During 2012 the Chavez administration spent like there was no tomorrow and avoided making any corrections to the numerous distortions present in the Venezuelan economy. Spending went down in October after the Presidential election, but most economic decisions were still on hold.
In fact, even the expected issuance of a new Pdvsa bonds to supply SITME was delayed until after a possibke devaluation in January, as it made little sense to issue now with a devaluation so close in time.
Most expected announcements after the Gubernatorial elections and a devaluation seemed assured even before the end of the year.
No more.
Chavez’ renewed absence and the very likely possibility of a Presidential election in the first quarter of 2013, places all economic decisions on hold, including devaluation, gas price increase, foreign exchange system, Sitme, bond issuance and the like.
It is likely that no economic decisions will be seen until April and that spending will once again be irresponsibly placed on steriods in order to promote the need for a Maduro Presidency. The feeling of prosperity has to stay in place once again, as Venezuela will go into electoral mode for the emoteen time in fourteen years.
This will only make economic adjustments tougher and the new President, whether Chavista or not, will be blamed for them. Meanwhile the holy image of Hugo Chavez will be preserved in history asthePresident that brought prosperity and could do no wrong
even if all of the adjustments will be due to his idiotic and irresponsible management of the economy.
And Giordani’s role in creating this mess will likely be forgotten.
The Devil's Excrement 
December 11, 2012 at 4:13 pm
http://www.eluniversal.com/nacional-y-politica/121211/villegas-chavez-cumple-protocolo-preoperatorio
Do you want to bet Hugo will be twitting or sending messages through his people on the day before the elections that he is recovering fast?
December 11, 2012 at 1:39 pm
Before leaving for Havana early Monday, Chávez met with military commanders at the presidential palace and promoted his defense minister, Diego Molero, to the rank of admiral in chief. Chávez showed Molero and other military commanders a golden sword that once belonged to independence hero Simon Bolivar. Holding the sword, Chávez told the officers that he fully trusts them. He also warned of potential conspiracies by enemies, both foreign and domestic. “I’m totally sure that our homeland is safe,” Chávez told them.
Does this mean the Castros are getting Bolivar’s gold sword in payment of the cancer treatments? In any event, it is a certainty that this gold sword will be in private hands after Chavez passes.
December 11, 2012 at 10:53 am
The risk is that an opportunist (ie: Cabello et al) use the required adjustments as an excuse for a power grab from whomever is challenged with mopping up chavez mess…
December 11, 2012 at 10:37 am
That is an estimate without an adjsutment, with the adjustment it will be 1-2%
December 11, 2012 at 10:35 am
Miguel,
What do you think of this regarding Venezuela?
http://www.eluniversal.com/economia/121211/la-cepal-preve-que-latinoamerica-crezca-31-este-ano-y-38-para-2013
Are tha optimist forecast for Venezuela coming exclusively from North Korea’s Fan, Giordani?
As far as I see, the average OPEC barrel is just about 2% higher this year compared to 2011.
I understand the government has been getting into debt with the Chinese (don’ remember how much from the “fondo chino”, for instance)
Is there a way to know how they could achieve this even by bookkeeping manipulation? Thanks
December 10, 2012 at 11:47 pm
Devaluation and other things mentioned are not done as options but rather last resorts required to satisfy outside forces that the country cannot control. If they could a simple socialist decree would make it go away.
The question will be who gets the blame. The new government, whoever that might be, or the former one. If you recall, they threw Stalin, Mao and other under the bus.
I found it interesting that at Mercorsur this weekend, Bolivia and Ecuador were there kissing up while Venezuela was MIA. Even then they were being told that they had to hurry up and comply with Mercorsur business rules and reminding everyone that Mercorsur was now a really big oil producer.
December 10, 2012 at 4:23 pm
[…] Chavez’ renewed absence and the very likely possibility of a Presidential election in the first qu…. […]
December 10, 2012 at 12:37 pm
Whomever gets elected – I hope it’s the opposition – must make a lengthy cadena (90 min, it’s lengthy enough, though not by Chavez standards) explaining why the adjustments are necessary, and have it play on all networks a couple of times a day, for a few months.
Chavistas will protest, but facts are facts, and propaganda can be very effective. It’s combining the two.
December 10, 2012 at 12:35 pm
It looks that you had taken for granted everything Chavez said last weekend. The base scanary is simply: Chavez will return on January 10th to renew his precidency for another period of six years.If he does not end his periodo, that is a different matter.
On the other hand, in overall, within the government there is not a harry for policy changes, the controls will be kept, they do not reacts to any market signals, they do not believe that they have to follow some markets rules. Regarding economics, socialism use only logistic calculations, it isvery esoteric.
Take for example te timming between policies changes. On December 30th, 2010, Giordani did not devaluate, he said, he was unifying the ex rate up to 4.3, don’t you find this really nice ?
Regarding Sitme, there is not foreign exchange there,so there is not devaluation; same as for the wrongly called “paralel”, market.
But something interest me to know, why there should be policies changes ? Believe me, following the Chavez government economic policy design, the only changes we can observe some times are prices, they do that with particular goods some times, that is what they have done from 2003 to now. The new Budget and its Debtedness Law bring lots of bonds to be issued, mostly en Bs, but in dollars too, be pacient, they will come.
The government does not obey by economic and markets rules I think that you are expecting some kind of “paketazo”. Do not put all the eggs in the same basket. The only possible paketazo is the eliminations of price controls, including foreigbn exchange (dollar) market, but that could be after the Chavez’s era.
AG
December 11, 2012 at 12:46 pm
“Regarding economics, socialism use only logistic calculations, it isvery esoteric.”
I would add, a socialist government is run by those who don’t know how to do their jobs, but pretend to know that they do, and pretend that their way is superior to proven methodologies — if they even knew about them. Hence, the chaos.
December 10, 2012 at 11:54 am
Meanwhile the “paralell” exchange rate is going slightly down…
http://www.dollar.nu/