December 28, 2012

Economics & Finance

Economy grew 5.5% in 2012

Nelson Merentes, President of Venezuela's Central Bank reports that gross domestic product (GDP) is expected to grow 5.5% by the end of the year, above the level estimated in the budget for fiscal year 2012. The strongest sector was construction sector with 16.8% growth which is 1.2% of total GDP. Expansion in this sector is attributed to the Great Housing Mission. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/central-bank-venezuelas-economy-hikes-55-in-2012; AVN, http://www.avn.info.ve/contenido/gdp-grew-55-2012)

Merentes calls inflation a problem

Central Bank President Nelson Merentes says that although price increases have slowed down, "inflation continues to be a problem for the economy", and calls for an increase in public and private production, as well as more efficiency in food distribution. This year's inflation goal had been projected between 20- 22% and year to date inflation was 18% by November: Final results for the year have not been announced. More in Spanish: (El Universal; http://www.eluniversal.com/economia/121228/merentes-admite-que-la-inflacion-es-una-dificultad)

Inflation reported at zero for 19 controlled items

Inflation was zero for 19 items controlled by the Superintendent for Fair Costs and Prices (SUNDECOP) since April 2012, which includes basic bathroom, cleaning, and drink products. Karlin Granadillo, head of SUNDECOP says the consumer price index (CPI) dropped by 13% last April on 19 controlled products, and there was no change in prices for the remainder of the year. She claimed that increasing prices due to alleged devaluation is just speculation. (AVN, 12-26-2012; http://www.avn.info.ve/contenido/inflation-rated-zero-19-regulated-items)

Domestic debt service projected at U$D 22 billion in 2013-2014

Information from the Planning and Finance Ministry shows that total debt service payments in 2013-2014 will be U$D 33.9 billion, 65% of which (U$D 22 billion) is domestic debt, which has risen by 306% from U$D 14.1 billion at the end of 2008 to U$D 57.3 billion by September 2012. (El Universal, 12-25-2012; http://www.eluniversal.com/economia/121224/venezuelas-domestic-debt-service-at-usd-22-billion-in-2013-2014)

Difficulties in acquiring FOREX and obtaining raw materials hit manufacturing

Central Bank figures show Venezuela's industrial sector has had a constant lackluster performance, and lags behind production levels recorded in 2008. The future looks bleak, with looming stagnation due to difficulties in obtaining foreign exchange and raw materials. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/obstacles-to-buy-us-dollars-and-raw-materials-lash-manufacturing)

Banking intermediation dropping

Banking is among the best performing sectors this year, with real annual profits increasing equity by 30%. However, intermediation has been under 55% throughout the year, and dropped to 50.88% in November, according to the Banking Superintendent's office (Sudeban). (El Universal, 12-26-2012; http://www.eluniversal.com/economia/121226/banking-intermediation-lashed-by-matured-bonds-payable)

Government extends standing ban on workforce reduction to all of 2013

The Government has again extended the standing ban on dismissing public and private sector employees to all of 2013. Under current rules no worker can be fired without just cause previously approved by a local Inspector from the Labor Ministry. More in Spanish: (AVN, 12-28-2012; http://www.avn.info.ve/contenido/gobierno-nacional-extiende-inamovilidad-laboral-durante-todo-2013;  El Universal, http://www.eluniversal.com/economia/121228/decretan-inamovilidad-laboral-durante-todo-2013)

49.4% of all unemployed are aged 24-44

Historically, the youngest population (Age 15-24) has been the hardest hit by unemployment. However, official data shows that in November those aged 25-44 faced more difficulties getting a job. According to data from the National Statistics Institute (INE), some 873,513 were unemployed last month, of which 431,411 (49.4%) were aged 25-44. (El Universal, 12-26-2012; http://www.eluniversal.com/economia/121226/out-of-the-total-unemployed-494-are-aged-24-44)

