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, November 11, 2011

November 11th, 2011

Economics & Finance

PDVSA has received U$D 13.58 billion from the Central Bank
Although the price of the Venezuelan basket of crude oil and byproducts averages U$D 99 to date this year, oil revenues have proven insufficient for the state-run oil company Petróleos de Venezuela, which has needed financial assistance from other government agencies. The Central Bank of Venezuela (BCV) has released details on the monetary base up to October 21, 2011. According to those figures, the BCV had provided financial assistance to the state-run oil company Petróleos de Venezuela (PDVSA) amounting to VEB 58.4 billion (U$D 13.5 billion).
In the opinion of Venezuelan economist José Guerra, former economic research manager at the Central Bank, the numbers show that the BCV is providing aid through purchase of PDVSA bonds. (El Universal, 11-09-2011;

PDVSA said to consider issuing dollar bonds to pay back Central Bank Debt
Petroleos de Venezuela SA, the state oil company, may repay part of a $3 billion debt with the Central Bank by giving it dollar-denominated bonds before year end, a government official said. PDVSA, as the oil producer is known, may issue the bonds to the central bank in a private placement to settle part of a debt stemming from loan agreements, said the official, who asked not to be identified because he isn’t authorized to speak publicly about the matter. The bank and PDVSA are still negotiating terms of the transaction, he said. (Bloomberg, 11-09-2011;

78% of the 2026 bond was used to pay interest on internal debt
Treasury data shows that U$D 2.325 billion out of the latest bond issue for U$D 3 billion were used to cover interest payments and capital on public debt. More in Spanish: (El Mundo, 11-11-2011;

Chavez proposes new bond to cover backed up pension payments
President Chavez has proposed an additional bond issue to pay backed dup debts with retired Venezuelan workers. He said each retiree would receive a bond which he could later trade in. More in Spanish: (Agencia Venezolana de Noticias, 11-11-2011;án-petrobono-para-pagar-deuda-de-prestaciones)

Congress has authorized U$D 78 billion in public spending in 2011
As Finance Minister Jorge Giordani submitted the draft FY2012 Budget Law to the National Assembly, he also estimated government spending in FY2011 at U$D 76.05 billion. However, government spending has already exceeded his projections. Additional loans passed by the National Assembly in the first 11 months of 2011 amount to U$D 30.67 billion, although the original FY2011 budget was estimated at U$D 47.49 billion. Accordingly, government spending as authorized by the National Assembly amounts to U$D 78.16 so far this year. (El Universal, 11-09-2011;

Scarcity index at 23.89%
A study made by GS1, entitled Missing Product Shelf (AFP), encompassing any product that cannot be obtained by the end user at its usual place of purchase shows that between January and September this year the scarcity rate average was 23.89%. More in Spanish. (El Universal, 11-10-2011;; El Nacional;

Economist predicts increased government imports next year
The scenarios that are emerging for foreign exchange in 2012 are marked by rising consumption, increasing imports and foreign exchange controls, according to economist Asdrubal Oliveros. He noted that state imports will increase, and in light of declining oil production, the currency supply for the private sector dollars will be impacted. More in Spanish. (El Universal, 11-10-2011;

International reserves fall to U$D 28.457 million
International Reserves closed on Wednesday at U$D 28,457 million, according to Central Bank of Venezuela (BCV). More in Spanish. (El Mundo, 11-10-2011;$28-457-millone.aspx)

Local stock market up 66%
The Venezuelan Stock Market rose again last week reaching a new 52 week high, closing at 108,353. Among the gainers this week were Electricidad de Caracas which closed at Bs. 0.29, up 16%. Mercantil Servicios Financieros also went up, both the A and the B shares, closing at Bs. 37, 4.23% above their closing levels last week. MANPA also had a considerable rise, closing at Bs. 3, a 7.14% rise. The Venezuela Stock Market Index is now up 65.83% for the year to date. (Latin American Herald Tribune, 11-08-2011;


Candidate Pablo Perez would revise Cuba oil deal
A leading opposition candidate hoping to challenge Venezuela's Hugo Chavez at next year's presidential election would revise preferential oil deals with Cuba and other Central American nations if he wins. Pablo Perez, governor of the oil-rich western state of Zulia, is one of three front-runners who will take part in an opposition primary in February to pick a unity candidate to take on Chavez at the main vote in October. "Venezuela is losing $8 billion (a year) because of gifts that are given out by the government. With that money we can generate 1.1 million jobs," Perez told Reuters after a walking tour of Caracas's Chacao district. (Reuters, 11-10-2011;

Electricity Minister says power demand is down
Electricity demand in Venezuela has not exceeded 17,000 MW, although authorities had estimated peak demand at 18,400 MW, according to Electricity Minister Alí Rodríguez.  Rodríguez praised consumers' response to government power saving plans. (El Universal, 11-09-2011;

