Drop in the supply of US dollars lashes Venezuela's imports
Fiscal and foreign exchange imbalances make things more difficult
No increase in the supply of US dollars to the Venezuelan private sector was reported in the first three quarters of 2012. The operation, which is usually conducted through the central bank via the Foreign Exchange Administration Commission (Cadivi), had to be executed through another mechanism, the Transaction System for Foreign Currency Denominated Securities (Sitme) so that the sector could carry out its respective imports in a year of high sustained consumption stimulated by public expenditure.
However, Sitme's US dollar supply has been cut, a fact that may lead to further shortage in 2013 considering that companies are suffering reductions in their stocks.
When contrasting the amount of US dollars approved by the central bank, the allocations to Cadivi, and the imports of the private sector, one realizes that companies only receive via Sitme, 30% of the total amount of US dollars they require to make their purchases abroad.
From January-September this year, the central bank approved USD 26.2 billion for imports in the private sector and the public, to a lesser extent. Thus, US dollar supply plunged 3.6% with respect to the same period in 2011.
As bond sales increase, Finance Minister Jorge Giordani seeks to stop bond issue to feed Sitme. The size of the State's debt continues growing rapidly and public accounting presents strong imbalances that make the authorities consider devaluation of the currency to obtain more bolívares (Venezuela's currency) per each petrodollar.
Although devaluation will be beneficial for public accounting, it will increase the price of imported products and, therefore, it will bring purchasing power down.
President Nicolás Maduro is not only the heir to the throne, but also to an economic crisis which demanded urgent measures to rectify the course. The crisis showed up in two aspects: a 50% inflation estimate, and shortage of staples ranging between 70% and 98%. These issues might hit the President's poor popularity; considering his feeble electoral victory of 1% over his challenger.