January 12, 2009

This whole damn government is like one big 404 error

Quico says: So, um...happy 2009, everyone! (Well, here's hopin', anyway...)

A lot has happened in the four weeks we've been off, but probably none of it will turn out to matter as much as the Central Bank's year end national accounts numbers.

The figures lay bare the scale of the vertigo-inducing oil boom we had last year. Probably, there's no easier way to get that across than with a simple chart:

Click to enlarge - source: BCV

Pretty much tells the story right there, doesn't it?

The first thing to note is that humongous spike in oil revenues last year. Turns out that 23% of the petrodollars the country has taken in over the last ten years came in 2008 alone! The reality is that Chávez has never had to deal with a substantial year-on-year decline in oil revenues, not even in the year of the oil strike (2002-2003).

Note also the way Dutch Disease continues to kick our asses: in the four years since the current oil boom started, non-oil exports have barely budged at all, even as the overall economy experiences very strong overall growth. With the government determined to increase the overvaluation of the bolívar, non-oil exports don't stand a chance. Oil now accounts for 93% of the country's export earnings.

What's scariest about the chart, though, is obviously that final bar: oil revenues could well collapse precipitiously this year. Of course, oil prices are inherently unpredictable. (Show me a man who confidently forecasts the oil market and I, sir, shall show you a charlatan...or a commodity trader - same difference.) But assuming prices stay about where they are right now ($32/barrel), Venezuela would get just about $32 billion this year - a third of last year's bonanza.

Actually, one neat features of this data I hadn't noticed before is that to get a rough-and-ready estimate of how much money oil will bring in over a year at a given price, you just have to tack nine zeroes on to the end of the barrel price. That works because, on BCV's say-so, Venezuela has been exporting just over a billion barrels of oil a year, give-or-take - which works out to 2.74 million barrels per day.

But, of course, that assumes that production and export numbers aren't dramatically cooked to begin with - something that Miguel Octavio, for one, doesn't believe for a second - noting, sensibly enough, that for BCV's numbers to work Venezuela would have to be exporting more oil than OPEC says we produce.

But lets not get bogged down in the measurement thing. Going out on a limb and assuming that BCV isn't plain old making numbers up, Chávez's first decade in power (from 1999 to 2008) would have seen Venezuela export some 10.3 billion barrels of oil, at an average price over the decade of $39.25/barrel. All in, BCV reports that oil sales have brought $404.8 billion into the country in the last 10 years - almost a quarter of it last year alone!

Looked at historically, though, we really haven't been getting that much Bang for our Petro-buck. The Chávez era has seen oil prices multiply by eight, but real per capita GDP is up just 10% from where it was on the year Chávez tried to overthrow Carlos Andrés Pérez by force - 1992, when we were on 105.4% of the 1987 level.

Click to enlarge - sources: IMF, VenEconomy and PDVSA

But I digress.

The point here is that the scale of the economic shitstorm that's about to hit Venezuela is something we haven't really processed yet. What's really scary is that Hurracaine Feces will be slamming into our shores at a time when the economy is already overheated, with inflation out of control and eating away fast at earlier purchasing power gains.

The insane tsunami of petrodollars that hit Venezuela in 2008 was unable to sustain the pace of economic growth that rising public spending had been buying us in 2004-2007, with growth falling from 8.4% in 2007 to 4.8% last year.

If 4.8 points is all the growth that 93 billion petrodollars bought us last year, how much growth do you think 32 billion petrodollars will buy us this year?

Grim stuff. Our Last Best Hope in the face of all of this is the government's much ballyhooed rainy-day funds, most of which (we're told) are stashed away in the National Development Fund, better known as Fonden.

Come to think of it, the end of the year was also supposed to be the time when we got our hands on the eagerly anticipated, only-comes-around-twice-a-year Fonden balance sheet. Dang, that's something to look forward to: arguably the single most important indicator of the Chávez government's preparedness to ride out Hurracaine Feces...

Except when you go to Fonden's downloads page, guess what you get? A friggin' 404 error! Jesus! This whole damn government is like one big 404 error...

Actually, Fonden's entire website's been taken down, and its old URL now redirects here, to something called the Oficina Nacional de Contabilidad Publica (National Public Accounting Office.) Their website is like a spoof of itself: brimming with high-minded language about transparency and accountability, but containing virtually no actual information on public finances and nothing at all about Fonden.

So, here we are: far, far up a creek, but...do we have a paddle?

Dunno. The government won't tell us.