CARACAS, Thursday December 06, 2012 | Update

Venezuela directs 60% of oil revenues to imports

The country's oil revenues over the last 14 years amount to USD 700 billion, with only 2% allocated to the international reserves

Think tank Econométrica believes that the Venezuelan Government will devaluate the local currency to VEB 6.50 per US dollar in 2013 (File photo)
Thursday December 06, 2012  11:53 AM
For the last 14 years, Venezuela has received large sums of money from the oil roulette, with oil exports totaling USD 700 billion. How did Hugo Chávez Government administer such a wealth?

University professor and economist Luis Oliveros underscored, "60% has been directed to imports, 12% to different funds such as (the National Development Fund) Fonden, and 2% to the international reserves, while capital outflows accounted for 26%."

International reserves -the country's US dollar tank for repaying foreign debt, backing the local currency, and paying imports- are mainly comprised by gold bullion, in view of the sharp drop of cash reserves.

Oliveros, who took part in a forum organized by think tank Econométrica to appraise 2013 economic perspectives, explained that although foreign exchange controls have been in place since 2013, "we are facing massive capital outflow because not all US dollars bought through Cadivi (the Foreign Exchange Administration Commission) to import are actually used for this purpose, bond sales, and the error and omissions account of the balance of payments."

Oliveros based his assessment on data compiled by the World Bank and the International Monetary Fund, in order to show the true colors of Venezuela -the Member State of the Organization of Petroleum Exporting Countries (OPEC) with the poorest results in managing the oil windfall.

"One may think that all petro-States are doing something similar, but they are not. Among all OPEC member States, over the last 14 years, Venezuela has reported the lowest growth of GDP, the highest inflation rate, the largest increase in foreign debt, and it is the only one that has failed to boost oil production."

For his part, Econométrica director Angel García Banchs presented the 2013 economic outlook.

"We believe the Venezuelan oil basket will average USD 105 per barrel, the economic contraction will stand at 1.3% roughly, and inflation at 30%," he remarked.

García Banchs added that public accounts are hit by a gap between revenue and spending amounting to 15 points of GDP. This will force the government to devaluate its currency to VEB 6.50 per US dollar, in order to obtain more bolivars for petrodollars.

Translated by Jhean Cabrera
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