Ramírez’s report card is in

On July 3rd, our Twitter TLs were filled with the rumor that Rafael Ramírez would leave PDVSA to occupy the Executive Vice-Presidency of Venezuela.

On July 8th, President Maduro said that Ramírez would stay in the cabinet “because he is the leader of the economic cabinet, the economic team, and the goal is to destroy him because they know that our strategy is the correct one.”

This month marks the twelve-year anniversary of Rafael Ramírez in the cabinet – yes, twelve years. He was first appointed Minister of Energy and Mines – now Petroleum and Mining- in July of 2002. Since then, he has steadily accumulated more responsibilities and greater power in areas ranging from housing to macroeconomic management.

Ramirez currently holds five – yes, five – simultaneous high-level positions in the central government. His latest gig was getting tapped for the chairmanship of Simon Bolívar Reconstruction Fund in May of this year, a special slush fund for infrastructure projects.

But all these jobs are side shows. Ramirez has held the presidency of PDVSA, his most important position, since November of 2004. The state-owned oil company is the source of 96% of the currency that enters the country.

Ramírez also became the “vice president of the cabinet’s economic team” in October of 2013. This position, which is kind of hazily defined, signals that he is above other ministers in the economic areas, and from there he (so he says) promotes reforms in the exchange rate system and in fiscal and monetary policies in order to achieve “economic equilibrium” – whatever that is.

Ramirez has been charged with addressing the difficult economic situation, in which shortages and inflation are exacerbated and dollars are rationed in an attempt to meet growing import needs while safeguarding what little reserves we have left.

So, in his long tenure, how has he done? Here is a short summary of Ramírez’s report card.

1. Between 2004 and 2013, oil production fell by 250,000 barrels per day. At current prices, this amounts to roughly $9 billion in lost income for the country.
2. Between 2004 and 2013, debt with PDVSA suppliers grew by a factor of 6.
3. Between 2004 and 2013, PDVSA’s financial liabilities grew by a factor of 12.
4. Since 2003, at least 255 people have been injured in PDVSA work-related accidents, and 78 people have died. There have been 217 reported accidents in the nation’s refineries alone.
5. Between October 2013 and May 2014 (latest available data), annual inflation averaged 58.03%. Those were the 8 months with the highest annual inflation levels since the BCV started to register the national price index in January 2008. Even though the Central Bank has not published the inflation rate for June, sources say that is was a whopping 5.5%.
6. The general shortage index averaged 25.7% between October of 2013 and April of 2014 (latest available data). This means one in four items was in short supply … as if you didn’t know that already.
7. In October 2013, Ramírez said “people, listen carefully: we will not devalue (the BsF).” Barely three months later, the exchange rate for travelers, Internet, and remittances –among others- was transferred from Cadivi (now Cencoex) to Sicad 1, shifting from BsF 6.3 per dollar to a rate of about BsF 11. Now, more sectors are expected to be passed to Sicad II, which hovers at around BsF 50 per dollar.
8. On July of 2014, Ramirez reiterated that “the economy has plenty of available currency” and stated that “we have already allocated in our foreign exchange budget $42 billion to pay for imports, so there will be no problem with commitment debt”. But by the first quarter of 2014, the public debt of the Central Government Budget was $122 billion, which implies an increase of 10.6% ($11.6 billion) since September 2013, and an increase of 29.9% ($28 billion) in the last year alone. Moreover, some estimate that the debt with private sector providers ranges from $8 to $12 billion, while others think it’s $14 billion.

For more facts, check our article (in Spanish) for Prodavinci.com.

Ramírez’s report card seems clear. His tenure has been marked by a failure to fulfill his word, and Venezuela’s numerous economic problems lay at his doorstep. In spite of this, he has proven to be a faithful soldier of the revolution, which ultimately is the only thing that counts.