April, 2015 Phone: (58 212) Venezuela: Economic Outlook and Perspectives 2015

Transcription

1 April, 2015 Phone: (58 212) Venezuela: Economic Outlook and Perspectives 2015

2 The Current Macroeconomic Context

3 FOUR (4) PROBLEMS SEVERE EXTERNAL CONSTRAINT RECESSION ACELERATING INFLATION PERSISTENCE OF GOODS SHORTAGE

4 RISK PERCEPTION (April-2015) Venezuela's Country Risk - EMBI Spread+ Date Value Variation 17/04/ ,72% 16/04/ ,13% 15/04/ ,08% 14/04/ ,59% 13/04/ ,29% 10/4/ ,53% 9/4/ ,31% 8/4/ ,92% 7/4/ ,00% 6/4/ ,83% 3/4/ ,28% 2/4/ ,39% 1/4/ ,72% 31/03/ ,87% 30/03/ ,77% 27/03/ ,32% 26/03/ ,06% 25/03/ ,90% 24/03/ ,62% 23/03/ ,88% 20/03/ ,66% 19/03/ ,64% 18/03/ ,27% Source: Bloomberg Country risk has improved during the last month (a) Foreign Debt Repayment was accomplished (b) Oil Prices has improved a bit

5 CREDIT DEFAULT SWAPS SAYING SOMETHING (up to 5 years) CDS spreads indicated a probability of default (in a year horizon) close to 80% in December Higher oil prices and high willingness to repay (foreign debt) lower this probability

6 98 I IV II 01I IV II I04 IV II I07 IV II I10 IV 11 II12 I13 IV13 14 REAL GDP GROWTH (QUARTERLY FIGURES), 1998:1 to 2014:3 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% Producto Interno Bruto Trimestral Rate of Variation t/t-4

7 FX RATIONING HAS BEEN AFECTING THE PRODUCTIVE SECTOR IV 2013 I 2013 II IV 2014 I 2014 II 2014 Composition of the Value of Imports 7 5 Quarterly GDP Growth 20% 23% Consumption Good Intermediate Inputs Fixed Capital % Fuente: Datos del BCV % of Venezuela s total imports corresponds to raw material, intermediate and capital goods. Import compression yields a supply-side constraint. Source: BCV

8 Vehicle Sales, Monthly Figures (Jan-11 to Jan-15) Vehicle Sales Vehicle sales reached 683 unit in January (a fall of 5.6% against January 2014) For year 2014 the registered fall of vehicles sales was 76% (against 2013)

9 INDEX OF SHORTAGE, NON-OFICIAL ER AND CPI INFLATION RATE j-09 d-09 m-10 o-10 m-11 a-11 e-12 j-12 n-12 a-13 s-13 f-13 j-14 d-14 J09 M10 N10 J11 M12 N12 J13 M14 N Shortage and Parallel ER Index of Scarcity Parallel Exchange rate CPI Inflation (t /t-12) Jan 09 to Dec 15 CPI Since the fourth quarter of 2012 the non-official exchange rate, the rate of inflation, and the index of scarcity of goods have increased and show strong correlation Source: Banco Central de Venezuela

10 The Source of the Difficulties in the External Front

11 may-00 abr-01 mar-02 feb-03 ene-04 dic-04 nov-05 oct-06 sep-07 ago-08 jul-09 jun-10 may-11 abr-12 mar-13 feb-14 ene-15 jul-11 oct-11 ene-12 abr-12 jul-12 oct-12 ene-13 abr-13 jul-13 oct-13 ene-14 abr-14 jul-14 oct-14 ene-15 OIL PRICES: RECENT EVOLUTION (Jan March 2015) 140 May Mar Jul Mar Cesta de Crudos Venezolana Linear (Cesta de Crudos Venezolana) Cesta Venezolana Trend Linear (Cesta Venezolana) 0 30 The rapid fall in oil prices started in Q There has been a minor recovery lately. The average price this year is hardly half the average price registered during the previous 3 years Source: Banco Central de Venezuela

