Seeing the data above really opened my eyes at the problems with the allocation of foreign currency in Venezuela. The Government has gone from importing US$ 7.5 billion in 2006, to importing US$ 34 billion last year. Not only that, but Government imports, which used to be 25% of all imports have not only surpassed private imports, but have now become 57% of all imports.
Think about it, if you are a manufacturer or merchant you have to go through a few dozen steps before CADIVI authorizes your imports. But if you are a Government official who wants to import some widgets, you not only get the dollars right away, but you don’t go through CADIVI, you buy from whomever you want and you probably only need one or two signatures to buy the stuff. Imagine the chain of suppliers between that Government official and the stuff that is being imported. Imagine the commissions, overcharges, fake imports (Giordani dixit!), empty boxes (idem!) and the like. Imagine how little planning goes into deciding how much to import or what to import. Obviously, it is hard to buy something locally, as local suppliers in the private sector have to go through the CADIVI nightmare.
But the most important thing is the inefficiency of the Government importing all this stuff. That is why in a country with little supply of new cars, because CADIVI does not allow the import of all the parts needed, the Government goes and imports 2,000 Toyotas at once for its own use. That is why food is found rotten in warehouses, some guy with no clue as to how much wheat or corn the country needs or consumes, decides to buy twice as much as needed and it needs to be stored somewhere or is just abandoned at the port for months.
Meanwhile the blue line of private imports is almost flat, the private sector is importing almost the same today as it was in 2008, but the average yearly price of the Venezuelan oil basket has increased significantly (From an average in the sixties to around 100 today). Thus, a voracious Government imposes controls, but nobody controls the Government and what it imports, why or at what price.
The result is more distortions. But instead of imposing controls on Government imports, the Government disappears SITME, which tripled and quadrupled prices of anything not in CADIVI’s list. And these guys think inflation will go down. Sure.
Meanwhile there is no mystery, there are plenty of dollars around, but the sinkhole of Government imports takes too much of the country’s foreign currency. And Maduro blames the oligarchs. And he is right, by definition, Chavismo/Madurismo is the new oligarchy and they are bleeding the country dry and destroying it.
The Devil's Excrement 