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, December 30, 2011

December 30th, 2011

Economics & Finance

BOFA-MERRILL LYNCH says Venezuela issues most debt in Latin America
The Chavez Administration has resorted to borrowing abroad to increase the government's cash flow to boost the economy. In its latest report on Venezuela, Bank of America Merrill Lynch states that this year the country issued US dollar denominated bonds for U$D 7.2 billion, which is 46% of all debt placed by the major economies of Latin America.  The financial institution forecasts that in 20012 Venezuela will continue to be Latin America’s largest issuer of foreign debt to cover its fiscal deficit, due to the policy of increased spending in the midst of an election year. (El Universal, 12-29-2011; http://www.eluniversal.com/economia/111229/venezuela-is-the-country-that-issues-most-debt-in-latin-america)

FITCH projects expanded credit and liquidity in the Venezuelan banking system
In a report analyzing tendencies within the Andean region’s banking system FITCH says Venezuela will continue increasing credit. “FITCH expects that the overall portfolio will continue to expand in real terms during 2012 as the expansive fiscal policy supports economic growth". More in Spanish: (El Universal; 12-29-2011; http://www.eluniversal.com/economia/111229/fitch-proyecta-expansion-del-credito-y-amplia-liquidez-en-la-banca)

Government held banks increase financing to Government up to 106%
The Finance Ministry is relying more on state controlled banks as a source for public spending. The Ministry sells bonds and Treasury bills on a weekly basis to these banks in order to increase cash availability. The Bank Superintendent reports that bond and bill portfolios increased by 106% from November 2010 to November 2011, from VB 24.388 billion to VB 50.255 billion. The main activity of government held banks is to purchase financial instruments from the Ministry. More in Spanish: (El Universal, 12-30-2011; http://www.eluniversal.com/economia/111230/banca-publica-eleva-106-financiamiento-al-gobierno)

Chavez creates Advisory Council on arbitration, expropriations
President Hugo Chavez created councils to advise the government on international arbitration cases and the expropriation of assets here. Chavez, who has seized assets from 1,045 companies since coming to power in 1999 according to Venezuelan manufacturing association CONINDUSTRIA, will receive a monthly report from the boards, according to two decrees published in the Official Gazette. (Bloomberg, 12-27-2911; http://www.bloomberg.com/news/2011-12-27/chavez-creates-advisory-councils-on-arbitration-expropriations.html)

Chavez claims 2011 GDP will be close to U$D 300 billion
According to President Chavez, 2011 GDP will be close to U$D 300 billion, up from less than U$D 100 billion a decade ago. He also claims per capita GDP is over U$D 10,000, up from U$D 4,000 during the same period. More in Spanish: (AVN, 12-29-2011; http://www.avn.info.ve/contenido/pib-cerrará-este-año-cerca-300-mil-millones and http://www.avn.info.ve/contenido/chávez-pib-cápita-supera-10000-dólares-al-cierre-2011)



Commodities

PDVSA's accounts receivable mount to U$D 10.7 billion
Energy agreements are hitting the finances of the Venezuelan oil industry. Financial statements from the state-run oil company Petróleos de Venezuela, S.A. (PDVSA) for the first half of 2011 show that the accounts receivable stood at U$D 10.7 billion. The report underlines that such accounts are related to PDVSA's oil supply agreements with other nations. But these obligations have soared up from U$D 7.4 billion at the end of the second half of 2010. (El Universal, 12-28-2011; http://www.eluniversal.com/economia/111228/pdvsas-accounts-receivable-amount-to-usd-107-billion)

Chavez: Venezuela will be world’s top oil exporter
Venezuela, which has the world’s largest certified reserves of petroleum, will become the top oil exporter within the next 10 years, says President Hugo Chavez. He has recently said: “We will reach (exports of) around 10 million barrels (per day) in the next decade”. The Andean nation was the globe’s No. 1 oil exporter from 1925 to “nearly 1970” and remains among the leaders, “but the Arabs – Saudi Arabia, Iraq, Iran (sic) – surpassed us,” Chavez said. (Latin American Herald Tribune, 12-28-2011; http://www.laht.com/article.asp?ArticleId=456802&CategoryId=10717)

Shortages of basic food items hits consumption in 2011
Poor food supply hit Venezuela throughout 2011. AS in previous years, Venezuelans had to spend more time and money to buy the basic basket of foodstuffs. Products with controlled prices were the most seriously affected. Essential food items such as powdered milk, edible oil and beef were hard to find during most of the year. Other items such as coffee, precooked corn flour and margarine were scarce during the second half of 2011. According to economic research firm DATANÁLISIS, the shortage index ended this year at 24.8%, according to their latest survey, compared to 8% in January this year. (El Universal, 12-28-2011; http://www.eluniversal.com/economia/111228/shortage-of-basic-food-items-hits-consumption-in-2011)

