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.

Tuesday, October 25, 2011

October 25th, 2011

Economics & Finance

Morgan Stanley sees Venezuela as LatAm's weakest link
In its latest report, Morgan Stanley claims that Latin America is more prepared than ever to deal with the worsening global crisis, but it labels Venezuela as the region's most vulnerable country. Though Venezuela benefits from solid current-account surplus, the report shows that if the price of raw materials remains stagnant since the first quarter, the balance of payments may change dramatically. If import and export upward trends remain changeless, Venezuela would end up having a current-account deficit of nearly 6.4% in its GDP. (El Universal, 10-22-2011;

Venezuela sells U$D 3 billion of 15-year bonds in local market
Venezuela sold U$D3 billion of bonds due in 2026, swelling total issuance this year to a record U$D 7.2 billion as President Hugo Chavez looks to finance government social programs ahead of his re-election bid. The bonds were priced at 95 cents on the dollar to yield 11.75%, according to a statement published on the Public Credit Office’s website. Venezuelans who bought them in bolivars at the official rate of 4.3 per dollar can sell the notes abroad at a discount to obtain foreign currency, a practice that skirts currency controls imposed in 2003. (Latin American Herald Tribune, 10-23-2011;

Food sales dropped 3.71% in September, supermarket sales down
Food sales dropped for the seventh consecutive month according to a poll taken by the Food Industry Association (CAVIDEA) with shows that tonnage went down 3.71% in September for 12 basic items: rice, pasta, oats, pasteurized milk, powdered milk, sardines, cured meats, tuna, oil, margarine, mayonnaise and tomato paste. The President of the National Supermarket Association, Luis Rodríguez, points out that sales volumes have gone down in the past months as consumers have less money available for large scale purchases. More in Spanish:  (El Universal, 10-25-2011; and El Nacional, 10-25-2011;

Nicaragua hosts 7th PETROCARIBE Ministerial Council
Representatives of PETROCARIBE from Latin America and the Caribbean arrived in Managua, Nicaragua, to participate in the Seventh Ministerial Council October 24-25. The goal of the summit is to analyze the social and economic impact of said energy initiative. The Venezuelan Energy and Oil Ministry says Nicaragua has confirmed the attendance of Antigua and Barbuda, Belize, Cuba, Dominica, Grenada, Guatemala, Guyana, Haiti, Jamaica, Dominican Republic, San Kitts and Nevis, Saint Vincent and the Grenadines, Suriname and Venezuela. (AVN; 10-24-2011;


Venezuelan oil basket spikes to U$D 104.79 per barrel
The average price of the Venezuelan oil basket gained U$D 2.74 during the week and ended at U$D 104.79 per barrel from October 17 to October 21. The Venezuelan basket of crude oil and products averages U$D 99.58 per barrel.
According to the Ministry of Energy and Petroleum, "the average price of crude oil ended the week with an upward trend, mainly driven by favorable macroeconomic data in the United States, the weakness of the US dollar against other currencies, and expectations about plans to contain debt crisis in some European countries." (El Universal, 10-21-2011;

Venezuelan heavy metals mining starves for cash
Ciudad Guayana, the only planned city in Venezuela, is a far cry from its designers’ vision fifty years after it was launched. The area holds important deposits of gold, iron and bauxite, yet the local industries, which employ 1.6 million Venezuelans, has languished in recent years. “This government destroyed industry here,” Pablo Perez, the opposition governor for one of Venezuela’s richest states, Zulia, said on a recent visit to the area. (The Gulf Today, 10-23-2011;

Commissions for gold transference to joint companies set up
The Ministry for Basic Industries and Mining (MIBAM) has set up a transition and negotiation commission to transfer gold reserves to joint companies with the Venezuelan government as the major shareholder. The commissions are divided into sub commissions such as mining and plant, finances and fiscal, legal, labor, small mining, environment, industrial safety, occupational, communications and social development. (Veneconomy, 10-22-2011;

