venezuela still has a low debt to GDP ratio of 18.6% and that it has actually improved in the last few years.
This one is only one of many puzzling things he said, he also suggested this Government inherited high inflation from its predecessors, ignoring the fact that not only have 12 years elapsed since then, but the “structural” and “inertial” factors invoked by Giordani to cause the current 27% inflation, were apparently absent when during his tenure as Minister of Planning in 2002, inflation was 12.2% for the full year, the remainder 15% then has to come from other sources, related to the irresponsible printing of money by the Venezuelan Government. The money supply has increased by a factor of 15 (Yes, 1,500%) since 2003. So much for structural or inertial.
Structurally Incompetent perhaps.
But going back to the Debt/GDP ratio and Giordani’s 18.6%, let’s look at some simple numbers:
1) Venezuela’s GDP in 2010 was estimated to be around US$ 355 billion, before the January devaluation. Since the currency was devalued from Bs. 2.6 to Bs. 4.3, this says that Venezuela’s GDP in foreign currency opened the year 2011 at US$ 233 billion.
2) Venezuela’s total debt as of Dec. 2010 was composed of two parts: 1) Bonds outstanding in the amount of US$ 31.1 billion (my calculation) and US$ 5.6 billion in debt with multilateral organizations. bilateral organizations and banks. This gives a total of US$ 36.7 (31.1+5.6) billion for the Republic’s debt, ignoring debt held by Government companies.
If this is all Minister Giordani was talking about, then the ratio is 21.3% (36.7/172.3), using the current “official” exchange rate.
But given the relationship between the Government and PDVSA, one can not separate the two. Thus, we need to take into account PDVSA’s debt:
3) PDVSA’s debt as of today, after the issuing of the PDVSA 2022 bond and ignoring (for now) other debt held by the company, amounts to US$ 20.5 billion.
Thus, between the two PDVSA and the Republic, Venezuela’s debt is US$ 57.22 billion.
But, whether you use last year’s number (which yields 20%) or this years number, which yields 24%, you still can’t get 18%.
But it gets better. First of all, Giordani has this unconventional interpretation that the US$ 20 billion borrowed from the Chinese is not debt.
Huh?
Imagine you borrow money from someone and agree that you will pay for it working for them, it may not be debt, but you are a slave, or not?
Same here, PDVSA has to ship oil to pay for the US$ 20 billion, we Venezuelans own PDVSA, and we have to pump oil to pay that, we are the slaves. It’s pure debt.
But let’s agree with Jorge for a while. Venezuela owes only US$ 57.22 billion, except that PDVSA, besides its bonds has liabilities in long term debt of about US$ 4 billion more, which is owed to banks. (We are ignoring employee liabilities, just straight debt)
Thus, the total debt is US$ 61.22 billion or 26%% of GDP
But wait, is the true exchange rate Bs. 4.3 per US$?
Or is it the SITME rate of Bs. 5.3 per US$. If we use the SITME rate, GDP goes down to US$ 189 billion, so that Debt to GDP goes up to a Debt/GDP ratio of 44%.
And yes, if you let the Bs. float, the equilibrium rate would be more like Bs. 6.5 per US$, thus GDP would drop, this time to US$ 113 billion, which would mean Debt/GDP ratio would go up to 33%. But if you add the 20 billion Chinese loan, then it goes up to 71.7%, which is quite high, very high. In fact, The Economist has taken notice.
And God forbid, the World Bank rules against Venezuelan in arbitration.
From all this, the only thing that is clear is that Giordani’s value is simply wrong. In fact, for a man that likes to talk about equations (Deputes are apparently scared of them) which are simply algebraic sums of factors like the Gini Index, throwing that mysterious 18.6% number out is simply irresponsible. He is simply ignorant or a big liar.
Take your pick.
What is clear is that “the man in charge” is either full of hot air, or has no clue, neither of which is encouraging for those of us concerned about the future of the country.
The Devil's Excrement 
December 29, 2013 at 6:10 pm
これらの靴はに恵まれている新しいグリーン フォーム唯一と黒不織布終了します。すべてブーツ靴ナイキが販売そのスタイル長い年。ナイキ シューズ 5 月するちょうど買ったについてどこでも。そこは確かに、いくつかの方法に関し近代的な検索になりますと新しいアイテム。
July 18, 2013 at 3:22 pm
I really like your blog.. very nice colors & theme.
Did you make this website yourself or did you hire someone to do it for
you? Plz answer back as I’m looking to construct my own blog and would like to know where u got this from. kudos
July 15, 2013 at 3:59 pm
Hello! It appears as though we both have a passion for the
same thing. Your blog, “The mystery of Giordanis 18% Debt/GDP ratio | The Devil’s Excrement” and mine are very similar.
Have you ever thought of authoring a guest write-up for a similar website?
It will definitely help gain exposure to your website (my site recieves a lot of traffic).
