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VenEconomy :The figures always tell all

 

Last Thursday, August 20, the Central Bank of Venezuela published the results of the economy for the second quarter of 2009.

The surprises and inconsistencies in the figures generate a serious lack of confidence and, even though they had been crudely touched up, they were unable to cover up the fact that there has been a weakening of the economy.
They reveal, for example, that the non-oil economy contracted by 1.6%. Analysts are surprised that the figure is so low, given that nearly all the indicators pointed to the contraction being much greater.

One of the explanations put forward in the Central Bank’s report is that General Government Services GDP rose by 3.3%. This figure also caused surprise, since government spending has contracted in real terms.

The Central Bank’s figures indicate that there was a surplus of $1.5 billion on the balance of payments and that oil exports came to $13.8 billion, equivalent to some 2.86 million b/d. This is a bit hard to believe, more so when OPEC and the International Energy Agency claim that production was some 2.3 million b/d. But the situation would seem to be even more serious, because, if to that figure one adds the 150,000 b/d produced from liquefied petroleum gas and subtracts domestic consumption of 650,000 b/d, the result is that actual exports would be 1.8 million b/d, which means that the government is apparently overestimating oil revenue by some $5.88 billion.

In VenEconomy’s view, as on previous occasions, this overestimation of oil production would only be offset by an outgo on the capital and financial account. But, here there is yet another surprise in store: the Central Bank’s capital and financial account posted a surplus of $1.5 billion, the source of which is not at all clear. According to the Central Bank, this surplus is due mainly: a) to the reduction in assets as a result of the majority of the government’s investment funds reducing their deposits abroad (in other words, the monies transferred to Fonden were brought to the capital and financial account for ordinary expenditures); and b) to the increase in public sector liabilities as a result of the deposit of $4 billion in the Bi-national China-Venezuela Fund.

The problem with surprises in official figures of this kind is that they undermine confidence in the figures’ reliability. In VenEconomy’s opinion, responsibility for the fact that government figures generate a lack of confidence is not the Central Bank’s, which is apparently processing data as it has always done; the distortion comes from the information supplied by state-owned companies and government agencies, which are inflating the figures they provide the Central Bank, as happens when PDVSA claims it is producing 3.4 million b/d, when it is in fact producing around 2.3 million b/d.

In short, the Central Bank’s report on the results of the economy for the second quarter would seem to indicate that, while Venezuela is not in recession, it is in a delicate situation, perhaps more serious than is generally thought.

 

VenEconomy has been a Venezuela's leading specialized publisher on financial, political and economic data since 1982. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.

Editor's Note: This commentary was originally published by VeneEconomy on 08/21/2009. Petroleumworld reprint this article in the interest of our readers .

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Petroleumworld News 09/09/03

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