Just how bad is Venezuela's dollar crunch?

Financial Times (Benedict Mander): One has to wonder whether Hugo Chavez ever read that part of the book of Genesis where Joseph interprets the Pharaoh's dreams, predicting seven years of plenty followed by seven more of famine -- and hence the importance of saving during the years of plenty.

If a recent analysis by Morgan Stanley is correct, not only did Chavez fail to save during the years of plenty (read: the oil boom that ended in 2008), but now that years of plenty are back again (that is, oil prices have recovered to relatively comfortable levels in 2010), Venezuela's financial indicators seem to suggest behaviour more akin to leaner years.

The $3 billion debt issue by PDVSA this week reinforces Morgan Stanley's theory that the government is facing a dollar crunch. This is based on their observation that in past years during elevated oil prices Venezuela has accumulated international reserves; now, the OPEC country is instead amassing an ever-growing debt load (which, to make matters worse, is probably considerably larger than official figures suggest).

Even so, PDVSA's debt issue was no surprise, and approved in the national budget. Less predictable is what has been going on with PDVSA's refineries of late. The sale to Russia of PDVSA's German refineries announced by Chavez today may have as much to do with strategic considerations as the cash squeeze many analysts suspect PDVSA is suffering.

But the "virtual exclusion" of PDVSA, according to the Brazilian press, from partaking in a project with Petrobras to build the Abreu e Lima refinery in Pernambuco state is perhaps more revealing. Petrobras is apparently considering shutting PDVSA out because Venezuela's state oil company has failed to cough up even "a cent" since the partnership agreement was signed in 2005, says Brazilian newspaper O Estado de São Paulo.

The extent of Venezuela's dollar crunch is anyone's guess. Dubious statistics make it very hard to make an accurate prediction. But although Morgan Stanley calculates that "a projection of Venezuela's dollar balance can range from a cumulative $24 billion surplus to a $53 billion deficit over this year and next, in practice we see evidence that suggests the authorities are facing a dollar crunch."

If they're right, that could spell a whole series of problems for the government.

Not least its ability to pay for imports on which it relies so heavily, and the knock-on effects that could have on shortages and inflation -- and Chavez' popularity ahead of presidential elections in 2012.