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After a trip to Albania, South Africa, India, and Kazakhstan, where I have spoken to governments about how to confront their problems, I found out that Nicolás Maduro has again tried to hold me responsible for his own failure.
Apparently, Venezuela’s financial problem has nothing to do with Maduro’s own decisions – a fiscal deficit of 20% of GDP, price controls, an exchange differential of more than 2600%, three-digit inflation, expropriations – but rather with a supposed conspiracy led by 2 Venezuelan intellectuals who are otherwise super busy with dozens of other public activities.
Nicolás Maduro’s ability to blame others for his own misgivings is truly astonishing. Venezuela is considered the riskiest country in the world because, as The Economist has pointed out, it is the worst managed country in the world. Credit rating agencies, whom I have confronted in the past, have a very positive opinion of Bolivia, yet they do not see Venezuela with the same set of eyes. Can the debt, deficit, money growth, expropriation, and exchange rate levels have something to do with the different perception of risk amongst countries that are otherwise members of the ALBA group of nations?
Since we are on the topic, I would like to point out some of the other lies coming from the despotic human-rights-and-Constitution violator that holds power in Venezuela. It is not true, as Maduro said last night, that I left Venezuela “expelled by Chávez’s revolutionary avalanche.” I left Venezuela in February of 1994 to take the job of Chief Economist at the Interamerican Development Bank, and I was in that position when Chávez won the elections in 1998. It is simply not true – it is, in fact, a stupidity – to say that credit rating agencies are governed by the World Bank and the IMF. Often times the market does not agree with these agencies, and bonds are frequently traded at rates that are different than those implied by their assessment of risk. There are also many cases in which the three largest credit rating agencies differ in their opinions. But in the case of Venezuela, they all agree. Thousands of institutions and people hold and trade $130 billion worth of Venezuelan debt, and in those markets the risk premium has shot up above 2200 basis points, the highest in the world. Many of the current holders of Venezuelan debt are covering the risk of default by paying the highest risk premiums in the world: these premiums imply a 94% probability of default in the next five years. This is not the opinion of a few. This is the firmly-held belief of thousands of institutions and people after witnessing Maduro’s incompetent rule. They awaited the promises of Ramírez, they waited for the Revolcón, they waited for the Fiscal Revolution, also known as the Cañazo, they waited for one announcement after the other, and they finally realized the man does not know what he is doing, and lies through his teeth.
Venezuela’s problem is not Moisés Naím and myself. If Maduro wants someone to blame, he should look in a mirror. Maduro and his eternal little bird frittered away the largest oil boom in the nation’s history, and now they don’t have any money to pay for their obligations. In the same period of time, countries such as Kazakhstan saved up three years worth of oil exports in its sovereign wealth fund, and they currently do not have problems confronting the fall in the price of oil. But Venezuela used high oil prices to issue debt and to create a situation that is unsustainable even with oil at $100 per barrel. That is why, even with oil at $100 per barrel, the black market exchange rate went from BsF 10 in September 2012 to BsF 100 in September of 2014.
Maduro is incapable of steering Venezuela away from the crisis he got the country into. He is incapable of understanding its causes, design its solutions, build alliances, and picture a viable and promising future, and invite Venezuelans and foreigners to build the country together. Instead, Maduro thinks that by naming 27,000 new pricing police, and by sending the National Guard to the borders, the nation’s economy is going to recover. Maduro is so lost that he used the recently expired Enabling Law to pass 50 laws that do nothing to solve the crisis that he got Venezuela into. Maduro thinks the country’s problems are caused by an economic war, without realizing that his policies are the ones that have declared war on the country’s economic possibilites. That is a war he is winning.
Venezuela has a future, but Maduro has no idea where that future lies, nor how to get us there. And nobody can lead a country to a better place by lying.