If you might be interested, e-mail me at: danilohughes@gmail.
com. Thanks
March 1, 2011 at 9:43 pm
Jens-Torsten I just wish you to live the rest of your life in petare, i believe it will be very very short 🙂
March 1, 2011 at 7:04 am
Jens-Torsten,
Hugo got 48+% of the votes, under 49%. Just go over the figures at the official CNE site, not elsewhere. Why he still got between 48 and 49?
Well, because people also voted twice for Carlos Andrés Pérez and they voted twice for Caldera. Small difference: CAP 2 did not have high oil prices to play with.
Chávez has got several times the amount of money the previous governments had and he did not do anything for that. It was world markets. So: the government that took office in 99 got a lotery. Still: it has been very wasteful with that lottery.
Question to you, else there is no point:
why don’t you go to live in Venezuela and instead work for such a capitalist company as Sony?
February 28, 2011 at 7:46 pm
OT: have you been getting wind of the Libyan numbers? $150B sovereign wealth fund, $20B in UK, $30B in US, multi-billion construction contracts with Brasil, Turkey, etc., etc…
Does anyone know of similar Venezuelan numbers/investments?
February 28, 2011 at 4:56 pm
Jens:
You make me tired. Go to Venezuela so suck Chavez’s b…, fetish lover. You have take a number there.
Cheating elections and referendums is a Chavez prerogative already taken several times.
February 28, 2011 at 4:33 pm
Typical for this geeser here. Twisting the numbers around so much that in the end not even he can follow up.
And schnatter, schnatter but as usual nothing but hot air why Chavez still got 50 %.
With people like you and Morel he don´t even have to dream of cheating in the elections.
Just have a look to the inauguration of your buddy Camora.
Jippie, 10 motorbikes made them tremble and run away as fast as they could.
True heroes and fighters for the freedom.
Long live papá Chavez and the world-revolution.
February 28, 2011 at 3:53 pm
[…] The mystery of Giordani’s 18% Debt/GDP ratio […]
February 28, 2011 at 11:43 am
Lets teach people to defend their dignity, we are all born with it
February 28, 2011 at 11:41 am
Jens and Pygmalion (you should actually be and write your name, why to hide?)
Don’t be so excited about this 50%.
I am not sure if you are referring to the 50% of people that voted, which is more or less what the officialism obtained on the last national election (less by a couple hundred thousand to the 5.2 million obtained by the opposition in the same election).
If you count, the approx 5 million that voted pro-goverment (with the incredible propaganda power of the goverment, more than 10 TV stations, and thousands of radio stations, and all the money to buy people), at least half of this are government employees who are obliged to assist to all kind of political activities. You are left with 2.5 other people , not direct employees, from a country of more than 27 million people.
Approx 40 % of the registered of voters did not do it. In 1999 when Chavez won, 70% of registered voters selected him. Guess why?
Guys corruption is a “mal de muchos” we are confronting a bunch of egotistic sick people, probably product of psychiatric breakdown of their parents in the IV republic, and “morally” deprived humans wearing green bills between their eyelashes. I am not an economist, but run into these messages, some interesting some wasteful words.
Jens and Pyg, the daily asesination of innocent people (17 thousand yearly asasinations), the conviction of government people that they have the right to destroy so many organizations, institutions, companies, and humans (like the recently deceased biologist Franklin Brito) just because they (goverment officilas) have an ideology, and because they harbor so much hate within (justified or unjustified, this is not the point). IT is the most misery I have seen in my half century.
Thanks to those that are trying to keep numbers straight.
cris
February 28, 2011 at 11:30 am
“Warum arbeitest Du nicht bei einer NGO? Nicht genug Geld?
Alles klar!”
for others:
Kepler said( i think): Jen why aren’t you working for an NGO?Not enough money?It’s all clear!
February 28, 2011 at 11:03 am
Basically, the €-Sack is travelling across Europe as Sony employee, enjoying capitalism and then doing “revolutionary tourism”.
As I said, when in Belgium, he does work for a party that gets 1% of the national vote, a party that is followed up by the police as it is the one group, together with the extreme right, to look for violence in every kind of demostration.
The guys are a joke. If they see a cop nearby, one of them throws himself on the floor and another one starts to take pictures to show “to the whole world” how the police is torturing them…he should try to do the same in Venezuela.
Jens,
Warum arbeitest Du nicht bei einer NGO? Nicht genug Geld?
Alles klar!
February 28, 2011 at 10:47 am
No, is Germany, I thought because of the name he was Danish, I lived there.
It always amazes me when people who come from countries with such repsect for human rights, love Chavez.
February 28, 2011 at 10:43 am
Miguel, is that IP from Denmark? The links I put here were of a fat German guy with that name who is apparently in Belgium.
“Ich bin Angestellter und vertreibe beruflich Sony-Produkte europaweit, ansonsten gesellschaftlich engagiert in der belgischen Gewerkschaft ACV/CSC (LBC) und in der PvdA, aber auch in internationaler Solidarität (Philippinen, Kuba, Venezuela, Bolivien) insbesondere mit revolutionaeren demokratischen Bewegungen.”
