Center for Strategic & International Studies

The Venezuelan Economy: Current Situation and Challenge for the Future (A brief inventory of “the warning lights on the dashboard”)

José Manuel Puente Public Policy Centre, IESA

A brief overview of economic history…

GDP Rate of Growth and Oil Prices 1950 – 2008 (A “montaña rusa” Economy…)

20,00%

I

15,00%

100

II

90

10,00%

60

5,00%

50 0,00%

40

US$/Barrel

70

30

-5,00%

50-79 Average 6,26

-10,00%

20 10

Source: BCV and PDVSA

GDP

2008

2006

0 2004

2002

2000

1998

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1970

1968

1966

1964

1962

1960

1958

1956

1954

1952

1950

-15,00%

1996

80-08 Average 2,08 1994

GDP Rate of Growth

80

Oil Prices

•Two totally different growth patterns in the last 58 years. •During the period 1979-2006 the economy did not grow four consecutive years… The average growth rate of GDP is much lower today and highly volatile…

The recent history…

GDP by Economic Sector. 2007 5,0

Other Goods and Services (Government) Other Services

10,9

Real State and Real State Services

6,6

Financial and Insurance Institutions

17,0 20,0

Communications Transport

13,5

Retail

16,9 13,3

Construction 2,4

Electricity and Water

7,2

Manufacturing 2,0

Minery Non-oil GDP Oil GDP

9,7 -4,2

Total GDP Source: BCV

-6

8,4

-1

4

9

14

19

24

Given the very high oil prices In the 2007 for a four consecutive year the GDP grew strongly… Particularly, non tradable sectors like financial institutions, construction and communications were sectors with a very high rate of growth. However, oil GDP (oil production) fell again by 4.2%…

Venezuelan Oil Production The oil sector is producing 500.000 barrels less than the volume registered in 2002…

3500000

3000000

2,699 2,365

bpd

2500000

2000000

1500000

Source: AIE

II 2008

IV 2007

II 2007

IV 2006

II 2006

IV 2005

II 2005

IV 2004

II 2004

IV 2003

II 2003

IV 2002

II 2002

IV 2001

II 2001

2000

1998

1000000

GDP by Economic Sector. 2008

4,5

Other Goods and Services (Government)

9,2

Real State and Real State Services Other Services

2,1

Financial and Insurance Institutions

-4,5 21,4

Communications Transport

3,6

Retail

3,8

Construction

6,7

Electricity and Water

4,4

Manufacturing

1,6

Minery

-1,1 5,3

Non-oil GDP Oil GDP

3 4,9

Total GDP Source: BCV

-5

0

5

10

15

20

25

After 19 consecutive quarters of growth financial institutions suffered a contraction of 4.5% in the 2008 and the rate of growth of manufacturing sector continues to fall (1.6%)…

GDP by Economic Sector. I Quarter 2009 0,1

Other Goods and Services (Government)

1,1

Other Services

4,6

Real State and Real State Services

-0,3

Financial and Insurance Institutions

-2,9

Communications

9,7

Transport

1,1 Retail

0,4

Construction

3,6

Electricity and Water

3,7 -1,1

Manufacturing Minery -13,6

1,3

Non-oil GDP

-4,8

Oil GDP

0,3

Total GDP

-14,00

-9,00

-4,00

1,00

6,00

11,00

During the first quarter, domestic economic activity seems to remain on the slowddown that began in early 2008. Minery, manufacturing and the oil sectors continues to fall…

Inflation Var. April. 08/ April. 09 35

29,4%

30

25

%

20

15

10 4,4

5 2

1,4 1,7 1,8

1,4

1,3 0,5 1,1

2,4

3,3 3,4

2,3 2,3

3,5 1,6

2,3

1,63 1,69

2,5 2,1 2,1 2,6 2,4

1,4 1,5

2,3

Indice general

Marzo

Enero

Noviembre

Julio

Mayo

Marzo

Enero

Noviembre

septiembre

julio

mayo

-0,7

Septiembre

Source: BCV

marzo

-5

enero

0

Anualizada

Venezuela has the highest inflation in Latin America and one of the highest in the world…