Government seeks to consolidate a communal system in 2013

Although little progress has been made in implementing a system that calls for communities to take part in producing goods and services - so little that in October President Chavez showed his disappointment and even threatened to eliminate the Ministry of the Communes - government and party leaders continue to call for full implementation during 2013. (El Universal, 12-26-2012; http://www.eluniversal.com/economia/121226/venezuela-aims-at-consolidating-the-economic-communal-system-in-2013)

Venezuela stock market up 298%

After rallying sharply in the week ahead of the Gubernatorial elections, Caracas stocks lost 1.9% the week ending December 21 to close at 465,336 on little volume. Only four stocks changed price: Mercantil Servicios Financieros A lost 3.6% at Bs. 135, while the class B shares lost 4.3% at Bs. 135. Banco Provincial lost 0.6% at Bs. 164, while CANTV was the only gainer, rising 0.6% at Bs. 17.1. (Latin American Herald Tribune, 12-24-2012; http://www.laht.com/article.asp?ArticleId=658459&CategoryId=10717)

Commodities

Domestic hydrocarbon market is plagued by distortions and subsidies

Venezuela's growing domestic hydrocarbon market is plagued by distortions and subsidies that show up in high demand and fitful supply. Neither the Petroleum and Mining Ministry or state-run oil company PDVSA provide in-depth reports on the size of the domestic market during 2012, but a few weeks ago, PDVSA's chairman, Rafael Ramírez, remarked that gasoline demand is at 298,000 barrels per day (bpd) and that this year the power sector's demand has been tremendous. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/venezuelas-oil-domestic-market-accumulates-distortions-and-subsidies)

International Trade

Venezuela will comply with MERCOSUR trade agreements next month

Trade Minister Edmée Betancourt reports Venezuela has reached tariff nomenclature agreements within MERCOSUR and had moved ahead in reducing tariffs on several products. She reported firm agreements had been reached with Argentina in 609 sensitive items and with Brazil on another 777 items. More in Spanish: (AVN, 12-28-2012; http://www.avn.info.ve/contenido/venezuela-acuerda-c%C3%B3digos-arancelarios-pa%C3%ADses-miembros-del-mercosur; El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/3-acuerdos-arancelarios-con-el-mercosur-comenzaran.aspx)

Venezuela is Spain's main weapons client

Venezuela was reported at the top of the list of countries buying arms from Spain during the first half of 2012 and has held this position for two consecutive years, according to Spain's Economy Ministry. From January-June, Hugo Chávez's Government purchased U$D 217.54 million in weapons, which is 26.5% of total arms exports reported by Spain. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/venezuela-is-spains-main-buyer-of-weapons)

Logistics & Transport

Guanta Port modernization reportedly advancing

Port authorities report the Government has invested over VEB 70 million through the Bolivarian Port Authority (BOLIPUERTOS), in order to improve Guanta's port infrastructure, which include refurbishing docks and roadways within the port, storage facilities, electric repairs, medical offices and other facilities. More in Spanish: (Bolipuertos, 12-28-2012 http://www.bolipuertos.gob.ve/noticia.aspx?id=6559)

Politics

Chavez delegates administrative responsibilities to his vice president

Hugo Chavez has delegated some administrative responsibilities to Venezuela's vice president, allowing his close confidant to make decisions related to the budget, expropriations and government debt. Chavez passed on the duties to Vice President Nicolas Maduro on Dec. 8, three days before the socialist leader underwent cancer-related surgery in Cuba. The measure took effect Wednesday upon its publication in the Official Gazette. (Fox News, 12-26-2012; http://www.foxnews.com/world/2012/12/26/venezuela-chavez-delegates-administrative-responsibilities-to-his-vice/#ixzz2GCF1CYfV; El Universal, 12-26-2012; http://www.eluniversal.com/nacional-y-politica/121226/venezuelas-vice-president-bestowed-economic-decision-making-capacity; Bloomberg, http://www.bloomberg.com/news/2012-12-26/venezuela-s-maduro-can-issue-debt-expropriate-assets.html; http://www.bloomberg.com/news/2012-12-25/chavez-gives-venezuela-economic-orders-in-christmas-eve-call.html; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-delegates-administrative-responsibilities-to-his-vice-president/2012/12/26/c1270bd4-4f81-11e2-835b-02f92c0daa43_story.html)