I am an employee and sell as a job Sony products across Europe. Else, I am socially involved in the Belgian union ACV/CSV (LBC) and in the PvdA, as well as in international solidarity (Phillipines, Cuba, Venezuela, Bolvia) specially with revolutionary (sic), democratic (sic) movements”.
Context information: the Belgian PvdA got about 1% of the votes in the last elections at EU level, it is not a socialist but an extreme left party (not the same as the Dutch PvdA, which is a democratic party).
I mean: the guy is a joke.
So, he is indeed an Eurokind…or rather, ein alter €-Sack.
February 28, 2011 at 10:17 am
Jens:
I do not think that we are all blodysuckers, I think the contrary.
I think you insult lots of emigrants from Venezuela that moving out represent LOST all material accomplishments in Venezuela, and after lost all their values through devaluation, and after help to built oil refineries and industrial infrastructure, the result is only to be in benefits of Chavez and his closest friends. I think at the contrary, Chavez sucks all our efforts made in Venezuela, like he does in any time he made an expropriation (or better, technical confiscation)
In my case, by protecting my family I broke my personal and family finances, with that I pay much that I do shall to do for the burden from my piers that like or votes for Chavez. I never vote for Chavez and I always vote against him. What more should I do? a meanless sacrifice?
February 28, 2011 at 10:13 am
Jens,
Chavez cheats like h..l.
Before and after elections.
And his ” help” to the poor exists only in image.
I believe that politics are the social relations that involve intrigue to gain authority or power through image.But Chavez is the epitome of that.Some politicians are willing to concede something for decency.Chavez is not.
Only people who take things on face value however, are fooled by this BS
February 28, 2011 at 9:38 am
Jens-Torsten has it ever occurred to you that Chávez has been cheating at elections, and abusing his power to influence on elections/voters? Google it, you might be surprised.
February 28, 2011 at 8:44 am
Jens-Torsten,
In reply to your comment:
“But still more than 50 % vote for him because they clearly can see that you are worse than even the badest of his people. Hundreds of years you were sucking the life and blood out of your fellow countrymen. ”
While it is true that many people were neglectful of the poor to a degree that was shocking at times-I myself was shocked to see that when I arrived-however what you imply( your English is not clear) that is dead wrong are the following implied ideas:
1. that the poor are any better, because they are not.If it is the poor who are taking revenge then they are just as bad or worse, because Venezuela has gone downhill drastically…Poor people are not intrinsically better or worse than the rich.Most of the time they are similar because of shared humanity.
2.As for the 50 % of people voting for him…many are interested only in money and corruption .Some are even nothing more than false ID’s. and others are semi coerced ones.
3. I have done my own personal polling which I trust 20 times more than anybody else’s polling, and I would swear on a bible that the only time Chavez won fairly was the first time.I have thousands of friends and family in the small towns and barrios of Caracas so for me it is quite easy to take the pulse of poor Venezuela.
Right now there are perhaps a majority of people in Las Minas de Baruta -for example- who express violence when speaking of Chavez as their the hatred is so great. Only a cynic would not care about the pain they are living in now BECAUSE of Chavismo.Yet it is ” surprising” just how many ex- poor people who work for Chavez don’t care.
February 28, 2011 at 8:17 am
Dont get many readers from my good old Denmark, let alone a PSF. Taight at Lyngby many years ago.
Correction: Chavez no longer gets 50%
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February 28, 2011 at 7:48 am
Old farts and geesers,
you realy think that Chavez came over Venezuela send by the devil.
He is here because you all braught him with your greed, your abuse of the poorer clases in Venezuela.
I don´t think that a lot of people love him and his gang of ministers, high ranking party members with all their corruption and shameless lifestyle.
But still more than 50 % vote for him because they clearly can see that you are worse than even the badest of his people. Hundreds of years you were sucking the life and blood out of your fellow countrymen. Chupasangres is still a nice term for you.
Pfui Teufel.
February 28, 2011 at 4:38 am
Pygmalion you seem to know about this matter about the same as I do and you don’t see me ranting about it here, so I’d suggest you stop being such a lame spin doctor and shut the fuck up.
Thank you.
February 27, 2011 at 11:24 pm
In that case, my number is even lower, GDP is 232 billion. all percentages go up by 22%
February 27, 2011 at 11:23 pm
I just looked at the BCV website, for those that think that the Bs. are what matters, when Chavez took over GDP was 50 billion Bs. in 2010 it closed at 1 trillion Bs. This means that a devaluation would have to generate growth for GDP to go up, hey tend to do exactly the opposite, hinder it.
February 27, 2011 at 6:19 pm
MO, thanks to clarify. I am amuse how Attila woks so efficiently.
