Dear Wall Street investment banker,
I apologize for interrupting your busy schedule, but in the off chance you are going to listen to Venezuelan economic czar Rafael Ramírez in the coming days, allow us to suggest a few questions for him.
As you may know, the Venezuelan government is desperate for cash. To quench that thirst, Ramírez is traveling to New York to beg for money – your money, given how the loans from China don’t really solve our liquidity problem.
So, before you hand over your clients’ funds to the business partners of Hugo Carvajal, may I suggest a few “due diligence”-esque things you might want to bring up?
- How can we be sure that the funds we give Venezuela will not be used to pay for the PSUV’s political campaign, like they have in the past?
- What is the implicit price per barrel of oil in the loans-for-oil deal with China? What is the discount rate that is being used?
- Can we see the agreement where these conditions are stipulated? What happens to the deal if prices go down? If they go up?
- How much money is in the Fondo Chino? How much of that has been paid for? Have these numbers been audited?
- When estimating Venezuela’s debt burden, are you including the billions of dollars PDVSA owes suppliers? Are you including the billions of dollars the government owes Venezuelan importers, including foreign airlines? Are you going to honor those commitments?
- Was the failure to pay the Sidetur bonds a default? What guarantees can you provide that this will not happen again?
- Why has Venezuela continuously failed to increase oil production, as it has promised to do in the past?
- Why is the average cost per barrel of oil six times higher than what it was in 1998? How are you planning on reversing this trend?
- Why is the productivity per employee, measured in terms of barrels of oil, one quarter of what it was in 1998? How do you plan on reversing this?
- When do you plan on “unifying” the exchange rate? At what rate is this “unification” going to take place?
- When do you plan on raising the price of gasoline? Can Venezuela be fiscally viable without raising the price of gas?
- How are you going to ask the people to pay more for gas while maintaining the onerous fuel subsidies to Cuba? Politically, can you even pull this off?
These are just some of the highlights, off the top of my head. Since you are the wolves of Wall Street, I trust you can come up with many more.
Oh, and a video of the meeting would be much appreciated.
All the best,
Your friendly bloggers.
UPDATE: Strange, strange. The meeting between Ramírez and the bankers has been suspended. And today, lots of rumors going around that Citgo is for sale. I guess when everything else fails, you just give away all you’ve got and pretend there is no problem. Champagne! Champagne for everyone! Somos una potencia!