An Exercise in Denial

Your daily briefing for Wednesday, February 24, 2016

For Wednesday, February 24, 2016. Translated by Javier Liendo.

“The country’s going through a difficult economic situation.”

Aristóbulo Istúriz

The Vicepresident regards the devastating economic crisis that Venezuela’s going through as a “difficulty”. Accompanied by all the ministers, he proved that the Government’s capacity to describe the crisis – and thus rise it – is inversely proportional to its magnitude.

Aristóbulo insisted that our crisis is the consequence of a “conspiracy”. of “the damage caused by big capital interests”, of “artificially created imbalances” and of discrediting campaigns. But those circumstances can’t spoil his optimism, that’s why the new focus is to overcome the oil rentier mindset; because now that we no longer have rents, the model itself has been exhausted and that’ll allow us to migrate to a productive model.


As if it was unrelated to the huge problem with inflation rates, Aristóbulo spoke about the 97% rise in the minimum wage for 2015 (The Central Bank calculated an inflation rate of 180%), saying that more than 54% of citizens earns between two and four minimum wages. He didn’t mention 11 are required to cover the food basket. According to the Executive Branch, formal employment increased to 59.3% of the workforce, which constitutes an 11% increment. Unless queues count as formal employment, I doubt the numbers are right.

Ignoring the drama that many Venezuelans live – and challenging the sense of opportunity – he said that access to clean water increased from 62% in 1998 to 84% in 2015. Likewise, he considered the access to housing as a success that he explained as “the efficient distribution of oil income.” He said nothing about the issue of health and the diseases we’re suffering; a subject treated in the report issued by representatives of the European Union in Venezuela, in which they conclude that the country is not ready for Zika.

About police and army operations (OLPs), he said that they dismantled 130 criminal gangs, confiscated 1,367 weapons and also 70 tons of drugs, without ever mentioning military officers. He added that the State of Emergency currently in force on Táchira, Zulia and Mérida is the reason smuggling has dropped. ¡Ja!

He pegged extreme poverty at 4.9%, the Gini Coefficient at 0.391 and he even dared to speak about life expectancy, putting it at 75 years. Sadly, crime, problems in every public service and the collapse of the healthcare system challenge that estimation.

We had to take a deep breath when he spoke of our solvency “despite attacks.” Had he mentioned them, corruption should’ve come out on top as the most violent hit. Anyway, the fact that the public sector’s fiscal deficit is now above 20 points of GDP makes it impossible for the economy to be solvent. Aristóbulo Istúriz left the National Assembly by a side door without offering comments to the press.


The gallera atmosphere in the Hemiciclo as the ministers were called to deliver their management reports was shameful. Anyone who defends institutional change must recover a sense of decorum, respect protocol  and control the pertinence of their actions. Luis Alberto Machado died today. Compared to today’s performance, the stature of that deputy and minister only brings sadness. Although, the fact that the ministers delivered their reports is a way of legitimizing the National Assembly.

Oil, the issue

Eulogio del Pino, president of PDVSA, said this Tuesday that they’re very close to signing a financing agreement with the Indian company Oil and Natural Gas Corp, for an investment of $500 million in a joint venture that PDVSA has in San Cristobal, Táchira.

The minister of Oil and Mining also added that PDVSA is negotiating with foreign banks for a possible refinancing of their debt: “that’s part of all negotiation processes,” he said about the payments that PDVSA faces, which exceed $5,000 million in matured bonds and interests.

José Bodas, secretary general of Venezuela’s United Federation of Oil Industry Workers, is the only one who has talked about Camimpeg, since the Federation’s opinion is that the military company will deepen the Government’s offensive against workers, damaging employment stability and the industry’s collective bargaining agreement, besides putting labor unions at risk.

Pray to pay

The Economist analyzes Venezuela’s possibilities to honor this year’s debt saying that, without a concrete plan, the only thing to do is pray that oil prices rebound: “Default is becoming hard to avoid,” because if oil prices remain where they are, Venezuela will only get $22 billions in oil exports, leaving a $30 billion financing gap in the balance of payments.

Russ Dallen, analyst for Latinvest, says: “The question is not whether the country will default, but when.” The report adds details about assets that could be confiscated and the tons of gold that have been taken out of the country to serve the debt. PDVSA’s risk is far greater than the country’s, hence Camimpeg’s creation. Several analysts were pleased by the possibility of protecting PDVSA’s assets against confiscation by creditors.

Venezuela’s left only with China – remember the $50 billion that we already owe them? – as a possible refinancing partner, in exchange for access to oil and minerals in favorable terms, which means a “costly help,” according to the Economist. With all of these complexities, the Vicepresident dares to talk about a solvent economy. Every exercise in denial worsens our situation. Aristóbulo’s optimism is a cruel and irresponsible mockery.

Naky Soto

Naky gets called Naibet at home and at the bank. She coordinates training programs for an NGO. She collects moments and turns them into words. She has more stories than freckles.