February 27, 2011 at 6:10 pm
The Caracas Stock Exchange companies are valued at less than US$3-3.5 billion at the official rate of exchange. This was once as high as US$ 12-15 billion. The Brazilian, Colombian and Chilean stock markets have value in the hundred of millions. A single company in Colombia, Pacific Rubiales, established, run and manged by former PDVSA people is alone worth US$ 8 billion.
February 27, 2011 at 5:59 pm
A question to MOctavio, to clarify the discussion with Pyg: How much representative is the Caracas Stock Index, comparative with other LA countries like Colombia or Chile, for example, comparate the cost of all shares against the GDP of each country, or comparative against daily average money movements? My personal impression is that after the destruction of economic infrastructure and all business ruined and abandoned the Caracas Stock Exchange, it looks like Latin America’s “Taguara” Stock Exchage, very insignificant in the revolutionary socialistic bananera republic economy
February 27, 2011 at 5:35 pm
Pygmallion, you are wrong, again, EDC and CANTV are still part of the Caracas Stock Index which has 17 components. Thus, you would have lost your shirt as stated. The only reason the index goes up is because few stocks trade. Mostly banks. They have their annual meeting in March and some, like Provincial pay huge dividends so they can ask the Government to repatriate them.
February 27, 2011 at 4:26 pm
Pyg, your words were that I “…wanted to throw Diosdado Cabello from a helicopter…” I’ve never written such a thing. As per Calvin Tucker’s opinions, mind you a guy who takes pride in having beating someone so badly that he needed reconstructive surgery to his face [http://alekboyd.blogspot.com/2009/08/does-guardian-know-about-calvin-tucker.html], well, I will let rational people decide whether or not to believe his words. I have addressed this point already, and I shall do it again: I was narrating a nightmare and Tucker, and other equally deranged Chavez groupies, cited me out of context. Groupies of a man that does have many deaths to his name, unlike me.
But let us not deviate from the point, Pig. Do tackle my figures. Do disprove my allegations about Weisbrot. Do demonstrate that I am wrong, and you are right. It should be easy for you, to come up with a roster of infrastructure works 8 times larger than what the IV Republic built, with a fraction of the income putschist Chavez has gotten.
February 27, 2011 at 3:31 pm
Though un-scientific, I have noticed that Venezuelanas that wear red tee shirts are very fat as those opposed who wear other color shirts. I attribute this to the advantage of shopping at the back door of the local Mercal. Just another “pequi muerte”?
February 27, 2011 at 3:04 pm
Pygmalion,
By the same token, US Americans must be comparatively speaking more prosperous with regards to Western Europe now than in the sixties as the level of obesity in the US is considerably higher than that of Western Europe and back then the difference was not pronounced.
And I reckon Britain has become much more prosperous than such countries as Norway or Switzerland as obesity there is considerably higher.
Geez…and this guy has enough petrodollars due to his privileged position in Caracas -su título de economista, sus conecciones, su puesto- as to send his daughter to Europe.
This is really a disgrace…Pygmalion, in reality you want the level of basic education for everybody to stay as it is now, so that you can make a living as economist in Venezuela. In the country of the blind, the one-eyed is king.
February 27, 2011 at 2:44 pm
“Note that both Alek and djbravo accuse me of being paid.”
Pygmalion, I said it was either blind infatuation or being paid. There is NO way a sane intellectual Venezuelan could believe in Chavez! He has failed in every way except possibly making promises! The only intellectual Venezuelans who continue to believe are those with vested interests in the outcome.
Think :
Economy
Freedom
Housing
Safety
Infrastructure
Sovereignty
Name one area that has improved since 1998? Don’t give some bogus Bullshit about some made up statistic concerning calories consumed.
February 27, 2011 at 2:28 pm
MIguel – I do not know if you have time or the inclination but do you think that you could write something on the reasons why obesity is becoming such a problem in Venezuela? Just an idea. Thanks. http://laht.com/article.asp?ArticleId=351269&CategoryId=12394
February 27, 2011 at 2:25 pm
Sorry guys, I just wrote a reply to many comments but for som reason it did not publish.
February 27, 2011 at 2:20 pm
Oh well, I got it wrong Alek. You certainly did not want to throw Diosdado our of a helicopter into a barrio. You are completely correct!
What you wrote was “I wish I could decapitate in public plazas Lina Ron and Diosdado Cabello”, from 2004 VCrisis. Here is a link for all to read: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=405&topic_id=39533&mesg_id=39559
Please tell us why you have to “disimular” and not be proud of your VCrisis heritage?
Note that both Alek and djbravo accuse me of being paid. These people cannot stop themselves from insulting. It’s incredible.
BTW of Friday the CSS closed at over 67,000 – and Miguel, you would not have lost your shirt since CANTV and EDC were in the Index when it hit 60,000 in early 2007 and those components are now out of the Index. FYI – I bought EDC when it was Bs 99 de los viejos in 1998.
Now let’s all put a date on when Venezuela or the government will go broke. Will it be before December 2012 so that we can get rid of Chavez?
