"Forex board has to turn the tap on to ensure supply"
"This quarter, authorities are likely to make some economic decisions that may oxygenate the market"
- Year 2013 begins with two negative factors: restrictions on the supply of foreign exchange and on the delivery of import permits. How would you describe consumption during the first few months?
- We expect a pretty bad first quarter because the products that should be bought abroad now and dispatched to Venezuela are not coming smoothly, because importers have more than 200 days without authorizations from the Foreign Exchange Administration Board (Cadivi) to purchase dollars. In the first quarter, authorities are likely to make some economic decisions that may oxygenate the market.
- Do you mean devaluation?
- I do not think there will be devaluation, but I believe that some changes will come in the exchange rate applied through the Transaction System for Foreign Currency Denominated Securities (Sitme) and Cadivi. This would allow rapid supply of the market, as political changes are coming. (Vice-President Nicolás) Maduro, who will be the substitute of (President Hugo) Chávez, could be in trouble amidst a macro-devaluation or brutal shortages in Venezuela. So they will put more foreign currency in the official market; solve the Sitme problem; issue more debt in order to sell dollars through Sitme and probably look the other way in the short term as far as the unofficial market is concerned, so as to restore some balance in supply.
- Do you think the only way to ensure supply is to open the flow of US dollars through Cadivi?
- I think Cadivi has to turn the tap on to ensure supply. But we must understand that this flow is not as large as in the past, because a part of the market is supplied by government imports, which represent 40% of total purchases abroad. The main actor in the import market is the government.
- What do you think about supply in a political scenario without President Chávez?
- Supply problems are to worsen in the first quarter, as well as volatility, and shortage. I think this month (December) authorities will make a final decision on the foreign exchange issue and that will bring some calm to the market.
- Do economic prospects remain the same under the current political circumstances?
- They will change. We believe devaluation will be implemented, yet not openly. The Government may handle spending in a more conservative way, but 2013 may be a presidential election year. Therefore, public spending may be increased to boost the economy. Consumption is likely to climb by 4%. Supply will depend on imports.
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.