12 2005 I 2006 I 2007 I 2008 I 2009 I 2010 I 2011 I 2012 I 2013 I 2014 I jul-12 sep-12 nov-12 ene-13 mar-13 may-13 jul-13 sep-13 nov-13 ene-14 mar I 2006 I 2007 I 2008 I 2009 I 2010 I 2011 I 2012 I 2013 I 2014 I ADVERSE DEVELOPMENTS IN THE EXTERNAL SECTOR 2,200 2,000 1,800 1,600 1, Thousand of Barrels/day Millions of US$ Non-oil Exports 1,200 Exports of Crude Oil 500 1, Linear (Exports of Crude Oil) Total Imports Linear (Total Imports) Millions of US$ 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, External debt Repayments Millions of US$ e

13 2005 I 2006 I 2007 I 2008 I 2009 I 2010 I 2011 I 2012 I 2013 I 2014 I PUBLIC SECTOR IMPORTS AS A PERCENTAGE OF TOTAL IMPORTS (Quarterly, 2005:1 2014:3) 60% % Public Sector Imports/Total Imports 50% Poly. (Public Sector Imports/Total Imports) 40% 30% 20% 10% 0% Very rapid increase in the share of public imports Source: BCV and Own Calculations

14 2005 I 2006 I 2007 I 2008 I 2009 I 2010 I 2011 I 2012 I 2013 I 2014 I RECENT EVOLUTION OF THE CURRENT ACCOUNT (2005:1 2014:3) MM USD/b 20,000 Current Account Result 15,000 10,000 CA Ajusted by Commercial agreements Linear (Current Account Result) 5, ,000 Official figures show a declining current account surplus Source: Data from BCV

15 OIL SUPPLY SUBJECT TO COOPERATION AGREEMENTS IN 2012 Thousand of Barrels per day PETROCARIBE Antigua y Barbuda 1.3 Belice 0.8 Dominica 0.4 El Salvador 12.7 Grenada 0.8 Guyana 6.9 Haiti 14.2 Jamaica 25.9 Nicaragua 27.5 Republica Dominicana 26.9 San Cristobal y Nieves 0.9 San Vicente y las Granadina 0.5 Surinam 2.2 Acuerdo de Cooperacion Energética de Caracas Bolivia 8.3 Paraguay 1.1 Uruguay 19.6 Convenio Integral de Cooperación Argentina 25.6 Cuba 91.1 Fondo de Cooperación con China China 264 TOTAL Convenios de Cooperación Energética (not including China) Petrocaribe 121 Acuerdo de Cooperación Energetica de Caracas 29 Convenio Integral de Cooperacion TOTAL The payment system of most agreements allows for purchase of oil on market vale for 5%-50% up front with a grace period of one to two years; the remainder can be paid through a year financing agreement with 1% interest if oil prices are above US$40 per barrel. Barrels not generating Cash-Flow Portion not generating cash-flow (P, ACEC, CIC) Fondo de cooperación con China 264 TOTAL Assuming the 50% of the purchases of oil remain unpaid and adding to this 264 thousand barrels used to repay the debt with China, then about 400 thousand barrels per day are not generating revenues. Ultima actualización: 07/11/13

16 jul-05 mar-06 nov-06 jul-07 mar-08 nov-08 jul-09 mar-10 nov-10 jul-11 mar-12 nov-12 jul-13 mar-14 nov-14 LIQUID STOCK OF INTERNATIONAL RESERVES (Jan 2005 NOV 2014) Millions of US$ 35,000 30,000 Liquid Reserves 25,000 20,000 15,000 10,000 5,000 0 In 2012 liquid reserves were already at a critical level Why? Source: BCV

17 TRANSFERS TO FONDEN ( ) 20,000 USD MM 18,000 16,000 BCV PDVSA 14,000 12,000 10,000 8,000 6,000 4,000 2, For years the central bank was allocating substantial amounts of forex to FONDEN. In ten years FONDEN received US$ millions both from PDVSA and the Central Bank The Central Bank took out this money from the country s precautionary fund (international reserves). Ultima actualización: 07/11/13 SOURCE: BCV and PDVSA Fuente: Memoria y Cuenta del MPP de Energía y Petróleo ; MPP Planificación y FInanzas

