Walking Blindfolded Towards The Edge of a Cliff

blind-fold-walking-off-cliff-1024x960This story in El Nuevo Herald is…well, just staggering:

En una muestra del grave estado de las finanzas públicas venezolanas, el régimen de Nicolás Maduro ha emprendido lo que hasta hace poco era impensable: un acercamiento con el Fondo Monetario Internacional (FMI), que incluye conversaciones exploratorias sobre lo que el país sudamericano debe hacer para obtener nuevas líneas de financiamiento, dijo una fuente familiarizada con la situación.

The long and the short of it is that with China apparently balking at extending the Maduro government new loans, some people in the government have started putting out feelers to…the IMF!

It’s a fun and important story, and it’s hard not to speculate that the source here has an obvious agenda – it’s hard to think what could weaken the “pragmatists” hand more than this kind of exposure in a right wing gringostani paper.

But, again, it just confuses me: it’s impossible to imagine Chavismo even considering a rapprochement with the bogeyman IMF  unless the government is getting perilously close to a kind of hecatombic fiscal collapse. I mean, even without the cargoship-sized loads of luggage the institution’s very name carries in chavista circles, the fact is that the IMF is designed as a lender of last resort. You just don’t go there until you’re totally out of both money and options.

But then, guys like Miguel run through the data and conclude that, most likely, there’s enough money in the kitty for a good few years to come.

Which one is it? Are we inches away from the cliff-edge? Or a few miles?

We just don’t know, because we’re making this particular walk with a blindfold on. With Fonden and Fondo Chino refusing to publish their balance sheets, and a general, deep opacity now the standard M.O. when it comes to reporting the public sector’s finances, we’re reduced to looking for “signals” here and there. Which makes it hard not to fixate on things like that Nuevo Herald article.

The ugly truth is: we don’t know how far that cliff edge is – all we know is that we’re walking toward it.

[Hat tip: La acaparadora de diamantes en el cielo…]

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