Inflation April 2008 – April 2009 (Sectors with the highest inflation) 58,60%

Agricultural goods Diverse goods and services

39,90%

Food and nonalcoholic beverages

36,80%

Restaurants and hotels

40,50%

Alcoholic beverages and tobacco

26,90%

Home equipment

36,60%

Health

33,60% 29,40%

INFLATION

0,0% Source: BCV

20,0%

40,0%

60,0%

80,0%

100,0%

Inflation by Socioeconomic Groups

Stratum I (25%Income)

2008

April 08/ April 09

2004

2005

2006

20,66%

14,85%

19,82%

35,7%

30,2%

20,13%

14,92%

19,46%

33,7%

28,7%

18,46%

14,21%

17,27%

32,7%

29,0%

19,04%

14,21%

15,85%

30%

29,6%

Source: BCV

Proportionally, the poorest are those who pay most for the high and persistent inflation…

Inflation: National & Imported Products (2004 – April 2009) 50,00 IPM Imported

45,00

23,43%

% Variación Anualizada

40,00 Ipm National

35,00

33,15%

30,00 0,00%

25,00

10,00%

20,00%

30,00%

40,00%

April 08 / April 09

20,00 15,00 10,00 5,00

Source: BCV

IPM: National

Mar-09

Nov-08 Ene-09

Sep-08

May-08 Jul-08

Ene-08 Mar-08

Sep-07 Nov-07

May-07 Jul-07

Ene-07 Mar-07

Sep-06 Nov-06

May-06 Jul-06

Ene-06 Mar-06

Nov-05

Jul-05 Sep-05

Mar-05 May-05

Nov-04 Ene-05

Jul-04 Sep-04

Mar-04 May-04

Ene-04

0,00

IPM: Imported

In the last 4 years imported products have become relatively cheaper than those produced in Venezuela, which reflects the gap between international and national rates of inflation and the maintenance of the official exchange rate at US$ 2.15…

Central Government Fiscal Balance 2008 (Mllions of Bolívares)

Source: BCV

Fiscal Income

-4217445 Expenditures

7.994.908

6.925.900

59.265

13.017.608 12.958.343

Julio Agosto

-12.338.026

Mayo

-708.128

13331274 17548719

Abril

13208645 14501578 -1292933

8974713 13588108

12236035 16003954

-13000000 Enero Febrero Marzo

Junio

-4613395

-8000000

-3767919

-3000000

11588607 12672913 -1084306

2000000

7253975 10750092 -3496117

7000000

9027787 9885222 -857435

12000000

16188724 12569348 3619376

17000000

13.082.918 13.791.046

22000000

19.263.926

27000000

20.323.907

28.318.815

32000000

Sep. Octubre Nov.

Dic.

Balance

During the first six months of 2008 the government accumulated a fiscal deficit of 20,7 billions of bolivares… For this year the Central Bank has not yet reported the Central Goverrnment Balance. There is a serious problem of transparency and accountability…

A very expansionary fiscal policy…

2008 2007 0

25

50

75

100 125 150 175

Billons of Bolivares Original budget

Budget+Modifications

Source: ONAPRE

The government was having a very expansionary fiscal policy… The high growth of the past was not attributable to higher production but to consumption financed by a high fiscal (and cuasi-fiscal) spending, expansion of lending and high levels of money supply….

