Caracas, Venezuela –
To break away from the socialist model, the Venezuelan government plans to open the door to private investment in some state-owned companies in key sectors as it seeks to address capital needs for unbanked businesses. seriously invested. Small details about the move are raising suspicions.
The government plans to sell between 5% and 10% stakes in various companies, some of which have been nationalized by late President Hugo Chavez in an attempt to turn the South American country into a socialist country. means. However, the basics of a public offering, including the number of shares, share price, and the exchange on which a company will list, remains unclear ahead of the sale scheduled for Wednesday. Two.
Chavez’s successor, President Nicolas Maduro, this week said sales would be “fundamentally” directed at domestic investors but foreign money could also flow into companies, including phone and internet service provider CANTV, which the government nationalized in 2007 after buying a stake in Verizon.
“We need capital for the growth of all public companies,” Maduro said during a televised event on Wednesday. “We need technology. We need new markets and we will move forward.”
However, interest rates may be limited to investors with government ties or those who are risk-averse.
The country is still under economic sanctions imposed by the United States and other countries that keep investors from pouring money into Venezuelan state-owned companies. And the percentage announced by Maduro will not give private investors the decision-making power to make much-needed changes in the corporation.
Among the companies Maduro mentioned are CANTV and its subsidiary Movilnet, petrochemical producer Petroquimica de Venezuela and a consortium focused on the mining sector. Some CANTV shares are traded on the Caracas Stock Exchange, the country’s oldest exchange.
At the turn of the century, Chavez made a series of acquisitions in the electricity, telecommunications, natural gas, and oil sectors. But the government has minimally invested in some of these companies, forcing them to provide substandard services.
Power outages lasting several days are common across the country. Millions of households have no access to water or intermittent services. Internet and phone services are in short supply.
Government supporters and opponents alike complain of poor basic services across the country even as an election looms close. But economists point out that the Venezuelan government needs to improve some of those services even if it comes slightly before the 2024 presidential election.
“We are definitely going to see a paradigm shift largely driven by forced circumstances but also largely driven by volatility,” said Luis Prato, senior economist at Torino Capital. political survival”. “Since June 2014, with this significant drop in the price of oil, the Maduro regime started to see oil revenues drop. Then we went through a period of price control from 2014 to 2015. 2019, with a more interventionist state. But to the extent that the state begins to lose its ability to create wealth and growth, it is starting to give way to private sector involvement.”
Venezuela is still going through a protracted social, economic and humanitarian crisis attributed to plummeting oil prices, economic sanctions and two decades of mismanagement by socialist governments. . But the government has taken steps to ease some of the economic pressures, including by abandoning long and complicated efforts to restrict transactions in US dollars to the local bolivar, whose value has been erased by inflation.
Maduro in an announcement this week said state-owned companies would be listed on the country’s “various stock exchanges” without specifying.
But as of Friday, Gustavo Pulido, president of the Caracas Stock Exchange, had yet to receive any word of his plans to sell the shares. He said the process of registering other companies and eventually listing them was lengthy and required the disclosure of financial documents.
“How long it takes you to make a successful trade. I can’t tell you a certain time,” Pulido said, adding that an offering on the Caracas Stock Exchange cannot be base structure on Monday.
The government set up its own exchange in 2010. A government spokesperson did not respond to a request for comment from the Associated Press about the exchanges it plans to use.
Prato said the government is likely to use its own exchange or a separate digital system right now, but it will have limited results.
Henkel Garcia, director of Caracas-based company Econometrica, said companies require significant investment to improve the quality of their services, which were much better before nationalization. However, he warned that the country’s lack of a mechanism to monitor companies’ accounting and financial reporting procedures makes it impossible to ensure that private investment in state-owned companies will be properly spent. physical.
That missing ingredient, he said, creates a scenario similar to the post-Soviet reforms, in which a large number of state-owned companies were privatized.
“If this is really the beginning of a full sale or a full handover of these companies, it seems to me a possible scenario, and one would have to ask who gets transferred to whom. because we have episodes like the Russian one, where these companies that once belonged to the state end up in the hands of people close to the government,” Henkel said. “So it’s a complex phenomenon that one could say opens the door to something positive, but given the institutional weakness we have and the lack of worthy referees. Trust me, it may not end for the best.”
