Money down the toilet

A picture of Maduro's economic policy
A picture of Maduro’s economic policy

Bloomberg’s Charlie Devereux, Corina Pons, and Sebastian Boyd are reporting that Venezuelan Finance Minister Nelson Merentes will soon hit the road to see what appetite there is for new Venezuelan bonds. Apparently, the Maduro government needs fresh cash because it doesn’t have enough on hand to import toilet paper.

The title of the post is to be taken literally. We are basically trading bonds for dollars so we can … oh, never mind, you get the point. The money quote:

Private-sector imports fell 11 percent in the first quarter from a year earlier due to the country’s economic slowdown and the curtailed access to hard currency, the central bank said on May 31.

The central bank’s scarcity index, which measures the amount of goods that are out of stock, rose to 21.3 percent last month, its highest level since January 2008.

Imports may have fallen 30 percent in March, according to estimates from Bank of America economist Francisco Rodriguez, who extrapolated from published data on exports to Venezuela from six of the country’s trade partners.

“It’s a planned economy of the Soviet type we saw last century and the results are similar,” Alberto Ramos, the chief Latin American economist at Goldman Sachs in New York, said in a phone interview. “They get billions of dollars from oil but they have to import everything else, which means there’s increasing demand for a finite and scarce supply of dollars.”

“If you have a double-digit yield, it’s because people don’t want to provide you with credit,” Morden said in a phone interview from New York. “I don’t know what they could bring to the table to change our minds. If they’re going to convert people they need to change the speech.”