Cuasifiscal Spending (The “other” budget) Just some numbers to give an idea of the magnitude of the “parallel” budget…… ANUAL TRANSFERS TO “FONDEN” (DEVELOPMENT FUNDS) (Millons of US$) Source

2005

2006

2007

TOTAL

BCV

6.000,00

4.275,00

6.770,00

17.045,00

PDVSA TOTAL

1.525,00 7.525,00

6.855,48 11.130,48

3.340,00 10.110,00

11.720,48 28.765,48

Source :Fonden

Source: MF

The “quasifiscal” (discretionary funds) expenditure averaged 3.5 points of GDP during the last four years…

Imports 1950-2008 50025 45025

47.601 45.463

40025 35025

32.226

30025 25025 20025 15025

23.693

17.021 10.483

10025 5025

Source: BCV

1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

25

An important part of public expenditure has filtered out of the economy as imports. In 2008 Venezuela had a “boom” of US$ 47.601 millions (almost five times greater than that of 2003…)

Balance of payment IV Quarter 2008 (US $ Millions)

IV Trim 2008

Current Account

(4.497)

Balance on goods

(3.724)

Export of goods f.o.b. Oil

9.581

Non Oil

1.023

Imports of goods f.o.b. Oil Non Oil Balance on goods, services and income Source: BCV

10.604

Current Transfers

(14.328) (1.019) (13.309) (4.360) (137)

This is the firts deficit in the current account in last 10 years. An excess of imports over exports of US$ 4.360… High levels of imports combined with the deterioration of the exports of PDVSA, the balance of payments could be seriously compromise in the near future...

Balance of payment I Quarter 2009 (US $ Millions) Current Account

(3.533)

Balance on goods

(1.442)

Exports. of goods f.o.b. Oil Exports Non Oil Exports Imports of goods f.o.b. Balance on services

9.829 9.111 718 (11.271) (967)

Balance on income

(10.304)

Current Transfers

(3.400) (10.522)

Capital and financial account 2/ (1.206) Errors and omissions Balance Transaction Current and capital

(15.261)

Source: BCV

For the firts quarter of 2009 the balance of payment presents a deficit of US$ 15.261… Source: BCV

J u n -0 6 J u l-0 6 A g o -0 6 S e p -0 6 O c t-0 6 N o v -0 6 D ic -0 6 E n e -0 7 F e b -0 7 M a r-0 7 A b r-0 7 M a y -0 7 J u n -0 7 J u l-0 7 A g o -0 7 S e p -0 7 O c t-0 7 N o v -0 7 D ic -0 7 E n e -0 8 F e b -0 8 M a r-0 8 A b r-0 8 M a y -0 8 J u n -0 8 J u l-0 8 A g o -0 8 S e p -0 8 O c t-0 8 N o v -0 8 D ic -0 8 E n e -0 9 F e b -0 9 M a r-0 9

Daily average foreign currency approved by CADIVI (Mill. US$) July 2006-March 2009

220

160

132

103 85 96

Source: CADIVI

132

116 125 129 230

189 200 203

158 163 141 213 200

165 174 151 207 204

167 165 194 196 160 165 150 137

117 104

Trade-off Between Inflation and International Reserves($) Politically optimal level of inflation and shortage of supplies…

Inflation

17% 15%

1000

Source: Malone & Puente, 2007

2000

... There is a trade-off between the level of Inter. Reserves and Inflation…

Var. Inter. Reserves ($)

Official and “Parallel” Exchange Rate 2003 – April 2009 7000 6000

Bolivares

5000 +/246.5% Vs TCO

4000 3000 2000

Source: BCV

TC "Parallel"

Abr-09

Ene-09

Oct-08

Jul-08

Abr-08

Ene-08

Oct-07

Jul-07

Abr-07

Ene-07

Oct-06

Jul-06

Abr-06

Ene-06

Oct-05

Jul-05

Abr-05

Ene-05

Oct-04

Jul-04

Abr-04

Ene-04

Oct-03

Jul-03

Abr-03

Ene-03

1000

TC Oficial

The “parallel” exchange rate almost triple the official exchange rate. The exchange policy is buoying the import boom by keeping the Bolívar artificially high against the US dollar on the foreign exchange market…

