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, November 15, 2011

November 15th, 2011

Economics & Finance

Central Bank says economy grew over 3.5% in Q3
Venezuela's economy grew more than 3.5 percent during the third quarter of 2011 compared with the same period a year ago, says Nelson Merentes, head of the Central Bank. Its economy expanded 2.5% In the second quarter and 4.8%  in the first quarter versus the same periods in 2010, boosting the government's confidence in sustained growth following an 18-month recession that ended late last year. "Fortunately, the worst years for the economy have passed. 2009 and 2010 were very tough years," Merentes said. President Hugo Chavez is seeking to spur the economy ahead of an election next October at which he has vowed to win another six-year term despite  recovering from cancer. (Reuters, 11-15-2011;

PDVSA to issue U$D 2.4B in 2021 bonds
State oil giant Petróleos de Venezuela said Monday it will issue U$D 2.394 billion in 2021 bonds in a private placement to the Central Bank, further extending the country's debt issuance spree this year, which has now surpassed U$D 17 billion. In a statement, PDVSA, as the company is commonly known, said it will exchange U$D 1.25 billion in existing 2013 for the new notes in the private transaction. Another U$D 564 million in debt will be exchanged for cash up front. With plans for ramped up spending ahead of next year's presidential elections, more than U$D 17.5 billion in debt has already been raised between PDVSA and the government in 2011, more than any other country in the region. The oil monopoly alone has sold more than $10 billion this year. (The Wall Street Journal, 11-14-2011;

Currency exchange operations to be made more flexible
The Central Bank (BCV) says it will modify rules on exchange controls starting January 1st, 2012. It will then allow duly authorized banks, savings and loan associations and currency exchange houses to operate under conditions dictated by the BCV. Hotels will also be able to also provide the service to customers. The rate of exchange for these operations has not been officially published. More in Spanish:  (Tal Cual;;

Business climate worsens in Venezuela, says World Bank
According to the 2012 Doing Business report, conducted by the World Bank, the ease of doing business in Venezuela has been worsening. Venezuela ranks 177 out of 183 economies across the world. As per data compiled as of June 2011, the South American country is just five steps from becoming the country with the greatest difficulties for doing business worldwide. In the previous survey, Venezuela ranked 175th. (El Universal, 11-14-2011;

Socialist criteria” to prevail in setting prices, Government will decide
The Executive Office has already defined the criteria it will use in the analysis and review of costs and prices of goods and services produced and sold in Venezuela. The Regulation drafted by the Executive Office and expected to become official, provides that guidelines for setting prices "will be based on statistical, economic and accounting methods that are best suited to the Economic and Social Development Plan, particularly those that promote the setting of better prices for people, meet their needs and are in line with domestic interests." The Government will now decide what costs to admit, parameters for profit regulation, documents to be presented to the Superintendent, frequency with which revisions and adjustments can be requested, and the time officials will take to decide matters. (El Universal, 11-14-2011; and El Universal, 11-15-2011;

Stock market up 72%
The local stock market broke its last record once again this week. It rose 3.36% over the week. The biggest gainer was Electricidad de Caracas shares which rose 17.24% and ended the week at Bs. 0.34. The National Electric Corporation (CORPOELEC) has made public its intentions to withdraw the shares of Electricidad de Caracas from the Caracas Stock Exchange and buy-back shares from previous workers that still hold them. However, the price the government is offering is Bs. 0.53, and shareholders have rejected it as below the one PDVSA paid to AES in 2007 when Venezuela nationalized the company. AES was paid approximately Bs. 0.57 a share, since it paid US$739.25 million for 87.1% of all shares. (Latin American Herald Tribune, 11-14-2011;


Oil basket rises to U$D 109.4
The price of the Venezuelan oil basket climbed to U$D 109.4 per barrel in the week from November 7 to 11, according to data released by the Ministry of Energy and Petroleum. It says;"The average price of main oil benchmarks ended the week higher, driven by improving macroeconomic data in the United States, as well as more positive expectations about a possible solution to the debt crisis in the euro zone". (El Universal, 11-11-2011; 


Attack reported on Venezuelan opposition candidate
An attack has been reported against Venezuelan opposition presidential candidate Maria Corina Machado and her supporters in a neighborhood on the east side of Caracas. El Nacional newspaper published a photo of what it said was the shooting, showing two people on a motorcycle. Wearing a red T-shirt, the man on the back is pointing a gun at a bus. A campaign spokesman says a pair on a motorcycle fired shots into a bus carrying Machado and her supporters. Machado says the “government has absolutely lost control and, in many cases, has been complicit with the criminal gangs". She accused the government of providing some groups with weapons. (CNN, 11-13-2011;

“Thousands” are reported to rally in support of President Chavez and his re-election bid
“Thousands” are reported to have turned out to show support for President Hugo Chavez and his plan to run for re-election next year at a rally which has been one of the few public events that Chavez has attended in recent months as he recovers from cancer treatment. (The Washington Post, 11-13-2011;; and Veneconomy,

UNASUR seeks closer tabs on arms spending in Latin America
Latin America's Union of South American Nations, which hopes to become a regional security umbrella organization, has served notice on members to get their facts together on who is spending what on defense in the region. UNASUR includes members of other regional groupings, notably the MERCOSUR trade bloc and the Andean Community of Nations. In recent months it has sought to exert influence on the defense spending of countries on its Defense Council, which is meeting in the Peruvian capital this week. (UPI, 11-10-2011;

Washington Nationals’ catcher Ramos rescued after kidnapping
Wilson Ramos, the 24-year-old Venezuelan catcher for the Washington Nationals, was rescued yesterday in a mountainous area of central Venezuela two days after being kidnapped in front of his family’s home. Commando units rescued Ramos after exchanging gunfire with his captors in a rural area of Carabobo state, Interior and Justice Minister Tarek El-Aissami said. Six people were arrested. (Bloomberg, 11-12-2011;; Reuters,

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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