Economics & Finance
Inflation: Venezuela World’s Worst
Venezuela posted the world’s highest inflation last year, followed by Argentina, according to a Latin Business Chronicle analysis of data from the International Monetary Fund (IMF) for 186 countries worldwide. Venezuela’s rate of 28.2 percent was higher than African countries like the Democratic Republic of Congo, Sierra Leone, Guinea and Angola. (Latin Business Chronicle, 04-14-2011; http://www.latinbusinesschronicle.com/app/article.aspx?id=4853)
Official Inflation in Venezuela at 27.4%
March CPI came in at 1.4%, as measured by the INPC, lower than the previous month and adding to a 6% increase in prices so far in 2011. Twelve-month inflation reached 27.4%. "The slowing of inflation, despite the fact that there was significant devaluation, is due to the fact that the Government has yet to increase the prices of many controlled items, something it will be forced to do in the upcoming months to avoid shortages," say Miguel Octavio, Head of Research at investment bank BBO in Caracas. "Thus, while the index has slowed down, it will likely remain high in the upcoming months." (Latin American Herald Tribune, 04-13-2011;
Venezuela's food inflation trebles Latin American average
The high food prices hitting Venezuelan households exceed by far those in the rest of Latin American countries, according to the Food and Agriculture Organization of the United Nations (FAO). Between February 2011 and February 2010, food prices climbed 37.3 percent in Venezuela, while the Latin American average food inflation is 8.8 percent, based on a statement prepared by the FAO to disseminate its quarterly newsletter. The Latin American countries with the highest annual inflation rates at the end of February were Venezuela, followed by Paraguay (17.1 percent), Bolivia (17 percent) and Argentina (10.6 percent), while inflation in Colombia, Mexico and Peru was below 5 percent. (El Universal, 04-15-2011; http://english.eluniversal.com/2011/04/15/venezuelas-food-inflation-trebles-latin-american-average.shtml)
Venezuela's international reserves fall to lowest level since August 2007
Venezuelan companies are required an authorization from the Foreign Exchange Administration Commission (CADIVI) to obtain US dollars at the official exchange rate. Then, the Central Bank of Venezuela (BCV) disburses the foreign currency. However, according to official data, there is a lower availability of foreign currency despite skyrocketing oil prices. To supply US dollars authorized by CADIVI and pay foreign debt obligations, the Central Bank of Venezuela has used the international reserves account, which of April 8 amounted to USD$ 25.92 billion, a 12% drop so far this year and the lowest level since August 14, 2007. A study prepared by economist José Guerra, a former economic research manager at the Central Bank of Venezuela, shows the portion of international reserves backed by gold increased from 39.56% in 2009 to 70% by the end of March 2011. (El Universal, 04-13-2011;
Central Bank Director expects Venezuela’s economy to enter into a long growth cycle
Armando Leon, director of the Venezuelan Central Bank (BCV), considers that the recovery of the Venezuelan economy could be within the framework of the new long growth cycle, involving all the productive sectors. “What trends show is that almost all the sectors of the economy should grow this year,” he said and highlighted that this recovery began during the fourth trimester of 2010. “The Venezuelan economy was affected by foreign and domestic factors. As they were overcome, the economy has been recovering. The connection between the private and public sector has improved,” he explained. (AVN, 04-13-2011; http://www.avn.info.ve/node/53064)
Industrial sector reports increase in power failures in Venezuela
Daily power failures in Venezuela are impacting industrial activity nationwide. "We are increasingly witnessing problems to maintain production processes without energy," said César Guillén Lamus, the president of the Chamber of Commerce and Industry of the western state of Mérida. He added that in the past 15 days, "unscheduled power cuts" have increased and have hit trade and production (El Universal, 04-13-2011;
Commodities
PDVSA to have a role in Vietnam's Dung Quat refinery expansion
Venezuelan state oil company Petróleos de Venezuela (PDVSA) and Vietnam's state oil group PETROVIETNAM yesterday agreed on PDVSA's participation in the expansion of Vietnam's Dung Quat refinery. After the expansion, the refinery will process 100,000 barrels per day (bpd) of upgraded crude oil from Venezuela's Orinoco oil belt, to be supplied by PDVSA Petromacareo. PDVSA Petromacareo was created by PDVSA and Petrovietnam with the objective to produce and upgrade extra heavy crude oil from Venezuela's Junín 2 block for 25 years. PDVSA expects to extract the first 50,000 bpd of crude from Junín 2 in the third quarter of 2012. (ADP, 04-14-2011; http://adpnews.info/?nid=b1f92cf612ab4f92)
Venezuela steelmaker sees Q1 2011 output rise
Venezuelan state-owned steelmaker SIDOR's output rose 16% during the first quarter compared with the last three months of 2010, according to a company document seen on Wednesday by Reuters. The biggest steelmaker in the Andean region and the Caribbean, Sidor has seen production decline since its nationalization in 2008, and the trend accelerated last year due to severe power shortages amid a drought. "The company started to increase production capacity with the end of electricity rationing," Sidor's industrial production director Rubens Llanes said in the document, referring to improved first quarter 2011 results. (Reuters, 04-13-2011;