Evolution of the Venezuela Oil Basket. January 1980 - April 2009 140 120

Dólares/Barril

100 80 60 40 20

Source: PDVSA

Ene-80 Ene-81 Ene-82 Ene-83 Ene-84 Ene-85 Ene-86 Ene-87 Ene-88 Ene-89 Ene-90 Ene-91 Ene-92 Ene-93 Ene-94 Ene-95 Ene-96 Ene-97 Ene-98 Ene-99 Ene-00 Ene-01 Ene-02 Ene-03 Ene-04 Ene-05 Ene-06 Ene-07 Ene-08 Ene-09

0

In July the average of Venezuelan Oil basket was US$ 129,54 but the average between January and April 2009 was only US$ 41,38…

An interesting point about the preceding economic indicators… All of this… in the context of very high oil prices (average of more than 40 US$/barrel) and oil exports of US$ 452.000 million in the last 10 years… … Only in 2008 with an average price of 86,81 US$/barrel the total oil income was US$ 92.927 million… Source: BCV

To summarize: A list of “warning lights on the dashboard” (Key variables for monitoring the economy in order to know what could happen in the future…)

1. High and persistent inflation 2. Imbalances in the external sector 3. Vulnerability in the oil sector 4. Imbalances in the fiscal area

To summarize The key point is sustainability… The expansionary trend in the Venezuela economy is not sustainable. It is not possible to maintain a growth model stimulated by increased consumption which is not supported by higher production and private investment. Everything is/was “link” to the oil boom. If oil prices are low, the country simply will be unable to continue importing to meet rising demand, maintain the exchange rate, the expansionary fiscal policy and in general maintain this “illusion of harmony”…

7500 7000 6500 6000 5500 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Nov-98 Fe b-99 M a y-99 Ago-99 Nov-99 Fe b-00 M a y-00 Ago-00 Nov-00 Fe b-01 M a y-01 Ago-01 Nov-01 Fe b-02 M a y-02 Ago-02 Nov-02 Fe b-03 M a y-03 Ago-03 Nov-03 Fe b-04 M a y-04 Ago-04 Nov-04 Fe b-05 M a y-05 Ago-05 Nov-05 Fe b-06 M a y-06 Ago-06 Nov-06 Fe b-07 M a y-07 Ago-07 Nov-07 Fe b-08 M a y-08 Ago-08 Nov-08

M M U S$

23,15 $/bl 25,8 $/bl 58,82 $/bl

100

80

60

40

20

0

U S$/barril

Macroeconomic Stabilization Fund 1998-2008 (El mundo al reves…) 140

120

150

50

0

Source: BCV

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Ene-08 Feb-08 Mar-08 Abr-08 May-08 Jun-08 Jul-08 Ago-08 Sep-08 Oct-08 Nov-08 Dic-08 Ene-09 Feb-09 Mar-09

Billones de Bs.

Liquidity (M2)

1992– March 2009

250

200

Nominal Variation 2007: 28.6%

100

Nominal Variation 2005: 54% Nominal Variation 2006: 68%

Active and Passive Interest Rates 1990 – April 2009 70 60 50

%

40 30 20 10 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Ene-08 Feb-08 Mar-08 Abr-08 May-08 Jun-08 Jul-08 Ago-08 Sep-08 Oct-08 Nov-08 Dic-08 Ene-09 Feb-09 Mar-09 Abr-09

0

Source: BCV

Activa

Pasiva

Thanks to the high level of monetary liquidity interest rates were in 2005 and 2006 at the lowest level in the last 17 years…however, interest rates increased importantly during part of 2007 and 2008…

Negative Real Interest Rates (Interest rates far below inflation…) 35 30

29,4 %

25 %

20 15 10 5 0 Activa Source: BCV

Pasiva (Depositos Pasiva (Ahorro) a 90 dias) Tasas de Interés

Inflación

Interest rate on deposits are at 16%, far below inflation… In Venezuela the money is a “hot potato”…