Officials claim Chavez improving after surgery

President Hugo Chavez is improving after a cancer operation in Cuba and has started exercising, officials said on Monday, amid doubts over whether the former soldier is in good enough health to continue governing. Vice President Nicolas Maduro said he had spoken by phone with Chavez, who was walking and doing exercises as part of his treatment. "We've gotten the best present we could get this Christmas: a phone call from our commander president," Maduro said on state television. Information Minister Ernesto Villegas said earlier in the day that Chavez had "shown a slight improvement in his condition," without providing details. (Reuters, 12-25-2012; http://www.reuters.com/article/2012/12/25/venezuela-chavez-idUSL1E8NO59620121225; AVN, 12-25-2012; http://www.avn.info.ve/contenido/chavez-greets-venezuelan-children-thank-people039s-prayers; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=658652&CategoryId=10717; Fox News, http://www.foxnews.com/world/2012/12/25/vp-says-spoke-with-chavez-who-is-up-walking/)

Cabello says he supports Maduro

National Assembly President Diosdado Cabello said he will carry out orders from President Chavez, and added that "the opposition thinks that January 10th is the day they will be rid of Chavez" and hope that "Diosdado and Nicolás are fighting. Let them continue to believe I am going to disobey an order from the Commander - The Commander was so clear and explicit, besides, orders must be followed by all who call ourselves "chavistas". The Commander said that if for some reason, any reason, he should become unable to lead, the Commander designated comrade Nicolás Maduro, in the knowledge that the revolution will not be lost."  More in Spanish:  (El Universal, 12-28-2012; http://www.eluniversal.com/nacional-y-politica/121228/cabello-con-maduro-no-se-perdera-la-revolucion)

Chavez has spent 201 days in Cuba and there has been no medical report

National Assemblyman Carlos Berrizbeitia charges that President Chavez has spent 201 days in visits and rest in Havana due to cancer treatment and that there has been no medical report. Berrizbeitia says the President has made 11 trips to Cuba, made 6 requests to the National Assembly for permission to leave the country, and has spent 106 days convalescing and 95 resting in Cuba. More in Spanish: (El Universal, 12-28-2012; http://www.eluniversal.com/nacional-y-politica/121228/chavez-lleva-201-dias-en-cuba-y-no-hay-informe-medico)

Colombia's Santos reaffirms support for Chavez

Colombian president Juan Manuel Santos reaffirmed his support for President Hugo Chavez, who is recovering after a surgery in Havana. Santos called vice-president Nicolas Maduro, and expressed Colombia's willingness to collaborate with Venezuela under any circumstance. (AVN, 12-25-2012; http://www.avn.info.ve/contenido/colombia039s-santos-reaffirms-support-chavez; El Universal, http://www.eluniversal.com/nacional-y-politica/121225/santos-gets-ready-to-attend-chavezs-inauguration)

Uruguayan president foresees a big question mark for Venezuela without Chávez

Uruguayan President José Mujica says he cannot provide "a sensible, categorical answer" about what may happen in Venezuela if Hugo Chávez does not recover from cancer. Mujica stated that he rather has "questions" regarding the future of the country in the event that the president steps down. "I have questions, as any person would, because Chávez has exerted a tremendous influence on low-income Venezuelans and the Armed Forces, and finding a person able to do so is yet to come. Questions arise," the Uruguayan leader said. (El Universal, 12-26-2012; http://www.eluniversal.com/nacional-y-politica/121226/uruguayan-president-sees-a-big-question-mark-in-venezuela-without-chav)



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.