International Trade

Gard P&I Club issues alert regarding robbery of vessels in Venezuelan ports
The risk of armed robbery is of concern for vessels anchoring in the areas surrounding Puerto La Cruz and Barcelona City off the north coast of Venezuela. Gard has warned members and clients and has repeated advice provided by their local correspondent and authorities as to precautionary measures to be taken by vessels calling at ports in the relevant areas. Reported incidents involve intruders, usually approaching the vessel in small fishing boats, climbing aboard the vessels during the night while the vessel is at anchor with the intent to rob the vessel and crew members of all valuables. Crew members have been threatened, beaten and even attacked with knives and guns. One  of  the  measures  suggested  by authorities is  to  always anchor in the Bahia de Pozuelos area where the authorities had implemented regular surveillance. (Safety4Sea, 11-11-2011;

Venezuela among the main destinations for Panamanian goods
August exports from the Panamanian free zone totaled U$D 1.42 billion; 57% over U$D 910 million in the same term last year, according to an official source. Main destinations for commodities shipped from Colón, include Puerto Rico (U$D 356 million), Venezuela (U$D 231 million) and Colombia (U$D 172 million), according to a report from the Panamanian National Institute of Statistics and Census. (El Universal, 11-09-2011;


Noriega: Chavez cancer progressing faster than expected
A former official in the Bush administration said in a column that President Hugo Chávez is in worse health than he has let on, that his cancer is spreading faster than expected and that his doctors fear that he may have only a few months left to live, says Roger Noriega, former U.S. ambassador to the Organization of American States, citing sources inside the Venezuelan government. “The international team of doctors in charge of treating Hugo Chavez’s cancer does not expect him to live more than six months,” said. According to Noriega, U.S. officials knew that Chavez was suffering from cancer six months before the Venezuelan president acknowledged it publicly and now they know that it is unlikely that he would be the candidate in the next presidential elections. Read more: (Miami Herald, 11-09-2011;

Chavez urges “respect” for "Carlos the Jackal"
President Hugo Chavez urged respect for the legal rights of "Carlos the Jackal" during his trial in France and saluted him as a "worthy" fighter for revolutionary causes. The socialist Chavez has run into controversy in the past by praising a man regarded as a terrorist killer by Western governments, though imbued with revolutionary allure for a small coterie of admirers. Chavez, who has praised Ramirez as a "revolutionary fighter" and criticized his jailing as unfair, said French agents violated international law when they captured him in Sudan in 1994 after years on the run. (Reuters, 11-08-2011;

Washington Nationals catcher Wilson Ramos kidnapped here
Wilson Ramos, one of the Washington Nationals’ most promising young baseball players, was kidnapped at gunpoint Wednesday night from his family’s home here, leaving the team in a state of shock and raising questions about the safety of playing in a country ravaged in recent years by kidnappings and street crime. The 24-year-old Ramos, the starting catcher for the Nationals, had returned for the winter and planned to participate in roughly 10 games for his Venezuelan winter league team, the Aragua Tigers, starting Thursday. Wednesday evening, four armed men arrived at Ramos’s mother’s house in the Santa Ines sector of the central city of Valencia, and took Ramos away, according to multiple news reports. Ramos’s family had not established communication with the kidnappers as of late Wednesday. More: (Washington Post, 11-09-2011;

Crime is highest concern
A poll by International Consulting Services shows crime is the main concern of all Venezuelans. The poll shows 60% believe crime is the nation’s worst problem, while unemployment comes in second at 11.5%. More in Spanish: (El Nacional, 11-11-2011;

Chavez plans to approve a new Labor Law before May 1st, 2012
President Hugo Chavez will enact a new Labor Law under his Enabling powers, to be launched before May 1st 2012. More in Spanish: (Agencia Venezolana de Noticias, 11-11-2011;ávez-propone-aprobar-nueva-ley-del-trabajo-antes-del-1º-de-mayo-de-2012; El Universal,

Supreme Tribunal: Leopoldo López cannot hold public office
Luisa Estella Morales, President of the Supreme Tribunal of Justice (TSJ), says that former Chacao mayor Leopoldo López has all of his political rights; and added that he can participate in political campaigns and create political parties, but that he cannot hold public office. (El Universal, 11-09-2011;

Assemblyman charges mismanagement of Chinese-Venezuelan Fund
Opposition Assemblyman Miguel Ángel Rodríguez says that the government here has mismanaged loans granted by the People's Republic of China under the Chinese Fund. He says: "We have in our hands a memorandum account from Minister (of Energy and Petroleum) Rafael Ramírez to President Chávez, and other documents that we can make available to all Venezuelans. Assessment of these documents shows that there is evidence that some acts contrary to the Constitution have been committed." (El Universal, 11-09-2011;

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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