Aggregate Demand Var. % 2007 Consumption

16,10% 4,80%

Publica consumption Private consumption

18,70%

Gross formation of fixed capital

24,50%

18,80%

Aggregate demand Exports

-5,30%

31,90%

Imports

8,40%

GDP -10,00%

-5,00%

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

30,00%

35,00%

Source: BCV

Aggregate demand grew 18.8% and private consumption 18.7%, but production, measured in terms of manufacturing GDP, increased only 8.4%... Given the lack of private investment, the gap between production and consumption is essentially cover by the import boom… For a long time now domestic industry has been unable to satisfy state-subsidized domestic demand…

Aggregate Demand 2008 Public consumption

5,70%

Private consumption Gross formation of fixed capital

6,40% -2,10%

Aggregate Demand

4,40%

Exports

2,70%

Imports

2,70%

GDP -3,00%

4,90% -2,00%

-1,00%

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

Source: BCV

Importan moderation of growth, private consumption and the level non oil exports….

7,00%

Aggregate Demand I Quarter 2009 1,90%

Public consumption

1,40%

Private consumption Gross formation of fixed capital

11,60%

4,10%

AggregateDemand

Exports -16,60%

Imports

3,60%

GDP

0,30%

Source: BCV

-20,00%

-15,00%

-10,00%

-5,00%

0,00%

5,00%

10,00%

15,00%

Venezuela: Homicides per 100,000 inhabitants 50 45 40 35 Inicio Gobierno de Rafael Caldera II

30 25

Transición por destitución de Pérez

20 15 10

Inicio Gobierno de Luís Herrera Campins

Inicio Gobierno de Jaime Lusinchi

5

Inicio Gobierno de Carlos Andrés Pérez II

Inicio Gobierno de Hugo Chávez Frías

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

0

Source: Patricia Monteferrante and Plan 180º, Alcaldía de Chacao

In Venezuela the probability of being killed is unequally distributed: this probability is much higher in the poorest areas….the result of inconsistent economic and social policies combined with the deterioration of state capacity…

03 /1 09 7 /1 /1 99 4 03 /1 8 /1 99 09 7 /1 8 /1 99 4 03 /1 9 /1 99 09 5 /2 9 /1 00 2 03 /2 0 /1 00 09 4 /2 0 /1 00 03 3 /2 1 /1 00 9 09 /2 1 /1 00 03 6 /2 2 /1 00 9 09 /2 2 /1 00 03 6 /2 3 /1 00 9 09 /2 3 /1 00 03 6 /2 4 /2 00 09 2 /2 4 /1 00 9 03 /2 5 /2 00 09 2 /2 5 /1 00 9 03 /2 6 /2 00 09 1 /2 6 /1 00 8 03 /2 7 /2 00 0/ 7 2 09 00 /1 8 7/ 08

Country Risk EMBI+

3000

2500

2000

1500

1000

500

0

EMBI+ Venezuela spread EMBI+ spread EMBI+ LatAm spread

Oil prices “were” really high but the country risk too… In the last year the Venezuelan country risk has been one of the highest in Latin America…

Balance of Payment 2008 (US $ Millions)

Current Account

45.971

Balance on goods

52.322

Exports. of goods f.o.b.

99.923

Oil Exports

92.927

Non Oil Exports

6.996

Imports of goods f.o.b.

(47.601)

Balance on services

(6.234)

Balance on income

387

Current Transfers

(504)

Capital and financial account 2/

(37.906)

Errors and omissions

(3.909)

Balance Transaction Current and capital

4.156

Source: BCV

At the end of 2008, the balance of payments continues to reflect a disproportionate increase in imports, while oil revenue decreased. Moreover non oil exports fell and capital outflow increased… High levels of imports combined with the deterioration of the exports of PDVSA, the balance of payments could be seriously compromise in the near future...