Catalytic cracking unit at Venezuela refinery restarts operations
The 89,000-bpd catalytic cracking unit of Cardón refinery, the second largest in Venezuela, has begun its start-up protocol after a failure that disrupted operations in the unit last week, a PDVSA source told Reuters. (El Universal, 10-24-2011;

Government to import 300 thousand tons of rice
With rice production down 13% from initial projections, additional imports will be required for a total of 300,000 tons, according to the President of the Rice Producers Association (FEVEARROZ), Fuaz Kassen. More in Spanish at: (Ultima Hora Digital, 10-24-2011;

International Trade

High level bilateral meetings held in Bogotá, trade rules extended for 90 days
During a trip to Bogotá, Foreign Minister Nicolás Maduro and Interior Minister Tarek El Aissami met with Colombian President Juan Manuel Santos in order to discuss plans for a meeting between Santos and President Chavez. Maduro met separately with Colombia’s Foreign Minister María Ángela Holguín to review gasoline and gas sales, as well as major projects such as a joint oil pipeline company that could be established by PDVSA and Colombia´s ECOPETROL that would go through both nations. As a result of the meeting former Andean trade rules have been again extended 90 days in order to establish a new system within ALADI. El Aissami and his Colombian counterpart Juan Carlos Pinzón agreed to exchange border officials to improve efforts against drug trafficking. More in Spanish at: (AVN, 10-25-2011;;; and El Universal10-25-2011;

Cuba absorbd over 70% of BANDES aid funds
Cuba has found the state-run Venezuelan Bank for Economic and Social Development (BANDES) to be a true lifesaver in providing funds in order to avoid a shipwreck. Up to September 2011, 70% of the BANDES International Cooperation Fund (FCI) has aimed at "supporting" the Cuban government and paying for projects between Havana and Caracas. Data was obtained by El Universal within the "Financial Summary of the Executive Management for International Cooperation and Finance" released by Bandes, and updated as of September 2011. The report shows, among other things, the interest of the government of President Hugo Chávez in strengthening international cooperation, particularly with Cuba, but also with Bolivia and Nicaragua. (El Universal, 10-24-2011;


Government doctors clain Chavez in optimal health
President Hugo Chavez is in optimal health after undergoing cancer treatment, doctors on his medical team said Saturday. The Venezuelan doctors spoke out to dispute a surgeon's remarks about Chavez's condition. Dr. Salvador Navarrete has been quoted as saying in a recent interview that he believed the president's prognosis "is not good" and that the life expectancy in such cases can be as little as two years. Dr. Fidel Ramirez, one of Chavez's doctors, read a statement at a televised news conference Saturday saying Chavez had never been a patient of Navarrete. The doctors questioned the surgeon's ethics, saying he is wrong and doesn't have access to Chavez's medical information. Ramirez said Chavez's health is "absolutely satisfactory, with an excellent prognosis." Ramirez, who is a brother of Chavez's close confidant and oil minister, Rafael Ramirez, declined to answer questions about the type of cancer or where the tumor was located. (AP, 10-24-2011;

Chávez to meet Argentine counterpart in November
In a telephone call by President Chavez to Cristina Kirchner, to congratulate her upon reelection, both heads of state agreed to “meet next November to continue consolidating the strategic alliance between both nations”. More in Spanish: (AVN, 10-25-2011;

Former Chavez VP says the President would lead polls by a comfortable margin over 19%
President Hugo Chavez would lead the upcoming polls by a comfortable margin over 19%, according to a survey by the Institute for Data Analysis (IVAD), which interviewed 1200 people nationwide between September 24th and October 2nd of this year.  The IVAD survey also reported that 71.8% of those polled looks favorably upon the Chavez Administration, according to journalist Jose Vicente Rangel during his Sunday television talk show. (AVN, 10-23-2011;

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.

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