January 20th, 2011

Economics, & Finance

Cadivi increased the allocation of dollars to food sector in 2010 by 20.9%

During 2010 the Comisión de Administración de Divisas (Cadivi) authorized 5658.2 million dollars for food companies. Of the total, the allocation for ordinary imports was U.S. $ 4,120 million, representing an increase of 20.9% over the previous year. Food items purchased in 2010 with preferential dollars were wheat, corn, malt, not roasted, whole milk powder, infant formula, hatching eggs, soybean oil, crude palm oil, animal fats or vegetable oils among others. (Descifrado; 01-20-2011; http://www.descifrado.com/index.php?id=10&no_cache=1&showUid=49403)

Venezuela, Turkey endorse energy and cooperation accords

Venezuelan authorities and a Turkish delegation agreed to endorse cooperation accords in energy, informed Minister of People´s Power for Energy and Oil, Rafael Ramirez.

Ramirez made the statement on Wednesday during a meeting held with Turkish Minister of Energy and Natural Resources Taner Yildiz to endorse different cooperation accords in energy and housing matters, among others.

The Republic of Turkey is highly industrialized and has a strategic geopolitical location between Europe and Asia, so Ramirez expressed there is a possibility to cooperate in the entire energy chain. (AVN, 01-19-2011; http://www.avn.info.ve/node/39008)

Ankara wants Venezuela's oil

Ankara is interested in tapping into the Orinoco oil belt off the coast of Venezuela, the country's energy minister said from Caracas. Turkish Energy Minister Taner Yildiz arrived in Caracas to meet with his Venezuelan counterpart Rafael Ramirez to discuss potential investments in the country's Orinoco Belt. Oil deposits in Venezuela are the some of largest outside the Middle East. Most of the Orinoco oil belt remains undeveloped and the region produces at least 600,000 barrels of oil per day currently. (UPI, 01-20-2011; http://www.upi.com/Science_News/Resource-Wars/2011/01/20/Ankara-wants-Venezuelas-oil/UPI-91311295535350/)

Venezuela among the countries with least economic freedom

Venezuelan economy is among the most "restricted" in the world, according to the 2011 Index of Economic Freedom from the conservative think-tank Heritage Foundation and The Wall Street Journal. The study reports that Venezuela's economic freedom score was 37.6 and ranked 175 out of 179 countries for which data are available. Only Eritrea, Cuba, Zimbabwe and North Korea have more restricted economies, according to the index. The study found that compared with last year's results, Venezuela fell one spot in the ranking. (El Universal, 01-20-2011; http://english.eluniversal.com/2011/01/20/en_eco_esp_venezuela-among-the_20A5013931.shtml)

Purchasing power and consumer credit plunge in Venezuela

Based on economic figures at the end of 2010, consumption in Venezuela has declined, thus curbing credit card financing and car loans. In 2010, credit card loans amounted to VEB 26.66 billion (USD 6.20 billion), according to data provided by the Venezuelan Superintendence of Banks. After inflation, this represents a 2 percent fall compared to 2009. Meanwhile, car loans decline is 22 percent, after inflation. (El Universal, 01-19-2011; http://english.eluniversal.com/2011/01/19/en_eco_esp_purchasing-power-and_19A5008533.shtml)

Venezuelan govn't may regulate private firms' profits

A newly created Superintendence of Costs and Prices seeks to control the profits of private companies, said Noel Álvarez, the president of the Venezuelan Federation of Trade and Industry Chambers (Fedecámaras), Venezuela's main business association. "It appears that the only goal of this agency is to control corporate profits and prices of goods and services," the business leader added. According to Álvarez, no additional economic controls will boost supply and curb inflation. "As long as actions are taken to discourage supply, as is the case now, there will be less variety of products. In turn, waning supply will result in increased prices of goods and services," he said. (El Universal, 01-19-2011; http://english.eluniversal.com/2011/01/19/en_eco_esp_venezuelan-govnt-ma_19A5008331.shtml)

Venezuelan plantains for the Russians

Russian banana tycoon Vladimir Kejman and the Venezuelan Food Corporation (CVAL, after its initials in Spanish) plan to create a joint venture to manage over half the plantain plants in Venezuela (20,000 hectares), announced the Russian daily Kommersant today. This explains the government interest in the lands at the South of the Lake. (Veneconomy, 01-18-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24546&idc=3)

Pdvsa repays debt to central bank with US dollar-denominated bonds

State-run oil company Petróleos de Venezuela (Pdvsa) will raise USD 3.15 billion in dollar-denominated bonds to pay an outstanding debt with the Central Bank of Venezuela (BCV) and the country's pension funds. The bonds are due to mature in 2017 and carry an annual coupon of 8.5 percent. The Central Bank of Venezuela received USD 2.4 billion and the pension funds USD 750 million, through a "private placement." (El Universal, 01-18-2011; http://english.eluniversal.com/2011/01/18/en_eco_esp_pdvsa-repays-debt-to_18A5003093.shtml)

Commodities

Venezuelan govn't plans to adopt measures in the agri-food sector

Tumbling domestic production could lead Venezuela's Executive Office to take steps to address both the consequences of heavy rains in the agricultural regions of the country and the effects of devaluation on the prices of food items, commodities and inputs. Sources said that government authorities have been discussing the possibility of implementing subsidies for agricultural products and food items or authorizing price adjustments for certain consumer goods. (El Universal, 01-19-2011; http://english.eluniversal.com/2011/01/19/en_eco_esp_venezuelan-govnt-pl_19A5008855.shtml)

