Economics & Finance
Venezuelan officials see 5% growth or more in 2011
Venezuela's government lifted its economic growth forecast for 2011 again on Sunday, this time to at least 5%, after an initial aim of 2%. President Hugo Chavez and other senior officials had said earlier this year the South American OPEC member's economy, which recently emerged from an 18-month recession, would probably grow twice the budget forecast of 2%. Government statistics body INE's president Elias Eljuri was more specific, however, telling local TV: "With all the plans the government is doing ... it will be at least 5%." The economy grew a better-than-expected 4.55% in the first quarter, compared with the same period last year, on the back of government spending which looks set to accelerate ahead of next year's presidential election. (Reuters, 06-13-2011; http://af.reuters.com/article/energyOilNews/idAFN1230213220110613)
Government unable to lower inflation
Under President Hugo Chavez Venezuela has become the country with the high and most persistent inflation in the Americas and one of the first with the highest price level in the world. The inflation rate in 2010 (27.2%) was 4.4 times the average rate in Latin America, 9 times that of Chile, 8.8 in Colombia, Peru's 13 times and 4.6 times Brazil. For this year, given the cumulative inflation of 10.3% in first 5 months, surely the country Venezuela will again be more inflation in the region. These results clearly show the complete failure of economic policies implemented by the government and the BCV for reducing inflation. Central Bank President Nelson Merentes and Finance Minister Jorge Giordani, claim there is a sustained trend toward a slowdown in prices. More information in Spanish. (Tal Cual; 06-13-2011; http://www.talcualdigital.com/index.html)
Finance Ministry issues new bonds
In less than three months, the Finance Ministry is issuing new special bonds to State-owned financial institutions. It announced it will place the bonds for BF 10 billion – due between 2015 and 2019, with Banco de Venezuela, Banco Industrial de Venezuela, Banco del Tesoro and the Deposit Guarantee Fund (FOGADE). It says these funds will be used to “contribute to the execution of the investment plan for the key public financial institutions ", but provided no further information. More information in Spanish. (El Universal; 06-14-2011; http://www.eluniversal.com/2011/06/14/finanzas-ofrece-bonos-a-banca-publica-y-fogade.shtml)
Venezuela to boost power tariffs as much as 200% after blackout strikes
Venezuela, the largest oil producer in South America, will boost power prices as much as 200% to counter rising demand after a blackout affected several thousand megawatts of capacity in the western state of Zulia. Bills will rise threefold for residential users that are consuming 20% more power compared with 2009 levels after a July 15 deadline, Electricity Minister Ali Rodriguez said today in Caracas. Power bills will rise 10% in the first month and 5% in each successive month for industrial users that don’t reduce usage by a 10th, he said. (Bloomberg, 06-13-2011; http://www.bloomberg.com/news/2011-06-13/venezuela-to-boost-power-tariffs-after-blackout-strikes-1-.html)
Government reinforces maintenance of transmission systems
The Venezuelan Government is reinforcing maintenance on the country’s power transmission systems, with a goal of incorporating 177 new transformers to renew the systems, according to Electric Energy minister Ali Rodriguez. Rodriguez explained that 109 new power transformers have been already installed, and another 200 transformers will be imported to renew transmission systems in the country. (AVN, 06-13-2011; http://www.avn.info.ve/node/62502)
Industry warns electricity crisis will limit production, fuel inflation
Carlos Larrazábal, President of the National Confederation of Industry (CONINDUSTRIA) warns that the renewed energy crisis and the proposed government plan will rein in economic development. "The repeated energy crisis and government regulatory plans will rein in economic development”, he said. "CONINDUSTRIA has said that the energy issue is a barrier to increasing production". He added: "If there is not additional production to satisfy demand, there will be further inflationary pressure". More information in Spanish. (El Universal; 06-14-2011; http://www.eluniversal.com/2011/06/14/advierten-que-la-crisis-electrica-limitara-la-produccion-nacional.shtml)
Commodities
Venezuela spurs disagreement within OPEC
The Organization of the Petroleum Exporting Countries (OPEC) failed to reach a consensus at its regular meeting in Vienna to raise real output, in order to cope with high oil prices and address a likely increase in demand in the third quarter. No agreement was reached because Venezuela, Iran, Angola, Ecuador, Libya, and Algeria refused to change production quotas and actual production volumes claiming that current prices are satisfactory and that oil supply is guaranteed. Luis Oliveros, a graduate level professor in Petroleum Economics at the Central University of Venezuela, says that "for the first time in nearly 20 years" political reasons prevailed over economic good sense. (El Universal, 06-11-2011; http://english.eluniversal.com/2011/06/11/venezuela-spurs-disagreement-within-opec.shtml)
