CARACAS, Thursday January 03, 2013 | Update

Venezuela allocates 59% of dollar revenue to pay for imports

The balance-of-payments current account balance plummeted 41%

Cheap US dollars and falling domestic production shoot up imports (File photo)
Thursday January 03, 2013  11:54 AM
The injection of public spending into scholarships and increases in wages and pensions boosts consumption at a time when production of state-run companies and staples such as milk and sugar falls. Therefore, there is no alternative but to resort to imports to prevent widespread shortages.

In his year-end report, President of the Central Bank of Venezuela Nelson Merentes stated that in 2012, imports totaled USD 56.35 billion, the highest amount in the last 16 years. The number amounts to 59% of the dollar revenues Venezuela obtained from exports.

Venezuela's economy is going through a cycle where imports are higher than dollar revenues because the price of oil, which provides 96% of foreign currency revenue, has stabilized.

In 2011, imports accounted for 50% of foreign currency earnings from exports. In 2008, which until now had been the record year, they amounted to 53%.

Dollars from exports not only are used to pay for imports but also to meet other commitments in foreign currency.

While the country's situation is not critical in this respect, the gap between imports, services purchased abroad and transfers, and the foreign currency revenue from exports, which is technically known as the balance-of-payments current account, fell 41%, from USD 24.61 billion in 2011 to USD 14.56 billion in 2012.
This is all there is

A simple reason: there is oil galore, would suffice to explain Guyana's actions. Another explanation lies in the little or none efforts made by the Venezuelan government to thwart the move by the Guyanese. This is certainly not a new problem, but a problem only recently highlighted because oil is involved. But what other resources does the disputed area hold? For most of us it is a section on the map with black and white stripes on it, a depiction of something distant, alien, a nothingness not worth paying much attention to in geography classes back in elementary school.

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