18 2005 I 2006 I 2007 I 2008 I 2009 I 2010 I 2011 I 2012 I 2013 I 2014 I 2015 I PRICE OF GOLD AND RESERVE GAINS AND LOSSES (Quarterly Figures, 2005:1 to 2014:3) 3500 USD MM US$ per fine ounce Ajuste por Revalorización de Activos Precio del Oro but since Q4 of 2012 the price of gold started to decrease in international markets. During 2013 the Central Bank reported a loss of US$ 4,300 millions. SOURCE: BCV, Bloomberg and Own calculations

19 Policy Reaction

20 IMPORTS APROVED BY CENCOEX (US$ MM) M o n to L i q u i d a d o B C V S e c to r A c u m u l a d o J u l i o A c u m u l a d o J u l i o V a r. (% ) U S $ C o m p o si c i ó n U S $ C o m p o si c i ó n V a r. (% ) A l i m e n to s , , 1 % -5, 4 % , , 2 % 7, 4 % S a l u d , , 9 % -1 5, 0 % , , 6 % 1 0, 1 % A u to m o triz 8 8 2, 6 3 7, 5 % -2 6, 7 % 1 6 3, 8 2 1, 7 % -8 1, 4 % C o m e rc i o , , 9 % 7, 1 % 3 4 6, 4 4 3, 6 % -7 2, 9 % Q u í m i c o , 1 0 8, 6 % 3 1, 4 % 8 6 6, 8 2 9, 1 % -1 4, 4 % M a q u i n a ria s y E q u i p o s 7 2 6, 0 9 6, 2 % -3 7, 1 % 4 0 5, 0 3 4, 3 % -4 4, 2 % O tro s , , 7 % -1 4, 7 % , , 5 % -2 3, 9 % I m p o rta c i o n e s O rd i n a ria s (I n c l u y e A L A D I y S U C R E ) , % -1 0 % , % -1 9 %

21 SICAD I and SICAD II (millions of US$) US$ MM SICAD I SICAD II feb-14 mar-14 abr-14 may-14 jun-14 jul-14 ago-14 sep-14 oct-14 nov-14 dic-14 */ estimated Last updated: 27/11/2014 Source: Own Calcaulations

22 FOREIGN CURRENCY EXCHANGE RECEIVED BY THE PRIVATE SECTOR, 2010:3 TO 2014:3 12,000 10,000 SICAD II Allocated through CADIVI/CENCOEX SITME/SICAD 1 8,000 6,000 4,000 2, I I 2013 I 2014 I By the end of 2012 a higher rationing in the allocation of FX starts to develop. Source: BCV

23 FOREIGN CURRENCY EXCHANGE RECEIVED BY THE PRIVATE SECTOR BCV s Average Daily Sales of FX to the Private Sector Higher rationing of FX to the Private Sector is taking place Source: Sintesis Financiera

24 RECENT EVOLUTION OF THE FX REGIME A multiple exchange rate system with forced devaluations seems to be norm The system is working today with 4 different exchange rates. On the extremes we have a rate close 260 Bs./US$ and another one at 6.3 Bs./US$ Two-tier system Swap Market was eliminated SITME is created The official rate at 2.6 is eliminated 2.6 SITME is eliminated and the official rate is adjusted to 6.3 SICAD 1 is created SICAD 2 is created SICAD 2 is eliminated and SIMADI is created Bs./$ January May June January February July March February 2015

25 Other severe Institutional Developments?

26 1999 I 2000 I 2001 I 2002 I 2003 I 2004 I 2005 I 2006 I 2007 I 2008 I 2009 I 2010 I 2011 I 2012 I 2013 I 2014 I BCV s FX REVENUES FROM PDVSA AS A PROPORTION OF OIL INCOME (1999:1 2014:3) % 100% 90% 80% 70% 60% 50% 40% 30% 20% FX revenues recived by the BCV from PDVSA/Total oil revenues Log. (FX revenues recived by the BCV from PDVSA/Total oil revenues) Foreign currency exchange needed to attend public and private sector imports, and debt repayment is limited, the Central Bank has been receiving a decreasing share of petrodollars. Source: Data from BCV

