Bs.564 million, down the toilet

On Saturday, Chávez announced another Bs.564 million rescue to try to plug the neverending financial shortfalls facing the Nationalized Guayana industries.

There’s enough candy for everyone in that piñata: Alcasa gets some, Bauxilum gets some, Venalum too, and Ferrominera and Sidor get rather a lot, actually. But it’s not just the big boys; even the bit players in the tragicomedy that is CVG, like Cabelum and Rialca, get a taste.

The good part comes later, though: Chávez followed this shower of petrodollars with a stern admonition to the Guayana SOEs to stop making losses already!

It’s heart-rending, really. Nobody in the government has the intellectual furniture in place to grasp the connection between a soft budget constraint and chronic loss-making on the part of State Owned Enterprises.

They really, really don’t see how extending a virtually explicit guarantee to the Guayana SOEs that they can come back again and again and get one bail-out after another per secula seculorum might put a a dent on managers’ incentives to make a profit. It’s like a brand new thought to them – nobody’s ever walked them through the logic behind it.

La vaina es tierna.

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