|
Venezuela Balance of Payments
As with its trade, Venezuela's balance of payments
experienced wide swings in the 1980s after enormous
success in
the 1970s. These fluctuations, largely negative, depended
primarily on the prevailing value of exports and the level
of the
country's foreign debt payments. As oil prices fell and
interest
rates soared in the early 1980s, international accounts
recorded
a massive deficit in 1982. Greater import protection in
1983
produced renewed balance-of-payments surpluses from 1983
to 1986.
But as oil prices fell in 1986, overall payments turned
highly
negative, culminating in a US$4.7 billion shortfall in
1988.
Besides oil price fluctuations, the balance of payments
also
suffered from huge capital outflows associated with
annual,
multibillion-dollar debt repayments and private capital
flight
precipitated by the deteriorating economy. As commercial
banks
turned away from issuing new loans to Latin America in the
1980s,
the country faced a net outflow of capital, exacerbated by
the
fact that its high per capita income excluded it from
multilateral financing.
The current account of the balance of payments moved
into a
deficit position as exports fell from 1986 to 1988 because
of
dwindling oil prices. Slightly higher oil prices in 1989
improved
the current account again, but large drawdowns on the
country's
international reserves provided the economy little
flexibility.
After accruing a level of international reserves equal to
that of
the rest of Latin America combined in 1975, by 1990 the
country's
reserves were depleted to such an extent that they covered
only a
few months of imports. Aside from the large role of
merchandise
trade in the current account, net services and transfers
represented a major drain in the 1980s. Deficits on the
services
and transfers portion of the current account were largely
the
result of steep interest payments on the foreign debt.
Venezuelans' penchant for foreign travel and costly
international
freight and insurance expenses also caused the services
and
transfers deficit to exceed US$3 billion on average during
the
1980s.
The capital account experienced large deficits for the
first
half of the 1980s, but improved after 1985 as new private
investment and short-term financing offset some of the
outflows
of private capital and principal payments on the country's
foreign debt. The reduction of capital-account deficits
after
1985 was significant because the country could no longer
rely on
immense current account surpluses, as it had historically,
to
balance international payments. Despite this trend,
average net
capital outflows of roughly US$2 billion were registered
from
1983 to 1988 as debt repayment proceeded and few new
foreign
loans were assumed. In 1986 the Japanese Export-Import
Bank
provided badly needed new monies for import financing, an
infusion that also slowed capital outflows. By 1989 the
IMF and
World Bank also supplied large financial resources in
support of
the government's structural reforms and in an effort to
improve
its worsening international financial position.
As the country moved toward a more flexible position on
foreign investment in the late 1980s, new inflows of
direct
foreign investment appeared after near stagnation in the
early
1980s. From 1986 to 1989, foreign investment averaged
US$300
million a year, an increase that eased the crunch on
capital. In
1988 total foreign investment stood at US$2.2 billion; a
little
over half of this total was attributed to United States
investors, followed by British, Swiss, and German
investors.
Analysts anticipated even greater private capital inflows
associated with continuing debt-for-equity swaps.
Nevertheless,
through 1990 large sums of private Venezuelan capital
remained
overseas, insulated from the uncertainties of the local
economy.
During the 1970s and 1980s, more than US$34 billion in
private
capital left Venezuela, ranking it as one of the world's
severest
cases of capital flight.
Data as of December 1990
|
