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Mix-Ansicht- @Scheich, Venezuela - Cosa, 17.07.2002, 13:36
- Danke. Schöne Zahlen. Guter Einblick in die venezuelanischen Verhältnisse. (owT) - El Sheik, 17.07.2002, 18:39
@Scheich, Venezuela
Hi Scheich,
Du hattest ja mal vorgeschlagen die Emerging Markets nicht aus dem Auge zu lassen. Hier ein lesenswerter Bericht zu Venezuela - liefert u.a. 14% des US-Rohölimportes - aus dem Global Economic Forum von MorganStanley.
herzliche Grüsse
Cosa
<font size="4"> Venezuela: Manageable for Now </font>
von Fergus McCormick and Whitney Kane (New York)
We have returned from our trip to Venezuela with several thoughts. First, political tensions remain high and threaten to delay prospects for an economic recovery. Second, the deeper-than-expected recession seems to be creating a challenge for the authorities, particularly on the fiscal front.
Third, high oil prices and sizeable international reserves should provide the authorities with sufficient ammunition to meet financing needs over the coming months. However, if political tensions persist, financing needs could create difficulties in 2003. Fourth, high oil prices and reserves should also help the central bank support the currency. Despite this, we believe the uncertain political environment is likely to result in further currency weakness. Therefore, we maintain our year-end bolivar forecast at 1,500.
A Weaker Growth Outlook
Opposition legislators are calling for a national referendum on the mandate of the executive, to be held no earlier than August 2003. Under the Venezuelan constitution, a referendum to revoke a public official?s mandate can only be held after one-half of his or her term is completed. In August of this year, a referendum will be held on several pro-government governors and mayors, and is likely to lead to further political tensions.
Political tensions have had a profound influence on consumption and investment behavior, with 1Q02 GDP declining 4.2%. With prospects low for an improvement in economic activity, we are revising downward our GDP forecast for this year, to -4.6% from -2.1%. Less growth is compounded by an unemployment rate that reached 15.9% in April, while pass-through from currency depreciation to inflation, so far relatively low, is likely to increase in the second half of the year. (In
June, inflation was 2% month-over-month, bringing the 12-month rate to 19.6%.)
Less growth, higher unemployment, and eventual pass-through will, in turn, probably result in lower approval ratings for the executive, particularly from the poorer segments of society, the government's traditional support base. A recent poll by Datanalisis shows that President Chavez's approval rating has fallen to its lowest level since his election, to 32.3% from 35.5% at the beginning of the year, while his rejection level has risen to 67.3% from 58.4%.
The Fiscal Challenge
Despite the benefits of higher oil prices and a weaker currency, the greater-than-expected economic decline appears to be posing significant challenges for the authorities on the fiscal front. We estimate that the central government deficit will reach 4.5% of GDP this year. The Finance Ministry's estimate is only 2.4% of GDP.
Both our estimate and that of the government incorporate a series of yet-to-be-approved measures that the government presented to Congress in May, which are designed to lower the deficit by 1% of GDP. The most significant of these is an increase in the value-added tax rate from 14.5% to 16%, a progressive reduction in the number of goods exempt from the VAT base (from 47 to 17), and an increase in the financial transactions tax from 0.75% to 1.0%. The measures also include an increase in tobacco and luxury goods taxes and the elimination of the two cheapest types of gasoline, which effectively increases gasoline prices. The program includes hiking social spending by 0.4% of GDP. The Finance Ministry assumes that these measures will increase nominal tax revenues 15.2% relative to last year.
We find this optimistic. Real tax revenues fell 31.2% in 1Q02 compared with the same period last year, and preliminary 2Q02 data show tax revenues falling short of official targets. Furthermore, the fiscal authorities are using a GDP denominator that we believe is optimistic and inconsistent with central bank expectations of a real GDP decline of 2-3% this year. To reduce the deficit, we would not be surprised to see the authorities defer second-half expenditures to first-half 2003, even though this might require a change in the fiscal law.
The Ammunition
Despite lower growth, Venezuela is armed with not only the benefit of high oil prices, but also $15.1 billion of international reserves, of which $11.1 billion are central bank reserves and $4 billion are in the macroeconomic stabilization fund, or FIEM. However, approximately $2.5 billion of the $4 billion in the FIEM is owed to PDVSA, and $1.5 billion to state governments. Nevertheless, we expect that the authorities could defer these obligations, if necessary, and draw down the remaining funds.
The Venezuelan oil basket tends to trade at an average discount of close to 20% to WTI crude oil prices. The 2002 WTI year-to-date average is more than $24 per barrel, while the average Venezuelan basket is over $20. For every $1 increase in the price of oil, central government revenues rise an average of $225 million (0.3% of GDP). The Venezuelan trade balance also improves an average of $1 billion (1% of GDP).
Venezuela has additional ammunition in the revenue it receives from a weaker bolivar: For every 10% depreciation of the currency, central government revenue increases $326 million (0.4% of GDP). A weaker currency means that dollar-based oil revenue yields more in local currency (budgetary) terms.
In addition to financing the fiscal deficit, Venezuela faces internal debt amortizations equivalent to $2.5 billion (3.0% of GDP) and external debt amortizations of $2 billion (2.4% of GDP) from July to December. Amortizations in 2003 are estimated at $5.2 billion.
In recent weeks, local banks have expressed reluctance to absorb new internal debt or even rollover current holdings -- more than 20% of bank portfolios is in public bills and bonds. Furthermore, while deposit transactions in May rose 1% year over year after declining in the prior three consecutive months, bank liquidity has fallen sharply. However, we believe that to induce banks to roll over their debt, the central bank could reduce the legal reserve requirement. The central bank has also kept interest rates relatively high to attract deposits, as well as stabilize the currency. A greater concern is the approximately $5.2 billion in 2003 amortizations, which we believe could pose financing problems if oil prices or reserves fall.
A Weaker Bolivar
High oil prices and reserves should help the central bank defend the currency, which has depreciated 72% since the end of last year, a loss in value of 42%. While it is difficult to identify the precise causes of currency weakness, anecdotal evidence suggests that both individuals and corporates have sold bolivars for US dollars. The currency may also have been the target of speculative flows, as well as possibly reflecting tourists' demand for dollars. To contain price pressures and inflation expectations, the central bank is likely to continue providing local banks with liquidity through daily hard currency auctions of up to $45 million.
Since the February 13 devaluation, the central bank has lost an average of $15 million per day. Extrapolating this daily loss through the end of the year, the central bank would lose an additional $1.8 billion, bringing central bank reserves to $9.3 billion. Historically, the central bank has become concerned whenever reserves fall below $9 billion. Therefore, we believe that if the central bank begins to lose more than $15 million per day, it might allow the currency to weaken further to maintain reserves.
Bottom Line
Political tension remains the greatest risk that Venezuela faces today, in our view. The authorities appear to have sufficient resources to weather currency pressure and meet financing needs in the near term. However, until the political climate improves, we expect further deterioration in the real economy, public finances, and the currency.
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