Home' Trinidad and Tobago Guardian : April 23rd 2015 Contents BG10 REGIONAL
BUSINESS GUARDIAN www.guardian.co.tt APRIL 2015 • WEEK FOUR
The dwindling supply of
US currency has left
across the country prac-
tically bare, with short-
ages of everything from
basic medicine to tooth-
paste to meat.
Bond investors suspect the Venezuelan gov-
ernment is pretty low on cash. Just how low,
though, is a tricky question.
After all, this is a country that has stopped
releasing even the most basic economic data---
things like inflation and government spend-
ing---on a timely basis.
Given how high the stakes are, with many
investors bracing for an imminent default,
Wall Street analysts are scrambling to fill the
void. Firms including Bank of America Corp
and Barclays Plc have created their own sta-
tistical series to try to help investors understand
how dire the country s cash squeeze is. It s a
challenging exercise, they say.
"We ve had to build these series based on
everything you can imagine," Francisco
Rodriguez, a Venezuelan native who covers
the country for Bank of America, said by tele-
phone from New York. "I feel like a private
detective. You have to try to find the data. At
least the police have power to gather evi-
dence---I don t have any."
While the lack of data---or lack of reliable
data---has plagued investors for years in coun-
tries from Argentina to Greece, the vacuum
in Venezuela has become especially problematic
as the 50 per cent tumble in oil prices since
June throttles the source of almost all of the
country s dollar revenue.
With about US$10 billion in bond payments
due through February, derivatives traders are
betting the probability the nation will run out
of money to pay debt in the next year is almost
US50 per cent; the highest in the world after
Ukraine and Greece.
Venezuela s Information ministry didn t
respond to an e-mailed request for comment
on the reliability of data.
While officials at the International Monetary
Fund say they have no major issues with
Venezuela s data, bond analysts say it s become
markedly worse since December 2013. That s
when the government of President Nicolas
Maduro, who had succeeded the late Hugo
Chavez six months earlier, began delaying the
release of inflation statistics, according to
Deutsche Bank AG economist Armando
Venezuela last reported cost-of-living data
almost five months ago, when it said consumer
prices had surged 68.5 per cent from the pre-
vious year. That s by far the highest rate in
Barclays economist Alejandro Grisanti says
he now looks at Venezuela s tax revenue to
come up with an inflation estimate. Based on
a reported jump in tax collection of more than
120 per cent in the first quarter---at a time
when the economy actually shrank---he projects
inflation has surpassed 100 per cent.
While Chavez was in power, "there were
delays and perhaps the detail and quality of
the data was reduced," Grisanti said by tele-
phone from New York. "Now it seems that
President Maduro has changed this into a state
policy of not publishing data."
Deutsche Bank s Armenta said he began
using a proxy to track Venezuela s imports by
pulling export data from the nation s biggest
trade partners in the second half of 2014.
That s a crucial piece of information for bond
investors as the tumble in oil exacerbates a
shortage of dollars; the hard currency the
country needs to pay debt and buy imports.
The dwindling supply of US currency has
left supermarket shelves across the country
practically bare, with shortages of everything
from basic medicine to toothpaste to meat.
Armenta s data shows that Venezuela
reduced imports to US$3 billion in January
from about US$4.5 billion a year earlier, possibly
to help pay down a one billion euro (US$1.1
billion) bond that was due in March, he said.
Still, Barclays s Grisanti says that some holes
in the data are hard to overcome. While private
data on oil tanker movements have helped
him track Venezuela s discounted oil sales to
Caribbean allies, he said it s a tricky exercise.
The state oil company stopped releasing official
data on the shipments in 2013.
"There are many cards Venezuela can play,
but they re almost impossible to analyse,"
Deutsche Bank s Armenta said in an interview
in New York.
Bank of America s Rodriguez says investors
reliance on reports that Venezuelans were
facing shortages of basic necessities like toilet
paper helped motivate him to independently
track everything from the country s interna-
tional investment position to its overseas aid
policies to get a better sense of the nation s
He cautions that these personal stories of
hardship don t tell the full story.
"Anecdotes give you the sense of something,
but it s very dangerous to try and use them
to make an assessment of how an economy
is," he said.
His team first began compiling and pub-
lishing an alternative set of statistics for
Venezuela as far back as 2011 as they sought
to track the flow of money in off-budget
accounts created by Chavez. The data set grew
over time, culminating in an 11-part report
called "The Red Book" that was published
April 6 and that Rodriguez plans to release
To Robert Rennhack, deputy director at the
IMF s Western Hemisphere Department,
Venezuela s economic data "isn t an issue."
The IMF censured Argentina in 2013 for mis-
reporting statistics such as inflation.
"They provide the data on a sufficiently
reasonable basis," he told reporters in Wash-
ington on April 17.
That s of little comfort to bondholders when
Venezuela s foreign reserves fall short of cov-
ering the almost US$30 billion of debt pay-
ments it has coming due through 2017. Only
15 per cent of the country s reserves were actu-
ally held in cash as of the end of March,
according to Bank of America.
"The availability of macro and financial
information on a timely basis is essential for
figuring out where to put your money," Fer-
nando Losada, an economist at AllianceBern-
stein, said in an e-mail. Bloomberg
Wall Street has no idea how
much money Venezuela has
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