It’s been a while, how ya been? Sorry for being AWOL for, like, 12 years. We just sort of grew apart, ya know? But I’m back! Are you single these days?

Really though: Blanca Vera from El Nacional published an eyebrow-raising piece this morning where she claims that the Venezuelan government sent the IMF a full set of economic statistics after 12 years of near radio-silence.

Over a decade ago, in 2004, Chavez stopped the IMF’s yearly monitoring (Article IV consultations) and closed down the IMF’s office in Caracas. He didn’t renounce membership from the IMF because that would have triggered a default, but he stopped replying to their phone calls, email, and FB messages. Though they didn’t sign the paper, they basically got a divorce.

So why is the government flirting with the IMF again? Here are some possible reasons:

  1. For free technical assistance (TA): the IMF has PhD level nerds that know how to fix just about any technical problem you could imagine. Need to improve the efficiency of FX allocations? Need to get some decent economic growth and inflation projections? The IMF can help. Gratis.
  2. For $$: Venezuela could be looking for authorization to withdraw more SDRs (special drawing rights, hard currency deposited in the IMF, basically). And for that it would need approval from the IMF board, which won’t move a finger without having up-to-date official statistics.
  3. For something more Machiavellian: maybe the Venezuelan government is flirting with the idea of getting some budget support (aka, big time $$ loans) in exchange for reforma neoliberal. Wouldn’t that be a twist?

It’s a little early to tell what is going on: Is Maduro looking for a piquito or does he want to go all the way? We don’t know. But we may find out soon. I’m excited.

18 COMMENTS

  1. I do hope this information does not come from Vera’s same “source” that said that the Podemos advisor (Serrano) was saying that Venezuela should default, only to then deny this on a public interview. Sigh…From one gossip to the other and no accountability…Niiiiiiiice

  2. My only comment here is a quote form the Emperor in the Return of the Jedi:

    “Good, I can feel your anger. I am defenseless. Take your weapon. Strike me down with all of your hatred and your journey towards the dark side will be complete…”

  3. Swimming so much, just to die at the shore.

    The best thing about chavismo for Venezuela will be showing the most practical example of how communism is an useless ideology.

  4. “…the Venezuelan government sent the IMF a full set of economic statistics…”

    In what manner do such statistics even exist? Perhaps Maduro’s crew submitted revolutionary figures, using revolutionary economic theory. Real figures? Transparency?

    You buy that, I got some real estate I’ll sell you on Mars. Cheap, too.

    • Hey, I actually don’t think it’s such a problematic claim. The IMF works with Albania, Benin and a bunch of other countries that don’t have proper economic information. And it’s not a big deal; the fund is used to flying with low visibility. To get a decent picture of what is going on in Venezuela, all you need is a nice, disaggregated time-series of, say:

      External: Current Account, Capital Account, Imports, Exports,
      Monetary: Stock of International Reserves (and flows in and out), Stock of Para-Fiscal funds (and flows in and out), Stock of Other External Assets (refineries, etc, and flows), flows through the official FX mechanisms
      Fiscal: Central government revenues and expenditures, accounts for other public sector entities with a likely fiscal burden (Corpoelec, the expropriated guys), treasury data tracking the same thing (to give you a better estimate)
      Oil: a few extra tables from PDVSA, (a phone call with important JV partners)
      Debt: Stock of Debt (including contingent liabilities, arrears, etc), Deficit Financing (including a line for monetary financing)
      Macro: economic activity by sector, registered taxpayers, businesses, inflation for various CPIs, etc

      The government already publishes a lot of this, its just a matter of giving the fund info on how aggregates are constructed and where the data comes from. What they don’t publish, they most likely continued to track. So its just a matter of sending an email.

      Overall, pretty plausible, especially if the govt. is looking to unlock option #2.

  5. The other one that occurs to me is Bane in Batman The Dark Knight Rises:

    “There’s a reason why this prison is the worst hell on earth… Hope. (..) I learned here that there can be no true despair without hope.”

    • Yes and no. The situation will devolve into two parallel economies: The Dollar economy and the Bolivar economy. I base that prediction upon what Cuba did, and it assumes that the existing government stays in power.

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