December 21th, 2012

Economics & Finance

Foreign debt payments projected to increase by 48% in 2013

The ECOANALÍTICA think tank is saying that next year's oil income will not be enough to cover foreign debt obligations and imports. "Considering our U$D 104 estimated average oil price and projected 2.22 million BPD exports, we see that oil income will be insufficient to meet the economy's FOREX needs." Increased debt service in 2013 will call for U$D 18.425 billion outflows, which is a 48% jump over 2012. More in Spanish: (El Universal, 12-21-2012; http://www.eluniversal.com/economia/121221/pagos-por-concepto-de-deuda-externa-aumentan-48-en-2013)

Serious devaluation required in view of large fiscal deficit

According to a report on Venezuela's economic outlook compiled by economists José Guerra, Sary Levy, Luis Bruzco, Isaac Mencía, and Luis Oliveros, "size of the (Venezuelan) fiscal deficit will require a serious revision of the foreign exchange rate" in 2013  They explained that the gap between income and expenditure stands at 17% of the gross domestic product (GDP). Also, Venezuela's debt is escalating rapidly, so the country will have no other choice but to devaluate in order to obtain more bolivars per each dollar. (El Universal, 12-19-2012; http://www.eluniversal.com/economia/121219/serious-devaluation-needed-in-venezuela-amidst-large-fiscal-deficit)

Average cost of regulated food basket was Bs.1,989.09 in November, up 2.69%. Accrued variation through November 2012 is 14.23%, down from 24.76% posted for the same period in 2011. (Veneconomy, 12-20-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33273&idc=3)

Government says unemployment dropped to 6.4% in November, claims inflation will be under 20%

Unemployment rates in Venezuela rated 6.4% during t November 2012, according to a monthly report on the workforce drafted by the National Statistics Institute (INE). The report claims 115,714 people found a paid job, so unemployment registered a month-to-month drop since October, when it was 7.3%. The Institute also said inflation may be under the 20% goal for the year. (AVN, 12-20-2012; http://www.avn.info.ve/contenido/unemployment-dropped-64-cent-november and more in Spanish: Últimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ine-desempleo-subio-a-6-4-en-noviembre.aspx)

Communes to receive more funding than mayor's offices

Venezuela's Budget Law for fiscal year 2013 provides some U$D 4.9 billion to the Inter-territorial Compensation Fund (FCI) for the projects and plans submitted by states and municipalities, as well as communal councils. However, in distributing the funds, authorities benefit so-called communes over the rest. As per the Budget Law, U$D 1.6 billion will be allocated to states; U$D 1.2 billion to municipalities, and U$D 2.04 billion to the "people's power" and community based plans. Funding for communal councils and communes exceeds that allocated to municipalities by 69% and to states by 25%. (El Universal, 12-19-2012; http://www.eluniversal.com/economia/121219/venezuelan-communes-to-get-more-funds-than-mayors-offices)

Commodities

Sugar import tariff set at 50%, by the Nutrition Ministry and the Planning and Finance Ministry. The ruling establishes 132,013 tons of sugar will be purchased abroad, through companies that guarantee imports and distribution into the local market. (El Nacional, 12-21-2012; http://www.el-nacional.com/)

International Trade

Venezuela-Colombia trade up 32.9%

Venezuela-Colombia trade rose 32.9% in January-November compared to the same period time last year, according to data from Colombia's National Tax and Customs Agency (DIAN), based on estimates from the Venezuelan-Colombian Chamber of Economic Integration (CAVECOL). The information shows that total bilateral trade was U$D 2.68 billion, compared to U$D 2.02 billion last year.  (El Universal, 12-19-2012; http://www.eluniversal.com/economia/121219/venezuela-colombia-trade-up-329)