Miguel, being the economist, must have some thoughts on this.
February 27, 2011 at 1:38 pm
Venezuelan Credit Default swaps are trading around 50% and last week “the cost of insuring the debt of Petroleos de Venezuela SA, the state oil company, tumbled 4 percentage points to 26 percent upfront, according to CMA prices for credit-default swaps. That means it costs $2.6 million in advance and $500,000 annually to protect $10 million of debt for five years.”
The traders that make these markets are not stupid. Something is WRONG. It is a BIG deal that PDVSA needs to pay 12.75% interest rates. To argue otherwise is either blind infatuation or payed troll. You take your pick.
February 27, 2011 at 1:19 pm
I am not sure, but eventually Venezuela National Health System hide data about the tall of the new born and the high of the children and adolescent. I like to know if someone has data about that. Eventually, the data was hiden when the high begin to decrease.
February 27, 2011 at 12:52 pm
BTW Pyg, feel free to tackle the numbers I used in the article I linked above, some of them official, to demonstrate how wonderful and efficient the chavista revolution has been. Bring in Weisbrot if you like.
February 27, 2011 at 12:47 pm
Pyg, such an appropriate monicker BTW, I am not that Alek, the one who you may be referring to was narrating a nightmare, and has never written anything along the lines of throwing Diosdado from a helicopter. Feel free to prove otherwise.
My comments, about issues pertaining my country, are more credible than comments from paid propagandists that have nothing to do with it any day of the week.
February 27, 2011 at 12:34 pm
Let me just say I do agree with pygmalian about the personal attacks. I tell my children that person insults are fools ammunition, and have no place in serious debate. There my agreement ends.
As for the calories, OMG. If the average consumption of any population was truly 2500 calories per day, they had better be athletes or lumberjacks. The U.N. also says Americans consume close to 4000 calories per day. I am a 6’0″ moderately active 44 year old. At 4k/m I would put on 20lbs a year. That’s a 100 pounds every years.
I don’t buy the U.N. calculations.
To give it the litmus test. Was the average Venezuelan emaciated 10 years ago? Do they look like they are eating twice as much?
February 27, 2011 at 12:29 pm
If you did put 10 economists in a room the argument would be how bad is it. Unless there are another set of books, nobody knows for sure. Also, non of the government planning of the last 12 and even 30 years or so has worked. The magic bullet of the Bolivarian Process (whatever that is) is turning out to be an even bigger disaster. By last count, the poor (class 4 and 5) now amount to almost 70% of Venezuelans. That number makes the priority making sure all are fed and at government cost. Much of the issues in the Middle East are about food with the governments there raising food subsidities and salaries if they can so as not to become the next fallen government.
February 27, 2011 at 12:13 pm
Pyg,
You said you disliked Chávez, but you are defending him all the time in the most irrational way and then you are put off when we call you for what you are.
“Hey George – I prefer to read the stats of CEPAL and the UN regarding social stats in Venezuela. Is that Ok with you? ”
1) OK. You noticed the UN was using stats from Cuba for a long time and then stopped doing so. Do you know why?
Now, let’s assume Venezuela’s raw stats, which are what UN works on, are right. Let’s take a look at the HDI.
Did you know Venezuela was -according to UN reports, I linked to them in my blog, directly to them, not to VTV- Venezuela has been surpassed by at least 5 Latin American countries since 1998 in the index rate? Did you know comparing absolute indexes of a country X across years is not as reliable and one should above all compare how that country is doing compared to others?
How is it possible Venezuela has been overcome by 5 different countries in L.A. even if it had such an oil boom? Others with copper or soya beans were not as benefitted by external circumstances.
“I do not believe MCM’s stats either. Officially recognized stats are what I look at.”
So, you recognise Venezuela has been surpassed by 5 different countries in L.A. in HDI since 98? Just go to my blog and look for HDI stats (economy label, I think)
“A_Antonio – I have not heard Chavez express support for Khadaif’s actions. ”
Then you are deaf. Gaddaffi is still the head of government and Hugo said he supported the government of Lybia, literally and even in his fucking twitter.
“And, no, I do not work for the government and would also ask why the Caracas Stock Index is not far of historical highs if the country is in such bad shape? It sure shows a lack of confidence, does it not?”
Do you remember 1982 in Venezuela?
February 27, 2011 at 12:04 pm
Pygmalion: Sorry, the word corrector change “Pyg” by “pig”, I did not mean it.
February 27, 2011 at 11:31 am
Pig: Insecurity is not psychological pressure, Insecurity in Venezuela is a bullet with a name (can be anybody names on it). More you stay, more provably the bullet will find you.
February 27, 2011 at 11:27 am
Pig: Chavez’s Silent is more evident that a 1000 word, It is evident that now when everybody points to Khadafy, he will not openly defend him (even that most countries in the past not say a word of condemned, and I was critical on that in past comments). But now who do not points Khadafy says he support him.
