December 13th, 2010

Economics, Trade & Business

ECLAC Venezuelan economy projected to close 2010 with a 1.6% contraction

The Venezuelan economy will close this year with a contraction of 1.6% according to projections by the Economic Commission for Latin America and the Caribbean (ECLAC), which disclosed its regional its balance in Santiago de Chile. The organization notes that the country will recover next year with a growth of 2%. As for the region, projected growth is 4.2% in 2011, a 6% lower performance at the close of this year. (El Mundo, 12-13-2010; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=26&Id_Noticia=11373)

PDVSA said to plan $2 billion bond sale before year-end

Petróleos de Venezuela SA plans to sell $2 billion in bonds to the central bank to repay a loan, said a government official with direct knowledge of the transaction. The bond sale will take place before the end of December, said the official, who asked to stay anonymous because the plan isn’t public. With the bond sale, the state-run oil company will have practically repaid the full amount of the loan, the person said. (Bloomberg, 12-13-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aitFIwX7uY4g)

Chávez to decree Venezuela sales tax rise

President Hugo Chavez said on Monday he would use special decree powers to hike Venezuela's sales tax rate and raise cash to help the South American nation recover from disastrous floods. "We need extraordinary funds and one of the laws we are going to approve is going to be a rise in sales tax," Chavez said. The Venezuelan leader said the government had still not decided by how many points it wanted to raise the tax from the current level of 12 percent. But any increase would have only a "minimal effect" on inflation, Chavez said. Each percentage point rise in the sales tax would raise 5 billion bolivars, Chavez said, without specifying over what time period that would be. (Reuters, 12-13-2010; http://www.reuters.com/article/idUSN1323747220101214)

Venezuelan government exonerates debts of flood-hit farmers

The government will exonerate agricultural debts acquired by farmers and producers with private or public institutions in the region of Sur del Lago, western Venezuela, informed last Sunday Agriculture and Lands Minister, Juan Carlos Loyo. Loyo commented the State is taking measures in the agricultural area with the aim to benefit all farmers who were affected by the heavy rains which hit the country. “Any agricultural producer who has a debt and had a partial or total loss will be exonerated by the Government and we will make it by means of an instrument which is being requested in Parliament,” he informed. (AVN, 12-13-2010; http://www.avn.info.ve/node/33673)

Argentina and Venezuela to build textile joint venture

The first textile joint venture in Portuguesa state will be built in the framework of the agreements between Venezuela and Argentina, to promote national production of fabric and rescue the production of cotton. The factory is expected to cost about 7.69 billion dollars. The Mayor of Araure, Jose Rafael Vasquez, where the factory will be built, announced that the works have already begun and the factory should be fully operational by March. It will be the largest textile company in Venezuela and with it, Portuguesa will generate 80% of the national cotton production,” he commented. (AVN, 12-13-2010; http://www.avn.info.ve/node/33744)

Politics

Chavez seeks decree powers over opposition protests

Venezuelan President Hugo Chavez is set to ask the National Assembly to grant him powers to enact legislation without its approval; a move the opposition says is intended to weaken the new congress being sworn in next month. Decree powers are needed to quickly allocate resources to build homes and repair infrastructure after heavy rains killed 35 people and left 124,000 homeless, Chavez said Dec. 10. The government will request permission as early as today and begin to pass legislation on Dec. 17, he said. (Bloomberg, 12-13-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a5aSH4Qme6ac)

Venezuela ranks 76th in quality of democracy

Norway is the most complete and developed democracy in the world, followed by Sweden and Finland, according to an interdisciplinary study prepared by the Vienna-based institute. In the 100-country list, New Zealand, which ranks sixth, is the only non-European country. The ranking considers indicators related to politics, economy, gender equality, access to education, health and environmental protection. The first Latin American country is Uruguay (21), while Chile and Costa Rica rank 28 and 29, respectively. Argentina ranks 38, ahead of Brazil (43), El Salvador (45), Ecuador (49), México (51), Colombia (55), Paraguay (59), Nicaragua (63), Bolivia (64), Honduras (70), Guatemala (74) and Venezuela (76). (El Universal, 12-13-2010; http://english.eluniversal.com/2010/12/13/en_pol_esp_venezuela-ranks-76th_13A4848855.shtml)

Venezuelan bill seeks to regulate the right to strike in the oil industry

Labor conflicts and union demands are perceived by the Executive Office's authorities as possible threats to the oil industry's operations. Therefore, a possible legal instrument to regulate oil workers' right to strike is being considered by Venezuelan authorities. According to an article of the draft Organic Law for Protection of the National Hydrocarbons Sector, "the right to strike may be exercised within the companies included in the national oil and gas sector, in the terms and conditions authorized by the Ministry with competence over labor issues. It will also provide the minimum services to be carried out to ensure the continuity and regularity of operations." (El Universal, 12-13-2010; http://english.eluniversal.com/2010/12/13/en_pol_esp_venezuelan-bill-seek_13A4848493.shtml)

Reform of the Telecommunications Act

The Democratic Unity Bureau warned that the planned amendments to the Telecommunications Law is evidence, once again, of the government's intention to establish greater controls to prevent the free flow of information and opinions in Venezuela. "If the Venezuelan democratic society does not reject it (...), the country would end up with one version of events that will be presented by the government controlled media (...) A citizen would have no option to choose and could only have access to the services provided by the government," warned the executive secretary of the UNT, Ramon Guillermo Aveledo, who condemned the Government's attempt to "seize the airwaves and even online." (Ultimas Noticias, 12-13-2010; www.ultimasnoticias.com.ve/Noticias/MUD-condena-reforma-a-Ley-de-Telecomunicaciones.aspx)

Petroleum & Energy

Venezuela Oil Minister: OPEC unlikely to change output in 2011

OPEC is unlikely to change its production ceiling in 2011 even though the price of oil could rise, Venezuela Oil Minister Rafael Ramirez said Saturday. Speaking to reporters after the Organization of Petroleum Exporting Countries' meeting, Ramirez said that oil's likely rise to the $100 per barrel does not reflect its true cost to consumers, as it is due to the relative weakness of the U.S. dollar. "The price we are seeing is not real," he said. "The price is affected by the dollar devaluation and the cost of services." (Fox Business, 12-11-2010; http://www.foxbusiness.com/markets/2010/12/11/venezuela-oil-min-opec-unlikely-change-output/)

US documents: Chavez's oil industry deteriorating

U.S. officials detailed declining conditions in Venezuela's oil industry in memos released by WikiLeaks, saying the country's growing economic problems are taking a toll on President Hugo Chavez's popularity. In one confidential document dated Oct. 15, 2009, the U.S. Embassy said "equipment conditions have deteriorated drastically" since the government expropriated some 80 oil service companies earlier that year. It said safety and maintenance at the now state-owned oil facilities were in a "terrible state." (AP, 12-10-2010; http://news.yahoo.com/s/ap/20101211/ap_on_bi_ge/lt_wikileaks_venezuela_1)

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.