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 
March 13, 2014 at 5:54 am
[…] This is what Venezuelans have to endure on a day-to-day basis. The root? The fact that farms have been taken off their owners’ hands and left unproductive. Venezuela, a country with a soil so rich that people joke about “mango trees that grow out of nowhere”, now has no food to feed its children. Instead, the government relies heavily on imports. […]
November 10, 2013 at 3:17 pm
[…] You see, ordinary people and companies have to go through Cadivi, but the Government does not. And Government imports keep increasing. Last year, they were US$ 34 billion, versus US$ 26 billion for the private sector. […]
September 8, 2013 at 8:29 pm
[…] revolution. And the reality is, that there is a shortage of foreign currency for the private sector which imported US$ 38.7 billion in 2007, but only received US$ 26 billion last year. That is a 32.8% drop. But […]
July 27, 2013 at 4:00 am
Wait, thought Chavez built a car factory? :p
July 5, 2013 at 11:12 am
And those inconsistencies are why I no longer live in Venezuela. A society living in denial of its present cannot build a better future economically or politically. How far down must the country fall before it reboots itself?
July 3, 2013 at 8:52 am
La complicidad a gran escala entre gobernantes y gente de oposicion es una de las dictaduras mas antiguas para los tontos que van a votar.
July 3, 2013 at 7:03 am
I’ve been thinking carefully about my response, because in some sense I agree with you completely, in another I disagree with you fiercely. I agree with you on gasoline prices, they are absurd and a privilege I neither want, nor need. It is inconsistent but not on my part but in the part of a government, that gives less to the needy with that subsidy than to the rich. I wonder if what I pay in taxes would cover what I get in gasoline.
I also agree the people in that line, and me, are privileged. I disagree with what you consider the privilege they have. They have the privilege of having money, as do I, more than the average Venezuelan, but the CADIVI system is not a privilege to them and, certainly, not an inconsistency to me. It sounds like a privilege because they are getting cheap dollars, but that is like saying that being a slave is a privilege because slaves get food for free. As the slave that I am in the current system I’ll accept the free food and the cheap dollars, but that doesn’t mean I don’t want my freedom.
So, I am not inconsistent. I do not want the “privilege” of CADIVI, I want the privilege of having my natural rights, among them the right to use my well earned goods as I see fit. I want the “privilege”of buying all the dollars I want, with the only limitation of how much bolivares I have to spend on that. In exchange for that right I accept that the price will fluctuate with time.
July 1, 2013 at 1:33 pm
PDVSA has not paid international venders in months. The whole supply chain is grinding to a stop.
July 1, 2013 at 10:32 am
[…] Government Imports Soar In Venezuela […]
July 1, 2013 at 10:13 pm
I love that one headline:
“The Errors of Edward Snowden and His Global Hypocrisy Tour.”
I think “Global Hypocrisy Tour” is going to make it into the English lexicon.
July 2, 2013 at 10:23 am
I am amazed at Putin. Here is a man who truly has a tremendous amount of real power in an influential and independent world power. He is backing peddling from stepping on the US’s toes. He knows international trade is where the real power lies. He is afraid of the secrets Wikileaks could expose in his spy department. How can he keep a straight face while he sits with this bus driver who acts all pompous and important?
I don’t think Maduro realizes he will lead his OPEC nation to be a net importer of petroleum from the US in the next 5 years. Fracking, natural gas, better offshore drilling technologies, more leased lands now that BP is being put in the past, Canadian pipelines, wind and solar power utilization Hybrid cars. Oil is currently very disproportionate to the rest of the US economy. Either the price of oil will drop, or everything else will inflate. Free markets always return to equilibrium at some point. Just imagine what the bolivar will be worth when oil drops to $50 or when the cost in dollars of all those imported products doubles. Or Both!
July 2, 2013 at 1:12 pm
And then you have the most ironic & stupid statement of the day from an imbecile:
“Maburo: El mundo tiene que ser libre: hay que proteger a Snowden”
This from the guy that has systematically closed all voices that are against him. Que bolas!
http://www.noticierodigital.com/2013/07/maduro-el-mundo-tiene-que-ser-libre-hay-que-proteger-a-snowden/
July 1, 2013 at 8:57 am
My niece and nephew who moved to Calgary way back are visiting Caracas next week, but they’re not attending a family party welcoming their visit. (Well, they’re not attending ONE of those parties.)
One of my brother-in-law’s son is a photographer there, working for some stupid propaganda arm of the government, and last week, he received an award from Maduro at some ceremony where they patted all the nice little Chavistas on the head. His name is Michel Montes, and I’m pretty sure that’s the correct spelling of the first name.
So his proud daddy and stepmom sent EVERYONE a photo of this little Nazi receiving his award, and instead of going to this party and being bombarded with pro-Chavez BS, they decided to pass.