Venezuela sees new Orinoco oil output this year

Venezuela hopes for extra output of 50,000 barrels per day from new projects in the vast Orinoco extra heavy crude oil belt during 2011, Energy Minister Rafael Ramirez said on Wednesday. The South American OPEC member has signed deals with foreign companies for Orinoco development projects slated eventually to add 2.1 million bpd of new production and bring some $80 billion in investment. (Reuters, 01-19-2011; http://af.reuters.com/article/energyOilNews/idAFN1923612220110119)

Venezuela oil production level in December 2010 flat year on year

Venezuela's oil production at the end of December 2010 stood at 2.26 million barrels per day (bpd) according to the monthly report of the Organization of the Petroleum Exporting Countries (OPEC), which is based on secondary sources. The figure is almost equivalent to the output recorded in December 2009, when OPEC reported that Venezuela's oil production amounted to 2.27 million bpd. According to the report, Venezuela's output in December 2010 averaged 36,000 bpd more than in November, when Venezuela's output was 2.23 million bpd. (El Universal, 01-18-2011; http://english.eluniversal.com/2011/01/18/en_eco_art_venezuela-oil-produc_18A5002371.shtml)

Venezuela faces uncertainty over oil find

Venezuelan President Hugo Chavez said the country's hydrocarbon reserves surpass those of Saudi Arabia but left open the possibility of an early commercial exploitation of the resource. A spate of nationalizations has turned investor institutions away from Venezuela, the only oil-producing major country to have reported a shrinking economy for the second consecutive year. Chavez told the newly installed National Assembly Venezuela's oil reserves totaled 217 billion barrels of oil equivalent, exceeding Saudi Arabia's and making them the largest in the world. (UPI, 01-18-2011; http://www.upi.com/Science_News/Resource-Wars/2011/01/18/Venezuela-faces-uncertainty-over-oil-find/UPI-24061295390986/)

SIDOR union leaders deeply divided over the latest work stoppage

According to a report in Correo del Caroni, SIDOR steel & iron company trade union (SUTISS) called an embarrassing work stoppage protesting non-payment of remaining benefits. Company directors confirmed that the differences in payment will be paid out before January 26 when the cash flow situation has improved. There are conflicts within the union for the stoppage which was called by SUTISS president, Jose Luis Hernandez without prior consultation of other board members. The liquid iron department came to a complete standstill losing 18,000 tonnes in a two-day strike. (VHeadline, 01-19-2011; http://www.vheadline.com/readnews.asp?id=100337)

Unions at state aluminium producer, CVG Venalum, took over the administrative building to protest their bad working conditions and to demand the head of the plant be fired. They vow they will continue their protest until Basic Industries Minister José “Chino” Khan and President Chávez heed their demands. (Veneconomy, 01-19-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24563&idc=3)

Politics

Opposition deputy: Venezuela's entry into Mercosur depends on return to CAN

Henry Ramos Allup, a Venezuelan deputy to the Venezuelan chapter of the Latin American Parliament (Parlatino), said that if Venezuela does not return to the Andean Community of Nations (CAN) it will not enter the Common Market of the South (Mercosur). (El Universal, 01-18-2011; http://english.eluniversal.com/2011/01/18/en_pol_art_opposition-deputy:-v_18A5003411.shtml)

Work set to begin on Venezuela-Cuba undersea cable

A specialized ship has arrived in Venezuela carrying enough fiber-optic cable to connect the South American country to Cuba, and will soon begin laying the cable along the sea floor to establish a link expected to dramatically improve telephone and Internet service for Cubans. The French-flagged ship Ile de Batz was anchored on the Venezuelan coast and will begin rolling out the cable across the Caribbean Sea in the coming days, said Jose Ignacio Quintero, a manager for Paris-based Alcatel-Lucent SA, which is carrying out the project. (AP, 01-19-2011; http://news.yahoo.com/s/ap/20110119/ap_on_bi_ge/lt_venezuela_cuba_communications_2)

Venezuela, Ecuador mull ALBA development fund

Venezuela and Ecuador are proposing to strengthen economic ties through the creation of a joint development fund under the aegis of a leftist regional economic bloc, Venezuela's top diplomat said Monday. Foreign Minister Nicolas Maduro said the South American countries are looking to define the fund's objectives within the framework of the Bolivarian Alternative for the Nations of Our America, or ALBA, which Venezuela and Cuba started as a socialist-oriented trade alliance in 2004.Maduro said the fund would be used to finance ALBA goals, including strengthening regional trade. He did not give other details such as how much money would be committed or how the fund would work. (AP, 01-17-2011; http://finance.yahoo.com/news/Venezuela-Ecuador-mull-ALBA-apf-786646.html?x=0&.v=1)

Venezuela, Haiti with the highest political risk in the region

Aon Corporation, a global provider of risk management services, released a Political Risk Map that ranked Venezuela as one of the 11 countries with the highest political risk in the world. Venezuela's level of risk was only matched by Haiti, a country that is mired in a serious social, economical and political crisis. According to AON, Venezuela has a high risk in all the variables analyzed in the study, including war and political violence, sovereign default risk, and foreign exchange transfer problems. In addition to this, Venezuela and Colombia are the only countries in the hemisphere that have war risks. (El Universal, 01-20-2011; http://english.eluniversal.com/2011/01/20/en_pol_esp_venezuela,-haiti-wit_20A5014815.shtml)

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.