Foreign Direct Investment (US$) Latinamerica & Caribe

US$ 125.800

Argentina

US$ 2.900

Brasil

US$ 37.700

Chile

US$ 15.300

Colombia

US$ 8.200

México

US$ 36.700

Venezuela

US$ 600

Source: Conferencia de la Naciones Unidas sobre Comercio y Desarrollo (UNCTAD)

Inflation Latin American Countries Var. April 08/ April 09 Country

April - 2009

Last 12 months

Venezuela

1,8%

28,3%

Mexico

0,35%

6,17%

Colombia

0,32%

5,73%

Uruguay

-0,04%

7.13%

Peru

0,02%

4,64%

Venezuela has the highest inflation in Latin America and one of the highest in the world…

Saldo de Deuda Pública Directa. 1996 - 2008 Años

Interna (MM Bs.F)

Externa (MM $)

1996

3.090

21.997

1997

2.381

21.109

1998

2.490

21.917

1999

3.783

21.404

2000

7.237

20.851

2001

10.996

21.762

2002

16.186

21.929

2003

24.046

24.365

2004

29.801

27.237

2005

33.712

31.139

2006

33.220

27.254

2007

35.991

27.316

2008

30.514

29.858

What will be the end result in 2008? End 2008 GDP

5-6%

Inflation

30%

Bs. US$ (Official / “parallel” exchange rate)

2150 / 5400 Bs / US $

International Foreign Reserves (US $ MM) + FIEM Venezuela oil basket (Average 2008)

30 98 US $

At least for 2008 the “illusion of harmony” continues…

The Share of Oil in the Economy

93% 70% 51%

47%

ports x E l Tota

om e c n I l Fi sca

1999

1999

2007

2007

100 90 80 70 60 50 40 30 20 10 0

The challenges for the future… Reversing the tendency of the last 30 (22+8) years is possible but it will require considerable time and effort. There are no simple, easy, and quick solutions… A return to a high and “sustained” rate of growth and a “progressive redistribution” of wealth is important for two main reasons: z

z

It is part of the ethical imperative to promote the general well-being of the population It constitutes a fundamental condition for consolidating the political and social stability necessary to sustain future reforms

Achieving these results is the most important challenge of the Venezuelan leadership for the next decades…

Households under poverty conditions

54

55,1

53,1 Por primera vez en 4 años, la pobreza aumenta en el segundo semestre del año

47 42,4 37,9 33,1

30,6

27,5

28,5

I sem 03 II sem 03 I sem 04 II sem 04 I sem 05 II sem 05 I sem 06 II sem 06 I sem 07 II sem 07

GDP Growth. 1999-2009* (% ) 17,9

20 15

9,3

10

3,7

5

10,3

8,4

3,4

0 1999 2000 2001 2002 2003 2004 2005 2006 2007

-5

-6 -8,9

-7,7

GDP per Cápita. 1998-2007. 1998 = 100 120 100 100 80

92,2 93,9 95,3

85,3

89,5

96,2

77,3

60 40 20 0

19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07

-10

Exchange Rate and International Foreign Reserves Julio 1996 – December 2008)

Depreciation of the exchange rate of more thanOvershooting 400% I and II 577Bs/$ in Feb. 1999 and 2150/$ in January 2003 (parallel market US$ 5700) Accumulated inflation of 556% in the last 10 years38000 2180 36000

1980

34000 32000

1780

30000

1580

28000 26000 24000

1180

22000 20000

980

18000

780

16000 14000

580

12000

380 180

10000 Mar-98 Jun-98 Sep-98 Dic-98 Mar-99 Jun-99 Sep-99 Dic-99 Mar-00 Jun-00 Sep-00 Dic-00 Mar-01 Jun-01 Sep-01 Dic-01 30FebMayAgo-02 Nov-02 Feb-03 MayAgo-03 Nov-03 Feb-04 MayAgo-04 Nov-04 Feb-05 MayAgo-05 Nov-05 06-Feb 0606-Ago 06-Nov 07-Feb 0707-Ago 07-Nov Feb-08 MayAgo-08

