CARACAS, Venezuela. In order to prevent the Venezuelan economy from falling into a huge collapse following the sanctions of the United States, which strengthens the political turmoil and constantly weakens its presidency, Nicolas Maduro is taking steps to try to stabilize the currency while his government is looking for ways to mitigate the impact on oil products. income.
Donald Trump's administration, along with a long list of countries that were considered fraudulent, that Maduro as a legal basis is a new mandate, soon rejected US companies banning US companies from buying oil in Venezuela and selling products. such as gasoline and thinners.
In Venezuela, virtually all incoming dollars come from oil exports and 500,000 barrels a day it sells to the United States accounts for 80% of the foreign oil flow that feeds Pssa, a state oil company. The other barrels, which are mainly sent to China and India, are used to repay the debts.
It is explained by the sources of the Vice President of Economics One of the options Maduro Administration has identified to reduce impact is the sale of oil to intermediaries who would later sell drums in the US or other countries.as well as the increase in oil exports to China and India, or the negotiation of oil revenues, which do not currently allocate resources because it is used for debt repayment.
At the same time, it is looking for new suppliers to buy diluents that allow Orinoco belts to be marketed, and the fuel it buys abroad due to defects in national refineries.
This contingency plan will generate less revenue because the sale of oil to other countries, such as China, means higher transport costs and low prices because only in the United States there are refineries specially equipped to handle heavy crude oil from Venezuela.
The sale of oil through intermediaries also means significant discounts, and there is doubt in the market as to whether this route would contradict Washington's sanctions if it plans to use it to send crude oil to the US refineries.
Nicolás Maduro has made his decision to resist what he describes as a "coup d'état in the United States", which, like the long list of states, has been acknowledged by Juan Guaidó, President of Parliament, who was sworn in as president. temporary
"Venezuela will be respected, these days I have realized that we are more independent than we think we are not dependent on gringo or Europeans or others; Venezuela has its own course and no one can stop it," Maduro said this Monday on Monday.
Ecoanalítica Director Asdrúbal Oliveros believes it will be very important for Madurai to provide imports that guarantee food boxes with basic products such as flour, rice, pasta and milk powder that are sold at subsidized prices to the lowest income and purchasing population. fuel to avoid defects in gasoline pumps and power outages.
"According to our forecasts, the government will have to spend three billion dollars immediately to achieve these priorities in three months, but not in normal circumstances, we will see less food box distribution, because they will certainly try Dosing quantities, there will be problems with gasoline supply, and possibly electric defects, ”says Asdrúbal Oliveros.
This is stated by Datanálisis Director Luis Vicente León "From my point of view, the chances of collapse are high, but I can't say it will inevitably happen. Typical activities are from countries that have been punished by the United States. Food imports are largely reoriented to Mexico, which disagrees with the actions of the US and Russia, which is an ally of the government. "
Turkey, another country associated with the Maduro administration, plays an important role as a food supplier and has become a source of foreign exchange earning gold from Venezuela, which, according to financial institutions' estimates, was $ 900 million in 2018. t
On January 19, economic vice president Tareck El Aissami went to Turkey and met with President Recep Tayyip Erdogan to develop a plan to increase Venezuelan gold exports this year.
"I visited so many gold processing companies, I saw this place for the first time with modern technology, it is a very well equipped place," said Tareck El Aissami.
Stop the dollar
The central bank is taking emergency measures to prevent the dollar from escalating and further devaluation of Bolivia if the environment is inevitably cut in foreign exchange earnings, political instability and hyperinflation, where prices rise on average by 4% per day. .
The plan requires a significant reduction in credit to prevent companies and individuals from financing dollars themselves and declare that they will sell the euro using private banks to reduce market pressure.
To reduce the credit, the Central Bank significantly increased the amount of money that the financial institutions cannot lend and have to freeze as reserves.
Leonardo Buniak, bank risk expert, explains that "the central bank does not have enough euro to significantly increase foreign exchange supply and inflation is not over, because the main reason is that the government generates large amounts of money to cover its expenses. the credit crisis will deepen the recession that started in 2015 and has not yet been completed. "
However, he points out that "in the very short term, measures can bring about a stabilization of the dollar price, but it is not sustainable".
From 4 September 2018 to 18 January 2019, the dollar price on the black market increased by 2 516%, and before announcing measures to "stabilize the exchange rate", the Central Bank continued to devalue the currency by aligning the rate. quoted on the market.
Although there are doubts that Nicolás Maduro will be able to overcome the political crisis, there is no discussion that Venezuelan economy will continue to collapse this year. Francisco Rodríguez, chief economist at Torino Capital, in his latest report, points out that, following the sanctions of the United States, the WSIS will experience a sharp drop in earnings, leading to a reduction in oil production by half to just 508,000 barrels per day.
Decrease in foreign exchange earnings will lead to a sharp reduction in imports of raw materials this is why GDP is expected to shrink by 26.4% this year compared to the Venezuelan economy, which has fallen by 59% over the last six years.
Credit Suisse, in his latest analysis, states that "these (US) sanctions could significantly impede the oil industry and the already devastated economy. The currency constraint will introduce exchange rate and inflation and will bring more downturns."
But greater poverty does not necessarily mean a change of government. Torino Capital believes that the most likely scenario is that Nicolás Maduro will remain in place in the next two years without calling new elections because it would be able to support the armed forces and fight international isolation.
"The country suffers from an economic downturn, but worsening and widespread dissatisfaction is not enough to expel Maduro from power," says Torino Capital Report, which gives 40% of probability and 30% of the scenario that the government calls for new elections internationally. pressure.
The company gives a 20% probability of the regime collapse if mass protest or external military intervention leads to the loss of power and, finally, a 10% Nicolás Maduro emerged from the ranks of the government, replaced by another leader.
Luis Vicente Leon points out that "there are examples of a US strategy leading to a collapse of the economy caused by internal talks or rebellions, but there are other instances where the government has not happened, there are Cuba, Iran, Syria and Zimbabwe."
"It may happen that the government of Nicolás Maduro becomes kind big brother stay in a very poor country where it is the only one with something that can be disseminated thanks to what it can get from negotiating with China, Russia, Turkey and Mexico that even if they cannot fully compensate for US sanctions damage control, ”says Luis Vicente León.
Faces (photos) of global struggle for political conflict in Venezuela