PETROCARIBE starts technical meetings in Margarita Island
Representatives of 16 countries will take part in the technical meeting of PETROCARIBE on Margarita Island. The energy cooperation agreement was launched on June 29, 2005. Work groups will evaluate progress made on treaties already signed. (AVN, 06-13-2011; http://www.avn.info.ve/node/62492)
GAZPROM NEFT intends to start oil production in Venezuela in 2013
Russia's GAZPROM NEFT, the petroleum arm of state-controlled energy giant GAZPROM, wants to start oil production at the Junin-6 block in the oil-rich Orinoco River belt in Venezuela in 2013, according to CEO Alexander Dyukov. "We are discussing a possible launch of early production in 2013 with the Venezuelans," Dyukov told an annual shareholders meeting, adding that Gazprom Neft planned to make exploratory drillings at the deposit in 2011. (Ria Novosti, 06-09-2011; http://en.rian.ru/business/20110609/164528914.html)
Expert says PDVSA misses out on opportunities to consolidate markets
Ramón Espinasa, an associate professor at Georgetown University, Washington D.C. and former chief economist of state-run oil company Petróleos de Venezuela (PDVSA), says that due to the current uncertainty in the oil market and strong economic growth, producers of commodities, particularly Latin American countries, have great opportunities. However, he adds, Venezuela, with certified oil reserves exceeding 200 billion barrels and a growing interest in expanding its influence on the oil market through new agreements to build or expand refineries, has failed to take advantage of the oil boom years to consolidate a global refining circuit that allows the South American country to sell its crude oil and expand its oil products supply. (El Universal, 06-13-2011; http://english.eluniversal.com/2011/06/13/pdvsa-misses-out-opportunity-to-consolidate-markets.shtml)
Politics
Chavez undergoes surgery and convalesces indefinitely in Cuba
President Hugo Chavez had an operation in Cuba last Friday for an abscess in the pelvis. He was out of the limelight for several weeks prior to that, due to a knee injury. "With his knee injury almost totally better, President Chavez suffered a new health problem, which was immediately assessed by his medical team," said an according to a official statement read on state TV. Surgery was carried out in Havana "with satisfactory results for the health of Commander Hugo Chavez, who is recovering with his family, medical team and part of the government team," it added. Chavez, 56, will stay on in Cuba for a few days until he is in a condition to return. His previous disappearance from the public eye fueled speculation in Venezuelan opposition and media circles that he may have a worse medical problem, and the operation in Cuba is bound to spur more rumors. "I will happily die in the service of the suffering people," Chavez was quoted as saying in Friday's statement, in his typically melodramatic language. (Reuters, 06-11-2011; http://www.reuters.com/article/2011/06/11/us-venezuela-chavez-idUSTRE75A0CZ20110611)
Venezuelan Government is world worst on accountability
The Rule of Law Index provided in the World Justice Project shows Venezuela has the worst government in the world in terms of accountability and citizen control. According to AFP, the report published by the US organization states that Venezuela is the nation: “with the worst registered results insofar as rendering accounts and setting controls on the Executive Branch”. More information in Spanish. (El Universal; http://www.eluniversal.com/2011/06/14/el-gobierno-es-el-peor-a-la-hora-de-rendir-cuentas-en-el-mundo.shtml)
Sanctions against Venezuela boost Hugo Chávez
The U.S. government has finally decided to take on Venezuelan President Hugo Chávez, but probably in the worst possible way: toothless sanctions that barely scathe the caudillo. Instead, these sanctions give him a treasure trove of ammunition to undermine U.S. policies and consolidate his own power. Secretary of State Hillary Clinton included Petróleos de Venezuela, S.A. (PDVSA), parent company of large American refiner and gasoline retailer CITGO, in a list of seven companies sanctioned last month for supporting Iran’s energy sector. PDVSA “delivered at least two cargoes of reformate to Iran between December 2010 and March 2011, worth approximately $50 million,” the statement says. Reformate is blended with gasoline to improve its quality. (Forbes, 06-13-2011; http://blogs.forbes.com/greatspeculations/2011/06/13/silly-sanctions-against-venezuela-boost-hugo-chavez/)
Business asks Gov’t to stop harassing merchants
Noel Álvarez, president of the Venezuelan Federation of Trade and Industry Chambers (FEDECÁMARAS), the country's main private business association, asked Venezuelan authorities to end harassment of merchants and the private sector, following the closure of Korda Modas department store, which was reopened on Monday morning. In his view, the closure was further evidence of harassment of the private sector and hit dozens of families whose right to work was curtailed. (El Universal, 06-13-2011; http://english.eluniversal.com/2011/06/13/business-sector-asks-govn-t-to-stop-harassing-merchants.shtml)
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