But, so far, private investors are not committing to any major outlays because they have serious doubts about Chavez and his leftist economic czar, Planning Minister Jorge Giordani. Private investors also fear the Chavez government's announced land redistribution scheme will target private property owners instead of privatizing millions of acres of fallow, undeveloped land owned by the state. Proof that private investors do not have any faith in the Chavez government is quite visible. Venezuela is building up a large current account surplus because exports have been significantly higher than imports this year, yet there has been no corresponding rise in the capital account. Venezuelans are sending their savings outside the country.
Capital flight is a serious problem.
Some is being spent on imports, but much of this money, too, is leaving Venezuela. Figures for the second quarter are not available yet. Based on his track record to date, Chavez will likely react by lashing out at the private sector, increasing his government's repressive measures against the political opposition and ratcheting up hostile rhetoric against countries like Guyana and Colombia.