|
Current account deteriorates amid lower oil exports
In the second quarter, the current account balance registered a surplus of
US$ 2.4 billion, below the US$ 2.8 billion Consensus Forecast figure.
Nevertheless, the data was better than the US$ 1.6 billion deficit
registered in the same quarter last year and also considerably above the
US$ 1.0 billion surplus recorded in the first quarter. The improvement
compared to the first quarter is mainly due to a higher trade surplus,
which increased from US$ 2.2 billion to US$ 3.7 billion, as exports
increased +36.0% yoy, whereas imports remained virtually unchanged at 0.3%
yoy. As a result of the second quarter widening of the current account
surplus, the annual figure reached US$ 9.3 billion, equivalent to 12.0% of
GDP. For this year, the Consensus expects the current account surplus to
narrow to US$ 8.2 billion or 11.3% of GDP.
International reserves rise but rainy day fund withering away
Due to the rigid exchange rate controls, international reserves have
experienced a strong recovery this year. In August, reserve levels,
including the Investment Fund for Macroeconomic Stabilization (FIEM, Fondo
de Inversión para la Estabilización Macroeconómica) reached US$ 17.8
billion, which was up US$ 3.0 billion from the end of last year. However,
successive withdrawals from the FIEM by PDVSA and the government have
withered away the resources available in the rainy day fund. In fact, at
the current level of US$ 699 million, the FIEM is at its lowest point
observed since February 2000 and is a staggering 75.5% below the year-end
2002 levels, at a time when high oil prices should have helped raise
resources. Unless the government is able to take advantage of more
favourable oil prices and a recovery in oil production this year to
replenish the fund, fiscal accounts could be severely strained if the
economy does not recover soon.
Supreme Court appoints Electoral Council
On 25 August, the Supreme Court appointed the 15-member National Electoral
Council (CNE, Consejo Nacional Electoral). The appointment had stalled
efforts by the opposition to organize the revocatory referendum over the
presidency, since the CNE is responsible for overseeing and administering
elections nationwide. Under the current 1999 Constitution, a referendum
over a president’s rule can be held half way through the six year mandate,
which was on 19 August for the Chávez presidency. A six-month impasse over
the CNE composition was ended with the Supreme Court action. The
opposition has already handed in the signatures of 20% of eligible voter’s
needed to proceed with the referendum but the government has already
indicated that the path towards a referendum will be challenged by legal
means where possible. From an administrative standpoint, elections could
probably be held by early next year. However, continued government
recalcitrance may postpone a final resolution to persistent political
crisis further, thus, undermining any prospects for a speedier economic
rebound from the current depression.
|