FAO reports food inflation lower in region, persists in Venezuela
According to the UN’s FAO general inflation remained stable in Latin America for the fourth consecutive month in November, as foodstuffs slowed slightly from the previous month. Annual foodstuff inflation in Latin America fell from 8.4% in October to 8.2% in November. The same reports says the annual food prices inflation increased by a percentage point in Chile, Panamá, Perú, Uruguay and Venezuela. More in Spanish: (El Universal, 12-30-2011; http://www.eluniversal.com/economia/111230/inflacion-en-alimentos-baja-en-la-region-pero-persiste-en-venezuela)



International Trade

Venezuela buying more weapons from Russia
Russia has approved credit worth U$D 4 billion to Venezuela to reinforce its military mainly in weapons. "Without the Russian readiness it would have been impossible for us to reach the training level and equipment we have now," says President Hugo Chavez, and adds that Venezuela will continue receiving air, land and sea defense equipment from Russia next year. According to Ígor Korotchenko, director of the Center that analyzes international weapons traffic, (TsAMTO), Venezuela took first place as a buyer of Russian army weaponry during 2011. Russian press agency RIA NOVOSTI reports that this year Venezuela boughtT-72B1 combat vehicles, BMP-3M infantry combat vehicles, BTR-80ª armored vehicles, artillery, missile launchers, anti-aircraft systems and other equipment. (Bernama, 12-29-2011; http://www.bernama.com/bernama/v5/newsworld.php?id=637108 and more in Spanish: El Universal, 12-30-2011; http://www.eluniversal.com/nacional-y-politica/111230/en-2011-venezuela-encabezo-compras-de-armas-rusas)

Chavez says Chinese banks to extend U$D 8 billion in financing
President Hugo Chavez said that Chinese banks will provide U$D 8 billion worth of loans next month for development projects, adding to the more than U$D 30 billion in financing since 2007 that is being repaid in oil. The Industrial & Commercial Bank of China will lend Venezuela U$D 4 billion, while the China Development Bank Corp. will loan another U$D 4 billion, renewing a bilateral investment fund, Chavez said today on state television. Bilateral trade between China and Venezuela will be about U$D 17 billion in 2011 and may reach U$D 20 billion next year, and Venezuela has increased its imports of household appliances from Qingdao Haier Co. and heavy machinery from XCMG Construction Machinery Co. using the credit line. (Business Week, 12-27-2011; http://www.businessweek.com/news/2011-12-27/chavez-says-chinese-banks-to-extend-8-billion-in-financing.html)



Politics

Chavez muses on US Latin America cancer plot, US calls comments “horrific”
President Hugo Chavez has questioned whether the US has developed a secret technology to give cancer to left-wing leaders in Latin America. Treated for cancer this year, Chavez spoke a day after news that Argentina's president had the disease. Fernando Lugo of Paraguay, Dilma Rousseff of Brazil and her predecessor Lula have also had cancer. Chavez said this was "very strange" but stressed that he was thinking aloud rather than making "rash accusations". "Would it be strange if they had developed the technology to induce cancer and nobody knew about it?, Chavez asked in a televised speech to soldiers at an army base. He said the Central Intelligence Agency was behind chemical experiments in Guatemala in the 1940s and that it’s possible that in year to come a plot will be uncovered that shows the U.S. spread cancer as a political weapon against its critics. State Department spokeswoman Victoria Nuland called the comments "horrific and reprehensible", and said they were not worthy of further response. (BBC News, http://www.bbc.co.uk/news/world-latin-america-16349845; http://www.bbc.co.uk/news/world-latin-america-1635906; Bloomberg, 12-28-2911; http://www.bloomberg.com/news/2011-12-28/chavez-u-s-may-be-behind-s-america-leaders-cancer.html; and Reuters, http://www.reuters.com/article/2011/12/29/us-venezuela-usa-cancer-idUSTRE7BR14I20111229)

Iranian president to visit Venezuela, Cuba
Iranian President Mahmoud Ahmadinejad is to visit Venezuela and Cuba as part of a four-nation Latin America tour in the second week of January 2012, an official said Wednesday. Ahmadinejad will also visit Nicaragua and Ecuador on the trip, his international affairs director, Mohammad Reza Forghani, told the official news agency IRNA. (AFP, 12-28-2011; http://news.yahoo.com/iranian-president-visit-venezuela-cuba-131516559.html)




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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