CARACAS, Thursday December 31, 2009 | Update
Non-oil exports during 2009 (USD 3.3 billion) are 36 percent lower than those recorded in 2003, when an oil strike took place (File photo)
In his New Year message, president of the Central Bank of Venezuela (BCV) Nelson Merentes said that "despite massive efforts to advance the process of transition from an oil-dependent economy to a new socio-productive model, the process has been slow."
Actually, his remarks are optimistic, considering the setback suffered by non-oil exports, which are an essential tool for diversifying income sources and reduce dependence on the fate of oil prices.
In 2009, non-oil exports stood at USD 3.32 billion, a figure that translates into the worst performance over the last 13 years.
Non-oil exports in 2009 were even 36 percent lower than in 2003, when employers went on strike. Further, they were 36.6 percent lower than in 2002, when a coup destabilized the Venezuelan economy.
The BCV merely indicates that the collapse is due mainly to the performance of "companies producing base metals, chemicals and chemical products and rubber products, among others."
For five years, the government of Hugo Chávez has kept the official exchange rate to the US dollar at 2.15 bolivars, even though during the same period the rest of the products jumped by more than 70 percent.
Consequently, the Venezuelan currency is overvalued, resulting in an imbalance: what can be bought with VEB 2.15 in the country is much less than what can be purchased abroad with USD 1.
Analysts believe that such mismatch creates a strong incentive to import and prevents the domestic industry from growing, generating jobs and diversifying exports, as it has to compete with cheaper foreign products.
Another factor to consider is that in an environment of lower consumption and restricted access to foreign exchange at the official exchange rate, industrial production decreased by 7.2 percent in 2009.
Inoperative industrial model
The dependence on oil to generate income is the result of the status of the industrial park in the country. The private sector is faced with a government that privileges the political agenda over the economy. Therefore, the private sector is dealing with a State that aims at the "State hegemony over the means of production," as envisaged in the government's 2007-2013 Socialist Plan.
The government insists that this is a phase of "transition," where state-run and private industries coexist. But that transition is proving a traumatic environment, at least for private investment.
The nationalization of industries and companies such as Cantv, Electricidad de Caracas, Cemex, Sidor and the sustained interventions of land plots and farms, have resulted in increased public assets and curtailed private assets, while the production production capacity of goods or tradable services abroad has not increased.
Moreover, government plans to transform the productive apparatus, with the promised socialist factories, have not been completed, at least in the times announced. Year 2009 is ending without the promised 200 factories (which were later cut down at just over 70) starting operations in key sectors such as food, electronics, metallurgy, plastics, paper or cardboard processing. Meanwhile, the Executive Office continues to ink agreements with allied countries to import equipment and products in these areas.
Víctor Salmerón / Ernesto J. Tovar
02:57 PM. HEAVY RAINS. Venezuelan Executive Vice-President Elias Jaua reported that the government is designing plans to support farmers, cattlemen and peasants of the state of Mérida who have been hit by heavy rains that have caused crop losses.