In matters of speeches and ways to refer to his ideas, to hemseft and to opposition, Chavez is one of the last leaders than resembles closely to Khadafy. And he refers to him as closest friend and like a brother.
February 27, 2011 at 11:08 am
Look, I can not take seriously that you mention the Caracas Stock Index as evidence of anything. I did not follow it this week, but the previous week on Thursday and Friday not a single share exchanged hand. Not one! That is evidence of exactly the opposite of what you suggest. Moreover, the Index stood at 60,000 in January 2007, in local currency, today it is at 67,000, in real terms you lost your shirt.
February 27, 2011 at 10:49 am
Thanks for the feedback and I notice that there is a tendency to stoop to personal attacks and insults as soon as another point of view is presented. Therefore I will answer some of the comments one at a time:
Hey George – I prefer to read the stats of CEPAL and the UN regarding social stats in Venezuela. Is that Ok with you? I do not believe MCM’s stats either. Officially recognized stats are what I look at.
A_Antonio – I have not heard Chavez express support for Khadaif’s actions. Sorry to disappoint you. I suggest you read official stats for your own education.
mick – countries do not eat more when there is more poverty. Venezuela’s diet has increased from aropund 1400 K calories per day per inhabitant in 1998 to around 2500 k calories per day now. UN, CEPAL abd FAO all support these figures.
Alek – people who live is glass houses should not throw stones. Are you the Alek who wanted to throw Diosdado Cabello from a helicopter into the barrios and slaughter people like Ghengis Khan? Your comments these days after that payasad are not credible for anyone, least of all your unwarranted attack on Weisbrot.
Two more points: Put 10 economists in a room and you will get ten different opinions. This is the case with this debate.
Just because there was a develuation does not mean that the INTRINSIC value of goods and services in demeaned. If you do not or cannot understand this I suggest you look up a definition of INTRINSIC in Websters dictionary.
And, no, I do not work for the government and would also ask why the Caracas Stock Index is not far of historical highs if the country is in such bad shape? It sure shows a lack of confidence, does it not?
Miguel – thanks for your work and I wish you all the best living abroad since you have obviously lost the stomacj for living in Caracas – or Venezuela for that matter. My daughter lives in Europe and the first thing she noticed when moving there was the relief of psychlogical pressure as there is very little insecurity. You and your family will surely feel the same.
February 27, 2011 at 10:30 am
let me talk like a non-economist or a regular citizen.
after 12 ears you cant blame the past administrations or the empire.
bitch please
February 27, 2011 at 10:27 am
Pyg: HDI is Human Deception Index?
It is so, in this case I am agreeing with you.
February 27, 2011 at 10:06 am
Pygmallion: Are you for real? Have you heard about nutrition statistics? Health Statistics? Infant Mortality? All of these have deteriorated. As for poverty, go buy Luis Pedro Espana’s book about Chavez’ first ten years.
You are a fool!
February 27, 2011 at 9:58 am
Pyg: Provably the more empty Millennium Goals will be from Venezuela.
It is demonstrated here en various post that INE (statistical Institute) and BCV (Central Bank) manipulates data.
In these times, when almost countries and UN point at Khadafy like a butcher, it is very significant that only Chavez remains silent, supporting that butcher.
Conclusion: Venezuelan Millennium Goals are very empty of statistical credibility and human values.
😦
February 27, 2011 at 9:29 am
BTW. Japan has a huge problem. Unless they reduce their debt, by 2020, Japan’s debt will not be serviced because the aging population and the lack of immigration will make it such that the country will not be able to generate enough to pay the debt. The debt is AA, Venezuela is BB.
As for Fonden, you must be joking. The last time Fonden published financials there was less than US$ 4 billion left in it of over US$50 billion put in it.
I remember giordani, who BTW is an Urban Planner, not an Economist, blasting Jose Guerra in September 2009. Giordani was saying the 4Q2009 would be positive, Guerra was saying Venezuela was mired in stagflation.
Guess who was right? Giordani’s positive number was a negative 3-plus, t took a year to barely (nobody believes it) get a positive reading.
February 27, 2011 at 9:01 am
How can people support their claim that poverty has declined, when the number of poor has increased and the middle class is slipping away?
February 27, 2011 at 8:43 am
NB! Can please administrator delete my last comment. I have corrected this as below (not a good user of HTML code).
Let’s hear the arguments of:
**Pygmalion Says:
February 27, 2011 at 7:11 am
I can see that you put a lot of work into this analysis but there are some basic facts and assumptions which are questionable:
1) GDP in 2010 was US$385 billion not US$285 billion**
COMMENT
This OFFICIAL link contains the report of Chavez to the National Assembly, Jan 2011.
http://www.minci.gob.ve/noticias/1/202771/
here says the GDP in 2010 is US$ 257 billion.
So much for the absurd figure of US$ 385 billion.
