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COUNTRY INSIGHTS

Relief comes from oil, not from China
VENEZUELA · Report · 21 May 2016

We update our foreign exchange cash flow forecast for 2016 bringing into the picture a slightly more positive outlook for oil prices and our reading of Minister Miguel Pérez Abad’s recent announcements on China, imports, and foreign exchange policy. Our deficit forecast remains almost unchanged a...

Minister Pérez Abad charts the course
VENEZUELA · In Brief · 16 May 2016

Pérez Abad’s announcements confirm our perceptions, as explained in our most recent forecast report. The minister said the government is forcing imports to fall by 50% to $20 bn in 2016 by restricting access to official dollars by the private sector. We forecast a 56% decline to $16 bn. In his vi...

Shortages drive inflation up
VENEZUELA · Report · 11 May 2016

Inflation remains high and rising. In our view, shortages and black market food prices are driving inflation up despite parallel market rate stability and slower money supply growth since mid-April.

Deepening stagflation
VENEZUELA · Forecast · 09 May 2016

We forecast for 2016–2017 deepening stagflation with no Pdvsa or Venezuela default—at least not in 2016. GDP shrinks by 10.0 percent in 2016 and 5.2 percent in 2017; inflation is 623.4 percent this year and 926.9 percent next year. We premise this outlook on the assumption that current policies r...

A hike announcing future hikes
VENEZUELA · Report · 03 May 2016

As we anticipated, on April 30 President Maduro announced a 30 percent minimum wage effective on May 1. This is the first time since 2008 that a hike is enacted on May 1 without announcing further steps. We hold to our view that there will be four wage hikes this year, and Maduro’s statement that...

Maduro retakes the offensive
VENEZUELA · Report · 29 Apr 2016

President Maduro is back on the offensive in hopes of lasting out its term (till 2019). It seeks to convey that its power is well consolidated and that it will survive any attempt to end its administration before the end of its constitutionally mandated term, and uses the Supreme Tribunal of Just...

Wages fall behind inflation
VENEZUELA · Report · 28 Apr 2016

​This year we see four minimum wage increases, driven by inflation and politics. Real wages will nevertheless plunge. The first hike this year came in March, when the minimum wage rose by 20 percent and the food bonus rose by 233 percent. We expect the next decree to be approved in coming days...

The central bank’s gold reserves
VENEZUELA · Report · 27 Apr 2016

A review of the 31 December 2015 balance sheet of the Central Bank of Venezuela (BCV) and the Notes to the Second Semester 2015 Financial Statements leads us to conclude that the central bank’s gross reserves appropriately record the effect of the 2015 gold swaps but net reserves (reserve assets ...

Dicom and money supply will push inflation up
VENEZUELA · Report · 08 Apr 2016

Inflation will accelerate modestly in April in May to a MOM rate of 10.0 and 15.9 percent, with YOY inflation rising to 345.4 and 368.8 percent. The shortage indicator will exceed the record-high level of 41.3 percent where it settled since November 2015. Our forecast is based on the assumption t...

The Plot Thickens
VENEZUELA · In Brief · 06 Apr 2016

On 4 April 2016 ICSID awarded Crystallex $1.4 billion as compensation for the Las Cristinas gold mine expropriation in 2008. The Venezuelan government could have settled this claim by returning Las Cristinas to Crystallex, were it not that six weeks ago the government included Las Cristinas in th...

Where is Dicom heading to?
VENEZUELA · Report · 05 Apr 2016

The Dicom rate is rising steadily and quickly. Between March 9 (Exchange Agreement 35) and April 4, the price of the dollar went up by 43 percent. Yesterday, April 4, the rate closed at 295.93 bolivars per dollar (+7.7 percent in the day).

Maduro Needs Rain
VENEZUELA · Report · 30 Mar 2016

The opposition hasn’t decided which path to take to force Maduro out of office before his term ends, whether to push for a recall referendum or to seek a constitutional amendment. Neither path would be easy: both would involve going through the government-friendly Supreme Tribunal of Justice, the...

Not Much Progress
VENEZUELA · Report · 22 Mar 2016

​Exchange Agreement 35 is far from solving the deep distortions caused by foreign exchange controls. Moving from three to two controlled exchange rates, with a fixed "protected" rate (Dipro) and a "complementary floating market” rate (Dicom), is a baby step in the right direction, and the authori...

Unsustainable political and economic crises
VENEZUELA · Report · 07 Mar 2016

Discontent among the population is converging against the president, and pressure for a change of government is increasing. Shortages of staple foods and medicines are now being compounded by water and power outages. Protests, organized criminal violence, and spontaneous citizen violence are on t...

Not So Quick
VENEZUELA · In Brief · 23 Feb 2016

The foreign exchange measures announced by President Maduro on February 17 are still in the pipeline. Exchange Agreement No. 34 published on February 18 refers to the Simadi rate for exporters announced on February 10. Jesus Faría, minister of Foreign Trade and Investment, said yesterday that a t...

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