Caracas Chronicles

For years – literally years – we’ve been wondering exactly how much money the Venezuelan government had squirrelled away in its “parafiscal funds”: Fonden- and Fondo Chino-style unaudited, unreported, wholly discretionary accounting black boxes.

Finally, yesterday, Maduro let the cat out of the bag: announcing he would finally unite all of these different pots into a single, grandly named Fondo Estratégico that will hold the knee-shakingly awesome sum of…$750 million!

That’s right folks, not even a billion bucks. At the first semester’s rate of imports – $115 million per day – that’s roughly six and a half days of imports. Not even a week! And that’s at the current rate of imports, which BoA says is already brutally contracted by 36% compared to last year’s!

What’s going on here? Well, Maduro has to come up with over $5 billion in maturing debt payments due in October. Refinancing under current circumstances is too crazy for even this manicomio-cum-government to countenance.

So after they set aside the money they needed to pay their October bondholders what they’re left with is…this. 

I do wonder if anyone quite checked with the Chinese that the elaborate oversight controls they’d negotiated for Beijing’s diplomats in Caracas to keep the reins tight over the Fondo Chino (“abajo el imperialismo!”, right?) are going to carry over into the new fund. (Then again, I’ll go out on a limb and guess the chinos are every bit as appalled and exasperated by the government’s macro management as everyone else.)

Stepping back, I suppose it’s “good” news that they finally seem to have decided to publish at least the current balance in these unaudited parafiscal funds now that, y’know, they’ve spent it all. Because that’s what this announcement amounts to: Maduro is telling us they blew the entire windfall from a decade long oil boom and in return gave us a country where you can’t even get ibuprofen at the pharmacy. 

Alternatively, he’s just lying: announcing a fund he claims will unify the parafiscal funds but keeping some parafiscal money out of it on the sly. That would achieve the remarkable feat of making the black-box funds even less transparent than they’ve been up to now, by refusing not just to publish their balances, but to acknowledge their existence. 

Pick your poison.