Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Friday, June 17, 2011

June 17th, 2011

Economics & Finance

Government issues U$2D.3 billion in bonds
Venezuela's government says it is issuing the equivalent of U$D 2.3 billion in bonds to help cover debt payments and public spending this year. The Planning and Finance Ministry announced the offering of 10 billion bolivars in government bonds. It said in a statement on Tuesday that the bonds will be offered to state-run banks. The ministry said the funds obtained by the government will go toward "national public debt service" as well as public spending. In recent months, President Hugo Chavez's government has turned to state-run banks to help finance growing public spending. Government debt held by state banks increased 32% in the first four months of this year and stood at about U$D7.5 billion in April. (Forbes, 06-14-2011;

Venezuela will honor debts to Colombian suppliers
Venezuelan importers will honor debts of just over U$D 718 million to Colombian suppliers after being authorized by the Central Bank of that country, today according to Minister of Foreign Trade of Colombia, Sergio Diaz-Granados, who added: "hopefully in the near term, we can say that the entire debt is paid". Diaz-Granados explained that a little over U$D 718 million is for disbursements made ​​through the ALADI Convention towards ordinary import and airlines and insurance. He added that CADIVI has analyzed obligations for U$D 1.398 billion, has authorized U$D 877 million and rejected U$D 109 million. It is currently investigating additional requests for around U$D 409 million. More information in Spanish. (Ultimas Noticias; 06-15-2011;

Forex board: Over USD 9.7 billion authorized for imports
Venezuela's forex board, the Foreign Exchange Administration Commission (Cadivi), granted USD 9.7 billion to meet import requests in areas such as health, food, industry supplies and machinery.
Cadivi's president, Manuel Barroso, said that in the first five months of the year, Cadivi allocated between 84 percent and 85 percent of the USD 14 billion that have been managed by the Central Bank of Venezuela.
"We have had positive results in the first five months of the year," Barroso told state-run TV network Venezolana de Televisión (VTV). (El Universal, 06-17-2011;

Venezuela to ration electricity in several regions due to recurring blackouts
Venezuela will soon begin rationing electricity in several regions because of recurring power outages, the country’s energy minister said Wednesday. Ali Rodriguez said he has ordered authorities to start scheduling rolling blackouts in affected regions and informing residents when they will be implemented. He did not provide details or say how many of Venezuela’s 24 states would be affected. They say power consumption must be reduced by 10 percent and have warned that hefty surcharges will be imposed on consumers who don’t reduce usage. Venezuela has experienced three major blackouts in the past three months. (The Washington Post, 06-16-2011;

PDVSA, Central Bank to create oil satellite account
Petróleos de Venezuela, S.A., the state oil company, and the country’s central bank will create a satellite account in order to measure the impact of oil on the economy, according to Oil Minister Rafael Ramirez. The account will measure crude beyond what the central bank calls oil gross domestic product by better gauging the “behavior of volume”. Ramirez also said Venezuela has no plans to increase production unless the Organization of Petroleum Exporting Countries approves a change to output quotas. (Bloomberg, 06-15-2011;

Venezuela: Trade with China is a "strategic alliance"
Trade with China is the "main strategic alliance" for the Venezuelan government, said Minister of Trade Edmée Betancourt.
"The relationship is of foremost importance for both governments," she said within the framework of the Third China-Venezuela Trade and Industry Expo.
The top Venezuelan official said that when President Hugo Chávez took office in 1999, bilateral trade was below USD 200 million and it has now increased to about USD 10 billion. "These figures attest to our new bilateral relationships." (El Universal, 06-17-2011;

VAT exemption for imports of goods for domestic production
A Value Added Tax (VAT) exemption for goods imported in order to boost domestic production came into force, and will be applied for valves imported to be used only for a project implemented by a Socialist enterprise known as the Venezuelan Endogenous Valves Industry (INVEVAL). Imports of movable tangible property used exclusively for the petrochemical, carbochemical industry and the like are also VAT exempted. (El Universal, 06-15-2011;


PDVSA to repay $1.5 Billion Japanese loan with oil
The Japan Bank for International Cooperation is preparing a $1.5 billion loan for Petróleos de Venezuela, S.A. that would be paid back with oil, newspaper El Nacional reported, citing a Japanese diplomat. PDVSA, as Venezuela’s state oil company is called, would be able to repay the loan with as much as 3 million barrels of oil a year that would be sent to Japanese companies over a five-year period, the Caracas-based daily newspaper reported, citing Takashi Kondo, a diplomat at the Japanese embassy in Caracas. (Bloomberg, 06-15-2011;