Venezuela's Electricidad de Caracas reports USD$215 million losses
Electricidad de Caracas reported its fiscal 2010 results, which closed in December. Revenues were up 7% at Bs. 3 billion (USD$ 697 million), but costs increased sharply by 86% to Bs. 3.9 billion (USD$ 906 million). The biggest jump in expenses was payroll, increasing 134% to Bs, 1.6 billion (USD$ 372 million). Total losses for the year were Bs. 926.8 billion or USD$215 million at the official rate of exchange of Bs. 4.3 per US dollar. (Latin American Herald Tribune, 04-13-2011; http://www.laht.com/article.asp?ArticleId=391647&CategoryId=10717)
Politics
Venezuelan opposition to hold its Presidential primary Feb. 12
Venezuela’s opposition parties will hold primary elections for a presidential candidate to run against President Hugo Chavez on Feb. 12 next year, according to a statement sent by e-mail from the Democratic Unity Table alliance. (Bloomberg, 04-13-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=abXhnJoWZzr8)
Ruling party deputy: pact with Colombia is better than CAN Agreement
Although the Economic and Trade Complementarity Agreement between Venezuela and Colombia was deferred for three months, the deadline set by the Cartagena Agreement for Venezuela to continue being a full member of the Andean Community ends on April 21. However, Roy Daza (ruling party PSUV), a Venezuelan deputy to the Latin American Parliament (Parlatino), said that some agreements with the sub-regional bloc are likely to remain in force. He specifically mentioned the Hipólito Unanue Convention on Cooperation on Health, which is an institution of the Andean Integration System that aims to coordinate and support efforts of member countries to improve people's health. Under this legal mechanism, countries can purchase vaccines at affordable prices. He also referred to the Andrés Bello Convention, which promotes educational and cultural projects. (El Universal, 04-12-2011; http://english.eluniversal.com/2011/04/12/ruling-party-deputy-pact-with-colombia-is-better-than-can-agreement.shtml)
Venezuela strengthens bilateral cooperation with Andean countries
The fact that Venezuela is leaving the Andean Community (CAN) has not prevented it from strengthening bilateral cooperation, beyond commercial agreements, with the member states of this bloc, such as Colombia, Ecuador, Bolivia and Peru. A few weeks before Venezuela´s participation in the CAN comes to an end, the Venezuelan government has reached agreements with Colombia, Ecuador and Bolivia, and is holding talks with Peru, to reach agreements under new legal parameters. (AVN, 04-13-2011; http://www.avn.info.ve/node/52984)
Venezuelan President, Argentine Minister meet in Caracas
President Hugo Chavez met with Argentine Minister of Federal Planning, Public Investment and Services, Julio De Vido, to strengthen bilateral relations. De Vido also met with Rafael Ramírez, Venezuela’s minister of Energy and Oil and chairman of the state-run company PDVSA. The two ministers discussed oil projects undertaken jointly by Energía Argentina (ENARSA) and Petróleos de Venezuela (PDVSA). They also discussed a project involving four mature oil fields in which the two companies undertook development plans. (AVN, 04-13-2011; http://www.avn.info.ve/node/53008)
Venezuela's militia
The Economist: A Caribbean Tripoli?
It is a long way from Tripoli to Caracas. But although Hugo Chávez, unlike his friend and close ally Muammar Qaddafi, is an elected president, there are some striking similarities between the Libyan and Venezuelan regimes. Mr Chávez’s grassroots “communes” resemble Colonel Qaddafi’s “people’s committees”, for example. And a new decree, published last month, speeds up the creation of a sectarian militia like that which opened fire against unarmed protesters in Libya.
A year ago Mr Chávez assembled more than 30,000 uniformed, gun-toting militiamen and women for a parade in the centre of Caracas. Unsheathing a sword that belonged to Simón Bolívar, Venezuela’s independence hero, he led them in an oath to work tirelessly to “consolidate…the socialist revolution”. Officials claim that the militias total 125,000, and that the goal is to reach 2m. Sceptics put the number trained so far at under 25,000. (The Economist, 04-07-2011; http://www.economist.com/node/18529829?story_id=18529829)
Venezuela's Chávez bankrolled Nicaragua with $1.6 billion since 2007
Venezuela upped aid to Nicaragua last year by 15 percent to $511 million, more than making up for diminishing aid flow from other countries, according to a report released Wednesday from Nicaragua's Central Bank.
Since President Daniel Ortega returned to power in 2007, Venezuelan President Hugo Chávez has provided his comrade with $1.6 billion in total aid, according to a Monitor tally of Central Bank figures. That growing pool of petro-dollars has supported Mr. Ortega's political programs and perhaps even saved his nation's fledgling economy from collapse, according to opposition analysts and the president himself. (The Christian Science Monitor; 04-07-2011; http://www.csmonitor.com/World/Americas/2011/0407/Venezuela-s-Chavez-bankrolled-Nicaragua-with-1.6-billion-since-2007)
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.
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