Venezuela became Guyana's second largest trading partner during the first half of 2012, due largely to energy exchanges within PETROCARIBE. According to the Guyanese statistics department Guyana imported U$D 147.6 million, which is 15.6% of all imports, and exported U$D 62.7 million to Venezuela, which includes around 60% of Guyana's rice production. More in Spanish: (El Nacional, 12-21-2012; http://www.el-nacional.com/)

Logistics & Transport

Only four out of 24 docks for commercial trade at La Guaira Port are operational, says Rusvel Gutierrez, head of the Vargas state Industrial and Customs Agents Chamber. He also said the government is investing in two high draught docks through the ALBA ports agreement at a time when there are 20 docks in the area waiting for maintenance. (Veneconomy, 12-20-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33276&idc=3)

Politics

Supreme Court Could Rule on Chavez Inauguration, Officials Say

Top Venezuelan officials have opened the possibility that cancer-stricken President Hugo Chavez may not have to be sworn-in Jan. 10 to start a new six-year term, as stipulated in the country’s constitution. Vice President Nicolas Maduro said yesterday that while he’s praying for the president’s recovery in Cuba, and added that the country’s constitutional court “has a great capacity to interpret the constitution” about the swearing-in date. On Dec. 18 National Assembly President Diosdado Cabello told reporters that there is precedent for delaying inaugurations in Venezuela. These comments raised opposition concerns that the government may try to delay the ceremony and subsequent national elections if Chavez is too ill to take office. “The president should present himself on January 10 and take his oath,” says opposition alliance secretary Ramon Jose Medina. “The date is constitutionally set and can’t be changed for personal opinions or political convenience.” (Bloomberg, 12-20-2012; http://www.bloomberg.com/news/2012-12-19/maduro-says-high-court-can-decide-issue-of-chavez-taking-office.html; El Universal, 12-19-2012; http://www.eluniversal.com/nacional-y-politica/121219/venezuelas-vp-we-work-under-the-premise-of-chavezs-recovery; http://www.eluniversal.com/nacional-y-politica/121219/congress-speaker-hints-possibility-of-adjourning-chavezs-inauguration-; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-has-respiratory-infection-after-cancer-surgery-official-says/2012/12/18/6b8e3528-4971-11e2-8af9-9b50cb4605a7_story.html; http://www.washingtonpost.com/world/the_americas/venezuela-vp-says-government-sticking-to-plan-for-chavez-inauguration-after-cancer-surgery/2012/12/19/89b4693a-4a3b-11e2-8af9-9b50cb4605a7_story.html; Fox News, http://www.foxnews.com/world/2012/12/20/chavez-ally-defends-idea-pushing-back-jan-10-inauguration-if-needed-after/)

Supreme Court President says there are no constitutional doubts over the President's term

Luisa Estela Morales, President of Venezuela's Supreme Court, says there are no constitutional issues over the term of President Chavez. She said: "It is important to know that for the moment there is no constitutional issue to decide. The President has complied with his constitutional duty to seek permission from the National Assembly to be absent for more than 5 days". She added that legal opinions about his stay in Cuba are "out of context", and said this was not "a legal, but rather a constitutional affair. Do not lose sight of this". More in Spanish: (AVN, 12-21-2012; http://www.avn.info.ve/contenido/presidenta-del-tsj-aclara-que-no-hay-duda-constitucional-sobre-ejercicio-del-presidente; El Universal, http://www.eluniversal.com/nacional-y-politica/121221/sobre-asuncion-de-chavez-no-existe-duda-constitucional)

Constitutional experts say President Chávez must take office next January 10

A group of Venezuelan constitutional experts rejected ruling party Diosdado Cabello's proposal for postponing the date reelected President Hugo Chávez should to take office for presidential term 2013-2019. President Chavez has often said: "everything within the Constitution is acceptable, outside the Constitution, it is not"; and today, these same words are used by Chávez's foes to dismiss suggestions of postponing the date (January 10) the Venezuelan president is to take office for presidential term 2013-2019 in order to let him recover from his fourth surgery. (El Universal, 12-20-2012; http://www.eluniversal.com/nacional-y-politica/121220/venezuelan-experts-president-chavez-must-take-office-next-january-10)