**2) The intrinsic value of goods and services do not change because the exchange rate goes from 2.6 to 4.3 to 5.3 to 8.6.**
COMMENT
Please!. All the national production is payed and valued in BSF, not in dollars. The same with the minimum wage, which is another subject that “chavistas” has forget to talk about.
Every time you devaluate, you make cheaper and more competitive the national production, at the cost of making imported goods more expensive. Any abrupt devaluation in a controlled system, changes the GDP, and this is exactly what happened in Argentine when they were forced to devaluate.
**3) PDVSA is not sovereign debt but PDVSA debt. You want to mix apples and oranges to make you political point**
The state owns PDVSA. Each dollar used by PDVSA to pay debts is another dollar that the Venezuelan State cannot use. You are splitting hairs for the sake of the argument.
**4) How much of the debt in percentage terms in private debt? You conveniently left this out.**
It would be interesting to know this. Anyway, in the point 2 and 3 of the argument, it is stated clearly that this is public debt.
By the way, the fact that PDVSA needs to issue debt, with an oil price round US$ 80 in the last times, shows, how critical the situation is.
**5) You do not take into account the funds in the international reserves or FONDEN which offset a great deal of the debt you talk about. This exists as a positive balance for the nation**
This is some kind of a joke. First, after reports of the BCV, the funds transferred to FONDEN are still registered as actives in reserves (???). The FONDEN is completely opaque, but it shows how desperate are the government for money, that they have transferred recently US$829 millions from the stabilization fund to the FONDEN. They are taking hold on whatever they can.
Recently, the oil spike has given some fresh air to Venezuelan finances, but you can’t count on lucky punch to develop the country.
**6) Whether or not Giordani’s 18.6% is correct or your 71.7%, the fact is that Venezuela’s overall debt is not out of line with other countries when you consider the parlous state of the US and Europe and more especially Japan whose debt rating was just lowered from AAA to AA**
COMMENT.
Is true that debt is a big problem in Japan, USA, and Europe.
BUT, they are much bigger economies, much more gross domestic product, pay an interest rate WAAAAY lower than Venezuela, and DO NOT depend only on a product.
In fact, many expects Venezuela’s default in around five years from now.
**7) From the government’s point of view most transactions are carried out at the 4.3 rate so that’s how the land lies as far as the BCV is concerned, for example. IN addition. Government income is around 45% in US dollars so your calculations are somewhat skewed since you do not take this into account.**
COMMENT
The budget is around US$47 billions, so you have around $US 21 billion in dollars. This does not change essentially the figures.
**8) The key concern of the government is powering poverty which has undeniably happened in the last 12 years and boosting the HDI figure – which is also much higher and making the Millennium Goals – which are also in good shape.**
To reduce poverty you need to growth, with rational basis and not leaving the problem to the following government. Venezuela is having a party now, and consequences begins to pay, for example, with outrageous interest rates and inflation, that reduces precisely the income of the people that this government allegedly protects.
**I would disregard the Economist since it has NEVER written a positive line about Venezuela since Chavez won the 1998 elections. In addition, I am certain that economists such as mark Weisbrot would question your analysis more stringently than I can.
Anyway thanks for the effort but it is too José Guerra-ish to carry much weight. Finally, and out of mutual respect, do not write this posting off as “trolling”, since I also work in the same field as you do – in fact very near BBO offices.**
The Economist criticizes because the populist formula fails one time after another, and keeps failing. The oil price keeps the illusion for a while, but the reality hits, it hits.
Finally, I would like to say that if you work for the government, this explain a lot of things….
February 27, 2011 at 8:07 am
Alek: I am not sure there is a difference, I break it down precisely to clarify my numbers. The only thing I left out is that in your Pdvsa debt Bs. Debt is included. I removed that since it can be devalued away. That is the same reason why I did not include internal debt. venezuela can print Bs. to pay internal debt, it can’t print dollars
Pygmallion: You are wrong, the 385 number was at Bs. 2.1. The intrinsic value of goods and services does change with devaluation, look at $ GGP numbers collapse in the mid nineties when the currency collapse. if you measure something with the wrong yardstick, you get the wrong answer that is what happens when you measure something with the lowest rate of exchange for years (Think about it, GDP in dollars went up faster than GDP in Bs. in 2005-2007). PDVSA and Venezuela together generate so many dollars, a limited amount per yer, what the debt to GDP ratio measures is ability to pay, they are not apple and oranges, Venezuela owns Pdvsa and Pdvsas oil fields, the dollars that Venezuela uses to pay the debt come from Pdvsa, Venezuela itself generates very few dollars (private imports are collapsing) so it is the same in the end. You are asking about private debt? What private debt? Are you joking? That is miniscule in the scale of things, that debt is a few hundred million at most and that of state companies is much larger. And in case, private debt would have to be paid for with BCV dollars, so it would only make the case worse.