27 PDVSA s ALLOCATION OF FX REVENUES PDVSA The remaining is sold to BCV BCV Imports of Crude and Derivatives Payments to providers and suppliers Capital Investment (CAPEX) External Debt FONDEN US$ Expenses in Social Programs Current Debt Housing Debt arrears (overdue) PDVAL Social Missions

28 BCV s ALLOCATION OF FX REVENUES BCV US$ 42,000 MM The remaining is sold to the private sector Private sector BCV s Debt Repayments US$ to the Non-financial Treasury FONDEN public enterprises Public Banks BCV s Own Needs External debt It seems to be clear that the adjustment variable is the allocation of FX to the Private Sector

29 COMPOSITION OF FOREIGN EXCHANGE PROVIDED BY BCV (2005:1 2014:3) Quarterly 2005 I 2006 I 2007 I 2008 I 2009 I 2010 I 2011 I 2012 I 2013 I 2014 I 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Debt Repayment Public Debt Treasury FONDEN Non-Financial Public Enterprices Public Banks BCV Private Sector The public sector is obtaining about 40% of the total allocation from the BCV Source: Data from BCV

30 The Fiscal and Monetary Problem

31 THE EFFECT OF INFLATION AND A FIXED ER ON PUBLIC ACCOUNTS Thousand of Bs 600,000,000 Government Oil Revenues and Total Spending of the Central Government ( ) 500,000, ,000,000 Government Spending increase with Inflation (Inflation adjusted) 300,000, ,000, ,000,000 Government Oil Revenues in domestic currency did not grow as much 0 Fuente: Ministerio de Finanzas While spending is inflation adjusted fiscal oil revenues are tied to the nominal exchange rate. The fiscal gap is increasing. Source: Data from the Ministry of Finance, BCV and own calculations

32 PDVSA s EBITDA AND CASH FLOW Source: IPD

33 LIABILITIES OF PDVSA (UP TO 2013)

34 dic-09 jun-10 dic-10 jun-11 dic-11 jun-12 dic-12 jun-13 dic-13 jun-14 CENTRAL BANK FINANCIAL SUPPORT TO PDVSA AND MONETARY LIQUIDITY (Jan 2010 Dec 2014) 16 USD MM 120, Acervo de Financiamiento Monetario a PDVSA Razón M2/RI Coeficiente de correlación: ,000 80,000 60,000 40, , In the case of PDVSA, the firm has resorted to monetary financing of the central bank, leading to a very dangerous dynamics Fuente: BCV and own calculations

35 THE EFFECTS OF EXCESS MONEY US dollars demand Real Estate Electronics Vehicles

36 An scenario for 2015

37 ASSUMPTIONS Lower oil prices. Oil revenues could fall up to 30,000 million dollars in one year External Debt Repayments will continue to be high and constraining. Roll-over does not look as an alternative Lower Imports and higher adjustments in the FX allocations. Higher adjustment in Private Sector allocations Very difficult conditions to get external financing and to mitigate the external crises, and the government will do as much as it can to get unconventional sources of financing Borrowing requirements in bolívares can be attended by devaluation, monetary expansion and higher taxes. Government spending has to be adjusted (in real terms) with uncertain political effects

38 OIL PRICES AND IMPORTS 120 Venezuela: Oil Prices and Imports, , , , ,0 40,000 30,000 20, , Crude Oil Prices (US$/bl) Total Imports (millions of US$) Si la disponibilidad para las importaciones llega a millones de US$, el sector privado podría recibir cerca de millones en Eso es 55% de lo entregado en 2014

39 EVOLUTION OF THE LEVEL OF IMPORTS Source: Síntesis Financiera

40 EXTERNAL DEBT REPAYMENT (PDVSA AND CENTRAL GOVERNMENT)

41 ESTIMATED FOREIGN EXCHANGE CASH FLOW Source: BCV and own calculations and estimations

42 MACROECONOMIC FORECAST Source: Institute of International Finance, IIF, February