Venezuela looking for a U.S. taxpayer-paid IMF bailout?

After years of reporting nothing about the state of its collapsed socialist economy, Venezuela surprised everyone by reporting the "ugly, ugly truth," as CNN puts it in its headline:

Venezuela's economy is in shambles and the country has plunged into political chaos. The dysfunction is so great that basic economic data has been hard to come by.

The stats and the reporting of them, of course, make no difference to the average Venezuelan on the streets who either starving or else fleeing. Those people already know the economy has gone to socialist hell. They also don't do much for the public relations picture painted by the dictatorship of Nicolas Maduro. Everyone can see that the economy has been colossally mismanaged under socialism, and the problem is not, as Rep. Ilhan Omar and other dictatorship apologists claim, a problem of sanctions.

So what the heck is going on?

Financial writer Michael Reid seems to have the bead on the matter, tweeting:

 

 

Obviously, someone read them the Riot Act about losing their voting rights for not reporting their country data over at the International Monetary Fund. They have a 0.77% voting share, owing to their contributing little to the body, while the U.S., which shovels a lot of cash at the bailout body, has a 16.52% share. That voting share ... is for what's called SDR or special drawing rights, which is a kind of IMF placeholder currency based on the bank's assets ... and which is what is used for bailouts.

This is funny stuff, not just because of the return to double-entry bookkeeping, but because the Venezuelan government has expressed extreme contempt for the IMF and World Bank with their reporting standards in the past. They even quit the body under the rule of the late unlamented Hugo Chavez in 2007, back when the oil money was rolling in, though they somehow have joined back. 

So suddenly they've released a slew of true-looking data, and done so without warning, after years of fourth-world-style neglect.

I'm gonna agree with with Reid that this is probably about voting rights - and potential bailouts, to be paid for in a large share by U.S. taxpayers. I do not have all of the particulars about how the U.S. could stop them or not stop them, but from the looks of this, it appears they think they can get around any U.S. opposition - and avail themselves of another stream of cash to waste.

One hopes the U.S. is on the ball about this (they probably are) and does all they can to keep money out of that government's hands.

 

 

 

After years of reporting nothing about the state of its collapsed socialist economy, Venezuela surprised everyone by reporting the "ugly, ugly truth," as CNN puts it in its headline:

Venezuela's economy is in shambles and the country has plunged into political chaos. The dysfunction is so great that basic economic data has been hard to come by.

On Tuesday, for the first time in three years, the Central Bank of Venezuela published statistics on the country's battered economy. The bank's records show that in the third quarter of 2018, gross domestic product contracted a shocking 22.5% over the prior year.
Bank records showed that the country's GDP has been in decline since the start of 2014 — contracting 52% between the third quarter of 2013 and the third quarter of 2018. That means the size of Venezuela's economy was reduced by half in a span of five years.
Price inflation is out of control in Venezuela. The inflation rate hit 130,060% in 2018, according to the new data.

The stats and the reporting of them, of course, make no difference to the average Venezuelan on the streets who either starving or else fleeing. Those people already know the economy has gone to socialist hell. They also don't do much for the public relations picture painted by the dictatorship of Nicolas Maduro. Everyone can see that the economy has been colossally mismanaged under socialism, and the problem is not, as Rep. Ilhan Omar and other dictatorship apologists claim, a problem of sanctions.

So what the heck is going on?

Financial writer Michael Reid seems to have the bead on the matter, tweeting:

 

 

Obviously, someone read them the Riot Act about losing their voting rights for not reporting their country data over at the International Monetary Fund. They have a 0.77% voting share, owing to their contributing little to the body, while the U.S., which shovels a lot of cash at the bailout body, has a 16.52% share. That voting share ... is for what's called SDR or special drawing rights, which is a kind of IMF placeholder currency based on the bank's assets ... and which is what is used for bailouts.

This is funny stuff, not just because of the return to double-entry bookkeeping, but because the Venezuelan government has expressed extreme contempt for the IMF and World Bank with their reporting standards in the past. They even quit the body under the rule of the late unlamented Hugo Chavez in 2007, back when the oil money was rolling in, though they somehow have joined back. 

So suddenly they've released a slew of true-looking data, and done so without warning, after years of fourth-world-style neglect.

I'm gonna agree with with Reid that this is probably about voting rights - and potential bailouts, to be paid for in a large share by U.S. taxpayers. I do not have all of the particulars about how the U.S. could stop them or not stop them, but from the looks of this, it appears they think they can get around any U.S. opposition - and avail themselves of another stream of cash to waste.

One hopes the U.S. is on the ball about this (they probably are) and does all they can to keep money out of that government's hands.