Non-oil exports fall 8% in the first quarter

Venezuela would be the poorest country in the hemisphere -a position currently held by Haiti- if it was not for oil.

In the first quarter, non-oil exports amounted to USD 1.04 billion. This number is 8% lower than that in the first quarter of 2011, and it would cover only 7.9% of the imports necessary to meet everyday demand of other kinds of products.

The official numbers highlight the failure of the government policy to diminish the dependence on oil.

In January 2010, Venezuelan President Hugo Chávez announced the devaluation of the Venezuelan bolívar and also a policy to boost non-oil exports.

"The time has come to stimulate the export policy, to replace imports and to produce in order to export. This is extremely important, because we have to leave the oil rent-seeking model behind. Venezuela has to be a country that exports other things, besides oil," stated Chávez.

In order to boost exports and authorize essential imports, the Executive Office created the Bicentennial Fund with USD 698 million. In order to grant loans under this Fund, Chávez announced that the interested companies should file their applications through the phone numbers 0800 Exporta and 0800 Importa. Further, he urged companies to enter into an alliance with the Venezuelan State.

Nevertheless, the plan has not worked.

The decrease in the non-oil exports in the first quarter is due to the fall of the production of the companies of the Venezuelan Corporation of Guayana (CVG).

These companies produce steel, iron and aluminum, which represent a large part of the few non-oil exports.

The production downfall of the Venezuelan Corporation of Guayana explains the decrease of 3.2% recorded by the mining sector during the first quarter.

Although dependence on oil is a constant in Venezuela, the situation has worsened since 2007. Non-oil exports that year totaled USD 7.57 billion. In 2011, they declined to USD 4.4 billion.

A number of factors have led to such economic performance, including the downfall of private investments, which prevents companies from purchasing machinery and expanding production; price controls, restrictions on foreign currency purchase and the protracted overvaluation of the Venezuelan bolivar.

The combination of a static exchange rate and an inflation rate that is the highest in Latin America and is much higher than that in the United States, leads to overvaluation of the Venezuelan bolivar. This situation creates instability, with imported products cheaper than domestically manufactured goods. This is why imports are skyrocketing.

At the same time, non-oil exports are less competitive and they are losing ground in the market.

The balance of payments of the first quarter is illustrative. While non-oil exports fell remarkably, imports soared 48.5%, in comparison to the first quarter of 2011. Therefore, imports hit the highest level for any single first quarter ever since 1997.

Translated by Karen Daza