Economic recovery in Venezuela | Pasqualina Curcio

To forecast the economic recovery in Venezuela, or in any country in the world, it is necessary, first, to know what the causes of the fall in national production have been. Between 2013 and 2020, the gross domestic product has registered an abysmal decrease of 73%, that is, we are producing around a quarter of what was produced 7 years ago. 

Like all economic, social and political phenomena, the causes are usually multiple, however, among all of them there are always some that have more weight. In this case there are two: 1) the fall in oil exports; 2) the attack on the bolivar. Recovering national production necessarily involves reversing these two factors or, at least, their effects.  

  1. Drop in oil exports

Venezuela is not a mono-producer of hydrocarbons. Since the 70s, of everything we produce, only 15% is oil production, the other 85% corresponds to other economic activities including agriculture, manufacturing, construction, services. However, we are mono-exporters, 95% of sales abroad are for oil. Here as in any country in the world, the foreign exchange that comes in from exports is used mainly to 1) import not only final consumer goods, for example, food and medicine, but also inputs and raw materials, technology, machinery and spare parts for production ; 2) cover external debt commitments; 3) save by adding to international reserves.

The attack on PDVSA by imperialism has been a sure blow in the framework of the economic war. At first (2013-2016) it consisted of manipulating the international price of oil, which fell 65% from 96 US $ / barrel to 34 US $ / barrel. It is the first time in world economic history that the price of hydrocarbons has fallen for 4 consecutive years. When prices began to recover in 2017, Donald Trump signed a decree formally blocking the industry and making it difficult not only for oil exports, but above all for importing raw materials and supplies for oil production itself, which decreased 82% in 2017. 2.854 thousand / barrel / day were produced and in 2020 only 500 thousand / barrel / day, which led to a 76% drop in exports, which went from US $ 85.603 million in 2013 to US $ 29.810 million in 2019 ( we do not have the figures for 2020).

According to our estimates, out of every 100 bolivars of decline in national production, 60 are explained by the attack on PDVSA. We are aware that other causes have had an impact on the decrease in oil production, including, for example, mismanagement or alleged corruption, but the commercial and financial blockade of the industry has been decisive.

Recovering national production involves increasing oil exports and for this it is necessary to increase hydrocarbon production, which, in turn, requires bypassing the blockade with the support of allied countries to get supplies and raw materials. This is different from negotiating the handover of a large part of the industry with the euphemism of the supposed bankruptcy of the company and the urgent "oil opening" to guarantee "confidence" to foreign investors, allowing entry, even, to the authors themselves. of the blockade. In 1999, oil exports barely totaled US $ 16.735 million, the year in which Chávez reversed the privatization of the industry.

Every 100.000 barrels per day of increase in oil production is equivalent to US $ 2.000 billion annually, which represents the importation of medicines for the entire population for 2 years (in 2005, US $ 800 million were earmarked for the importation of medicines, of course, without overbilling). Could it be that we can insist on increasing production little by little? An increase of 500.000 barrels / day for a total production of 1.000.000 barrels / day would represent US $ 20.000 million of foreign exchange earnings per year.

That production effort would be in vain if, on the one hand, we let the little that comes in to escape to tax havens. Knowing the bourgeoisie that operates in our country, characterized by being historically parasitic, it is necessary to control the administration of these currencies and reverse the exchange flexibility approved in 2018. Additionally, in economic war, the priority is the Venezuelan people, so Payment of the external debt, especially if the creditors are the ones who besiege us, should go to second or third place. If we take the account, in these 7 years, at least US $ 80.000 million have been paid in debt, something like a little more than US $ 10.000 million on average each year.     

  1. Bolivar attack

Of every 100 bolivars of decline in national production, 40 have been the consequence of the criminal attack on our currency. The sequence is as follows: they manipulate the exchange rate, which translates into an increase in the prices of all goods and services which, given a nominal wage that has not been adjusted in the same proportion and speed as the prices of the rest of the goods and given a public spending budget that has not been adjusted to price increases either, has implied a decrease in the quantities demanded by households and the government (between 2013 and 2017, household consumption decreased 52% and public spending fell 30%). Faced with this fall, businessmen have decreased supply and with it production.

The only way to increase national production and especially the living conditions of the people, while the attack on the bolivar persists, is to recover the purchasing power of the working class and cover the government's budget deficiencies. This is the fundamental objective of the proposal to index the economy: to neutralize the effect of the attack on the bolivar, which requires breaking with monetarist dogmas.

Every attempt can be made to try to woo foreign private investors, offer them all the incentives to bring their capital, but if there is no one to buy their goods, they will not come, unless they decide to produce here in better conditions. exploitation than usual, in areas rich in natural resources and specially arranged for them, but with the sole objective of exporting. A situation that, although it will be counted as an increase in production, it will not be reflected in higher consumption and better living conditions in Venezuelan homes, which, in revolution, is what ultimately matters.

Finally, we envision another economic recovery scenario: the "magic" one. Suddenly or perhaps gradually (so that it is not so noticeable) the blockade on PDVSA is relaxed and the attack on the bolivar stopped, which, obviously and knowing the enemy, will not be for free. Both weapons being so powerful, they will lay them down in exchange for very, very large economic and political concessions. This is not the scenario that Chávez would have envisioned.


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