Crystallex to seek compensation from Venezuela
Canadian gold miner Crystallex International Corp said it will seek to restore permit to develop the Las Cristinas gold mine in Venezuela and compensation for the interim losses suffered. Alternatively, Crystallex said it may seek full compensation of more than U$F3.8 billion for the contract cancellation. A state-owned Venezuelan company had unilaterally decided to end their 2002 contract on Las Cristinas project in February. (Reuters, 06-14-2011;

Minister Ramírez denies fractures within OPEC
Venezuelan Minister of Energy and Petroleum and Pdvsa CEO Rafael Ramírez denied that OPEC "is injured or with irreparable fractures," adding that the organization "is clear in its strategic objectives," even though during their last meeting the OPEC failed to reach consensus on the production quotas of its member countries. Ramírez said he will keep watching over the market, which he described as unstable due to the situation in Libya. Therefore, he argued, OPEC member countries should "work in close cooperation." This includes monitoring the spare capacity of OPEC, and the efforts of each member country to maintain a balance in production. (El Universal, 06-15-2011;

Minister claims Venezuela is one of the few countries in a real oil expansion process
Energy and Oil Minister Rafael Ramírez says “Venezuela is one of the few countries into a real process of development of its oil production,” which can be evidenced with the expansion plans of the industry that expects to double its current production (about 3 million barrels per day) through the exploitation of the oil reserves at the Orinoco Oil Belt. “We are going to have in the Belt the same production levels that we currently have; for such reason, we need to double the industrial complex to produce pipelines, valves and rigs,” Ramirez pointed out and underscored that the Government has met with industrial private sectors to boost the sector. (AVN, 06-16-2011;

Nicaragua cattle boom in sales to Venezuela
Last year livestock production became one of the major sources of revenue and jobs in Nicaragua, thanks to a growing demand for meat and dairy products from Venezuela. "Livestock is a source of direct employment for over 800,000 people in the field, which is enough in a country of 5.8 million people," said the president of the Federation of Livestock Producers of Nicaragua, Solon Guerrero. "The activity represents approximately 27% of Nicaragua's total exports and 25% of gross domestic product," he said. The cattle boom is being driven by purchases of Venezuela acquires 44% of Nicaragua's export meat. Trade is conducted government to government. More information in Spanish. (El Nacional; 06-15-2011;


President Chavez recovers at a satisfactory pace
According to Vice President Elías Jaua, President Hugo Chavez is recovering at a good pace after an unplanned surgery he had last Friday in Havana, Cuba, due to a pelvic abscess. (AVN, 06-15-2011;

Indefinite absence authorization ratified
The National Assembly ratified authorization given to President Chávez to remain abroad for “over five days” until he recovers from the surgery he underwent in Cuba. According to the agreement read in Parliament and passed with the votes of the government majority, President Chávez is fully authorized to exercise his duties while he remains in Havana. (Veneconomy, 06-15-2011;

Venezuela on US list of alleged human rights offenders
The United States included Venezuela, China, Iran, Libya, North Korea and nine other countries in a list of nations that Washington wants the United Nations to hold accountable for alleged human rights violations. US ambassador to the UN Human Rights Council Eileen Chamberlain Donahoe on Wednesday said that "too many governments suppress dissent with impunity," reported AP. (El Universal, 06-15-2011;

Chavez will need to overcome health problems and a vigorous opposition to win re-election
Hugo Chávez is unwell. He is running his country from a hospital bed in Havana, following an emergency operation on June 10th to deal with a “pelvic abscess”. Quite what caused the abscess, or exactly how severe it was, has not been revealed. Mr. Chávez’s medical difficulties may well be exceeded by his political ones. The opposition Democratic Unity coalition is due to choose its candidate in February for the election to be held in December 2012. Mired in recession for the past couple of years, and plagued by inflation of close to 30%, the country has recently returned to growth, thanks in part to higher oil prices. Even if growth remains modest, Mr. Chávez has squirreled away billions of dollars in unaudited public funds, and should be able to pay for a pre-election spending binge. But if the polls are to be believed, this election will be no walkover. One survey found that the leading contender for the opposition candidacy—Henrique Capriles, the youthful governor of Miranda state could beat him in a head-to-head contest. (The Economist, 06-16-2011;

Chavez, Lula, or Humala?
Since his June 5 election as Peru’s next president, Ollanta Humala has been the subject of intense debate.  Observers have wondered aloud whether he will be a Chavez or a Lula, or something else altogether.  The debate matters: how Humala chooses to govern will directly impact Peru’s ability to sustain its historically high growth, or whether the country will squander its recent success.  That observers are having this debate at all reflects the reality that most people outside Peru are not sure exactly who Ollanta Humala is, or what he stands for.  His previous run for the presidency in 2006 presented a candidate in the Chavez model, more interested in the distribution than the creation of wealth, more interested in currying favor with Caracas than with Washington or Brasilia. (Latin Business Chronicle, 06-16-2011;

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.

No comments:

Post a Comment