Bs

1380

Reservas Internacionales T.C Observado

Límite Inferior Límite Superior

Paridad Central

8000

GDP Growth

Coeficiente de Correlación: 0.403749

Oil Price

2008 I

2007 III

2007 I

2006 III

2006 I

2005 III

2005 I

2004 III

2004 I

2003 III

2003 I

2002 III

2002 I

2001 III

2001 I

2000 III

2000 I

1999 III

1999 I

1998 III

1998 I

GDP Growth 40 120

30 100

20

10

0 60

-10 40

-20 20

-30 0

$/bl

Oil Price and Quarterly Real GDP (1998-2008)

80

GDP Per cápita 1950 – 2007

2

6.37% vs. 1992

1

11.89% vs 1998

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1970

1968

1966

1964

1962

1960

1958

1956

1954

1952

0 1950

millones Bs. de 1997

3

If the per capita GDP followed the same growth rate as the period 1950-1979, the level of 2007 would have been more than double of that observed today...

Feb90 Jul- 9 0 Dic90 May -91 Oc t91 Mar92 Ago92 Ene93 Jun93 No v -93 Abr94 Sep94 Feb95 Jul- 9 5 Dic95 May -96 Oc t96 Mar97 Ago97 Ene98 Jun98 No v -98 Abr99 Sep99 Feb00 Jul- 0 0 Dic00 May -01 Oc t01 Mar02 Ago02 Ene03 Jun03 No v -03 Abr04 Sep04 Feb05 Jul- 0 5 Dic05 May -06 Oc t06 Mar07 Ago07 Ene08 Jun08

MM de US$

Foreign Exchange Reserves January 1991 – October. 2008

41000

36000

31000

26000

21000

16000

11000

6000

World Champions? 1950-1979

Per capita Social Spending, Poverty, Inequality and Informality in Venezuela. 1974-2000

Per capia social spending

Gini coef.

Poverty index

Informality

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

0.23 1986

0.00 1985

0.33

1984

2,000.00

1983

0.43

1982

4,000.00

1981

0.53

1980

6,000.00

1979

0.63

1978

8,000.00

1977

0.73

1976

10,000.00

1975

0.83

1974

12,000.00

The consequences of the poor economic performance… More than 25 years of very negative economic performance not only contributed to Venezuela’s poverty increase, but also social inequality with a high level of unemployment and more than half of the work force in the informal sector… The political consequences of the poor economic performance of the last three decades are less clear than the social consequences: z

Social discontent and problems of governance in Venezuela have been largely the result of the decline in socio-economic conditions…

Sin embargo, el Gobierno todavía tiene “con que…”

• A pesar de los “múltiples desequilibrios macroeconómicos” que continúan agudizándose el gobierno cuenta con activos externos acumulados que le “podrían” permitir posponer “ajustes dramáticos” en una primera etapa y trasladar la “arruga” hacia el futuro…

Feb90 Jul- 9 0 Dic90 May -91 Oc t91 Mar92 Ago92 Ene93 Jun93 No v -93 Abr94 Sep94 Feb95 Jul- 9 5 Dic95 May -96 Oc t96 Mar97 Ago97 Ene98 Jun98 No v -98 Abr99 Sep99 Feb00 Jul- 0 0 Dic00 May -01 Oc t01 Mar02 Ago02 Ene03 Jun03 No v -03 Abr04 Sep04 Feb05 Jul- 0 5 Dic05 May -06 Oc t06 Mar07 Ago07 Ene08 Jun08 No v -08 Abr09

MM de US$

Reservas Internacionales Enero 1991 – Abril 2009

46000

41000

36000

31000

26000

21000

16000

11000

6000

Gasto Cuasifiscal (El otro Presupuesto)

Algunas cifras para tener una idea de la magnitud los recursos con los que cuenta el Gobierno… … APORTES ANUALES REALIZADOS AL FONDEN AL 19-07-07 (Expresado en MM USD) Fuente