The Bs. 6.5 comes from economists, I did not make it up, so the land does not lie. You want to be like Giordani, take the lowest possible number
As for the size, it is worrisome because this Government has been increasing it at a rate of US$ 10 billion per year, done the math, in three years there is a crisis. Period. And it does matter, Giordani LIED, you dont mind that, I do. I want Finance and Planning Ministers to know their numbers, is that erally too much to ask. Mediocrity generates mediocrity. Giordani is proof of tht.
as to where you work. Who cares? The mercado de Chacao is near there too. I looked up Pygmallion in the phone book, did not find one. And you may work in the area but your replies above show that you may work in the general area, but not on this.
February 27, 2011 at 7:43 am
Pygmallion, economics aside, do you mean the Mark Weisbrot who lied to the Congress of his own country while propagandising for Chavez? The Mark Weisbrot who gets paid to write scripts for propaganda films? The economist Mark Weisbrot whose hypothesis got trashed by Francisco Rodriguez? The Weisbrot whose papers are not subjected to peer-reviews before publication? That Mark Weisbrot? The Mark Weisbrot whose PhD thesis does not contain one single number or economic formula?
Correcting what I said above: Miguel and other economists please have a look at my numbers and tell whether these are off, and why. Imbeciles don’t bother replying.
February 27, 2011 at 7:25 am
And Mark Weisbrot…the same “economist” who writes a very long document to “prove” the media is mostly anti-Chavez and who did not mention all those channels and newspapers that are critical of the military thug-president can reach only 30% of Venezuela’s population (not that media is economics, but his way with numbers was already peculiar even there)
February 27, 2011 at 7:20 am
Pygmalion, you work in economics and you cannot grasp why petrol prices are just mad and you think you have a right to get petrol for free?
Are you also going to compare Venezuela’s employment rate to that of Europe, perhaps, and that based on INE or BCV figures?
February 27, 2011 at 7:11 am
I can see that you put a lot of work into this analysis but there are some basic facts and assumptions which are questionable:
1) GDP in 2010 was US$385 billion not US$285 billion
2) The intrinsic value of goods and services do not change because the exchange rate goes from 2.6 to 4.3 to 5.3 to 8.6.
3) PDVSA is not sovereign debt but PDVSA debt. You want to mix apples and oranges to make you political point
4) How much of the debt in percentage terms in private debt? You conveniently left this out.
5) You do not take into account the funds in the international reserves or FONDEN which offset a great deal of the debt you talk about. This exists as a positive balance for the nation
6) Whether or not Giordani’s 18.6% is correct or your 71.7%, the fact is that Venezuela’s overall debt is not out of line with other countries when you consider the parlous state of the US and Europe and more especially Japan whose debt rating was just lowered from AAA to AA
7) From the government’s point of view most transactions are carried out at the 4.3 rate so that’s how the land lies as far as the BCV is concerned, for example. IN addition. Government income is around 45% in US dollars so your calculations are somewhat skewed since you do not take this into account.
8) The key concern of the government is powering poverty which has undeniably happened in the last 12 years and boosting the HDI figure – which is also much higher and making the Millennium Goals – which are also in good shape.
I would disregard the Economist since it has NEVER written a positive line about Venezuela since Chavez won the 1998 elections. In addition, I am certain that economists such as mark Weisbrot would question your analysis more stringently than I can.
Anyway thanks for the effort but it is too José Guerra-ish to carry much weight. Finally, and out of mutual respect, do not write this posting off as “trolling”, since I also work in the same field as you do – in fact very near BBO offices.
February 27, 2011 at 6:45 am
Like Rayma cartoon yesterday in eluniversal.com, you need to use 4D (four dimension) glasses to see how beautiful Giordani see the numbers. Lies in 4D are beautiful. It is easy, you separate the debs in dimensions, 1D= state debs; 2D= PDVSA debs; 3D= state business debs; and 4D= Venezuelan people (and not me), will pay the debs. Giordani like a lot 4D.
February 27, 2011 at 5:46 am
Miguel, I am glad you picked this up, being an economy expert and all that. I wrote something about it a while ago, and must say our numbers are different:
http://alekboyd.blogspot.com/2011/01/dictador-hugo-chavez-memoria-cuenta.html
I should be most grateful if you, or any of the resident economist commentators, can point out whether my numbers are off, and why.
February 27, 2011 at 2:13 am
I have a little comment.
I am wondering how much of the Venezuela’s GDP is oil-related.
Should ALL oil’s production export with current oil prices, this is around USD 60 billions (60 millardos). And it isn’t affected by exchange rates.
Obviously, this alone does not change figures too much, but this relates to the following question.
How much of the oil’s multiplicative effect (attached industries or services) can be counted in USD?
I feel there is a “hardcore” GDP that must be accounted in USD. Anyway, all of this doesn’t change the main point of your analysis: GDP figures and debt rates need to be adjusted. And it will be painful.
In no way this comment underestimates your work, and I appreciate always your short, plain and direct explanation. The same for the article of The Economist.
Regards