At first, I thought they were doing the right thing. Then, I realized that this was emblematic of VZ’s problem in the first place:
Choosing non-confrontation against a confrontational adversary who only UNDERSTANDS confrontation, even if it’s family.
I gotta tell you, it’s enough to break your heart.
June 28, 2013 at 10:10 am
Apparently the import of soap is not soaring:
http://news.yahoo.com/costa-rica-probes-soapy-money-laundering-venezuela-001211884.html
June 29, 2013 at 9:42 am
Looks like someone in Venezuela thought they could save some money and not bribe the proper people!
June 26, 2013 at 9:43 am
Tanks, guns, bombs & uniforms may explain the
defacto state’s import costs.
Imagine if this country
was left defenseless, and weaponless –
the paranoiacal sense of loss would be
enough to drive the whisky imports
through the roof.
Now THAT would be a REAL problem.
June 25, 2013 at 5:25 pm
Reblogged this on danmillerinpanama and commented:
A great example of
an efficienta centrally planned state economy.June 25, 2013 at 5:02 pm
1. OIL export price es certainly nearing 100 US$ per barrel, 50-60% above 2008’s .. However, we are collecting 50% less oil at such price. I would say that only some 800.000 barrels sold to the US at full price and maybe 200-300.000 sold to CHINA and prepaid at a whoknows heavily discounted price. Exports to Cuba and many petro-buddies are not translated into real money for either PDVSA or CENTRAL BANK. So, total revenues in 2013 are barely same as in 2008.
2. Imports. We are not importing cars, motorcycles, computers, 18 yrs old whiskey, etc…and many other luxury items… but we are importing huge volumes of such tech gadgets like Bath tissue from the US, beef from Nicaragua and Brasil, milk from everywhere in South America, chickens, rice, GASOLINE, beans, etc etc..and we are finally importing a lot more as a country.
3. Central Bank reserves. I was reading today that our reserves are 4 billions below the beginning of the year, about 25 Billions today down from 29 Billions in JAnuary. Usual explanation is that money was used to pay CADIVI old bills in April/MAy. And in fact there was a higher CADIVI payment pipe in April/May.
However I did browse the Central Bank Balance sheet (April) and I see that GOLD reserves are still at about 120 Bill Bolivares or 20 Billions US$.. But..in the rest of the known world GOLD felt out of the bed in May from 1600/ounce to less than 1300, 20% less..or 4 billions less for BCV..
So… question… are BCV total reserves actually 25 billions or only 20????
June 25, 2013 at 5:11 pm
1) Petrocaribe and Cuba all were full running in 2008, China was starting, dont remember volumes then, so we were already collecting less.
3) Central Bank Reserves use an average for gold which is way above the current value of gold, thus, the real number is closer to 20 than 25, but paralell funds still have money.
Cadivi flows can be erratic and pdvsa inflows too.
July 2, 2013 at 9:56 pm
Miguel, why do you say that the paralell funds still have money? There are many theories that they ran dry or are filled with a lot of paper IOUs that are not recoverable.
June 25, 2013 at 11:23 am
Reminds me of Iran and Egypt (and probably a lot of other crony states) under previous regimes. A handful of well connected folks got very rich. In Iran, one guy controlled shoe imports, another cigarette imports, and so on. Quite a few of them from Iran are living in huge mansions in Los Angeles today.
June 25, 2013 at 10:43 am
This the video Nicolas doesn´t want you to see !!!
June 25, 2013 at 9:29 am
Excellent article!
June 25, 2013 at 3:06 am
Looking on the bright side does this mean the government increasing import level will help Venezuela hit bottom sooner rather than later ?
June 25, 2013 at 10:35 am
well said Perdop. I think this is all part of a necessary final death spiral of chavismo…….
June 24, 2013 at 11:05 pm
You forgot huge gasoline imports by the Gov : a crimal act !
June 24, 2013 at 9:58 pm
“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.”
I could not agree more Miguel. That’s why they say “CADIVI came to stay forever.” so that the get richer and richer.
The worse nightmare of a corrupted would be that CADIVI an price controls be eliminated. Some 90% of corruption would be wiped out. But this can only happen with a completely new government. If I sometime see this, it would be one of the happiest day of my life.
June 24, 2013 at 8:14 pm
I’m just wondering. You bring up the price of oil. I know that Venezuela is currently getting around 100 USD for a barrel of oil. My question is, what is the current price of getting that barrel out of the ground. Just as the price of everything else seems to have skyrocketed in Venezuela, wouldn’t it stand to reason that the price of extracting that oil has also gone up?
June 24, 2013 at 6:23 pm
And there it is…..At this rate, NOTHING will change to better the dying country..For dying it is.
June 24, 2013 at 6:20 pm
and what is the curve for imaginary imports, yet payed in full to “enchufados”
June 28, 2013 at 10:22 am
See the article from Costa Rica on the real 10 million dollars for the imaginary 10 million bars of soap with money being laundered from Venezuela government owned companies funneled via Costa Rica to Panama, US and China accounts.