2005

2006

2007

TOTAL

BCV

6.000,00

4.275,00

6.770,00

17.045,00

PDVSA TOTAL

1.525,00 7.525,00

6.855,48 11.130,48

3.340,00 10.110,00

11.720,48 28.765,48

Fuente :Fonden DISTRIBUCION DE LOS RECURSOS FINANCIEROS ADMINISTRADOS POR EL FONDEN (EXPRESADO EN DOLARES AMERICANOS) Instrumento Efectivo OVERNIGHT Certificado de Garantía Productos Estructurados Bono Soberano (Ecuador) Fondos de inversion Total

Recursos Líquidos Disponibles 7.299.142.321,2 1.993.831.772, 1

9.292.974.093,3

Recursos Invertidos

500.000.000,0 5.351.000.000,0 25.000.000,0 9.200.000,0 5.885.200.000,0

Total 7.299.142.321,2 1.993.831.772,1 500.000.000,0 5.351.000.000,0 25.000.000,0 9.200.000,0 15.178.174.093,3

Fuente: FONDEN

El gasto “cuasifiscal” (fondos discrecionales del Ejecutivo) han promediado 4 puntos del PIB en los últimos 4 años…

Fondos “paralelos”, que podrían servir como “amortiguadores”, al menos por un tiempo… FONDEN

9.6

BANDES

3.6

TESORERIA (BCV Y MONEDA EXTRANJERA)

1.3

PDVSA

0.9

FONDO SÚBITO

2.3

FONDOS MIRANDA

0.1

FONDO CHINO

3.0

Otros Fondos Binacionales (Irán, Rusia, Bielorrusia)

1.5

Otros Fondos (ALAN, Proyectos Sociales Especiales, etc.)

2.0

Depósitos en el sistema financiero

5.3

FONDOS PARALELOS TOTALES

29.6

Además de US$ 17.000 millones que se van a emitir en deuda interna durante el 2009…

…Y finalmente, un poco de “astrología”… (El cierre del 2008 y “tres posibles” escenarios para el 2009…)

¿Como cerró el 2008?

Final 2008 PIB PIB Petrolero

4.9% 3%

PIB No Petrolero

5.3%

Tasa de Inflación

31.9%

Bs. US$ (oficial al final del 2008)

2150* Bs US $

Reservas Internacionales (US $ MM)

37

Balance Fiscal Gobierno Central (% del PIB)

-1.5

Cesta Petrolera Venezolana (Promedio para el 2008)

86.81 US $

Escenario Macroeconómico 2009 I

(“Lo mejor que puede pasar”…)

Final 2009 PIB

2-3%

PIB Petrolero

-1-2%

PIB No Petrolero

3-4%

Tasa de Inflación

33-35%

Bs. US$ (oficial al final del 2009) Reservas Internacionales (US $ MM) Balance Fiscal Gobierno Central (% del PIB) Cesta Petrolera Venezolana (“Promedio” para el 2009)

2,15* Bs US $ 27 -3% 60 US $

Escenario Macroeconómico 2009 II (“Trasladando la arruga”…)

Final 2009 PIB

0-1%

PIB Petrolero

-4-5%

PIB No Petrolero

2-3%

Tasa de Inflación

38-40%

Bs. US$ (oficial al final del 2009) Reservas Internacionales (US $ MM) Balance Fiscal Gobierno Central (% del PIB) Cesta Petrolera Venezolana (“Promedio” para el 2009)

2,15* Bs US $ 25 -5% 38 US $

Escenario Macroeconómico 2009 III (“Explota la bomba”…)

Final 2009 PIB

-2-3%

PIB Petrolero

-2-3%

PIB No Petrolero

-1-0%

Tasa de Inflación

45-50%

Bs. US$ (oficial al final del 2009) Reservas Internacionales (US $ MM) Balance Fiscal Gobierno Central (% del PIB) Cesta Petrolera Venezolana (“Promedio” para el 2009)

3,5* Bs US $ 20 -5% 35-50 US $