Chávez is stabilizing steadily and is fully conscious, says Vice President Nicolás Maduro, who read a medical report out of Havana which claims the President is undergoing a rigorous and constant treatment after his operation two weeks ago. He said a respiratory infection is also being treated. More in Spanish: (AVN, 12-21-2012; http://www.avn.info.ve/contenido/presidente-chávez-agradece-victoria-del-16-diciembre; El Universal, http://www.eluniversal.com/nacional-y-politica/121221/maduro-asegura-que-chavez-esta-bien-y-consciente)

Municipal elections postponed to May 26, 2013. According to an announcement made by Elections Board President Tibisay Lucena. She said the call for elections will be made during the last week of January 2013, when the registry will be opened for 15 days in order to receive new inscriptions, that political organizations may present nominations to each municipal board on February 15-22; and that the campaign will take place from April 25 through May 25 next year.  More in Spanish: (AVN, 12-21-2012; http://www.avn.info.ve/contenido/tibisay-lucena-elecciones-municipales-se-realizar%C3%A1n-26-mayo-2013; El Universal, http://www.eluniversal.com/nacional-y-politica/121221/cne-difiere-hasta-el-26-de-mayo-las-elecciones-locales)

Call for recount made in Bolivar state

Andrés Velásquez, opposition candidate for Governor in Bolivar state has made a formal request for a recount to the local Elections Board, despite the fact that it has certified government candidate Francisco Rangel Gómez's reelection. Velásquez emphasized that invalid votes (18,212) are more than the difference between both candidates. More in Spanish: (El Universal, 12-21-2012; http://www.eluniversal.com/nacional-y-politica/121221/entregan-al-cne-de-bolivar-impugnacion-y-exigen-reconteo)



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.

December 18th, 2012

Economics & Finance

BARCLAY's reports Giordani may be on the way out

A report by BARCLAY's Capital says there may be significant changes in economic policies, "including the possible departure of Finance and Planning Minister Jorge Giordani, who has serious differences with the pragmatic sector of the Chavez movement. Giordani has been a strong advocate of the severe exchange controls that have distorted the FOREX market and increased the fiscal deficit". Also, although Giordani has tried to stop new bond issues, current policies have forced the nation and PDVSA to issue bonds at a much higher cost." More in Spanish: (El Nacional, 12-18-2012; http://www.el-nacional.com/)

Central Bank seeks "rational" exchange policy

Central Bank President Nelson Merentes says "this market is too complicate to predict". He adds that exchange concerns have "disturbed the economy" during the past months and said the Bank is meeting "with the different Ministries in order to seek options and a rational exchange policy, and seek a favorable outcome for the economy". Asked about the black market he said: "This market is very complex. Some sectors become speculative and nothing can be anticipated because too many agents play rough with this type of gains". He refused to answer on a possible devaluation, saying it "is not a media matter". More in Spanish: (El Mundo, 12-18-2012; http://www.elmundo.com.ve/noticias/economia/banca/bcv-busca-con-ministerios-una--racionalidad--cambi.aspx)

Cost of underwriting Venezuela's debt rises after gubernatorial election

The cost of underwriting Venezuelan government debt in the event of default surged on Monday to reverse a portion of recent profits, following the landslide victory of the followers of President Hugo Chávez in the gubernatorial election, according to numbers provided by Markit. Credit default swaps (CDS) had dropped since President Chávez appointed a successor on December 8. The action raised the expectations about his stepping down after 14 years in office, Reuters cited. (El Universal, 12-17-2012; http://www.eluniversal.com/economia/121217/cost-of-underwriting-venezuelas-debt-rises-after-gubernatorial-electio)

Chavez's cancer may put Venezuela devaluation on hold

President Hugo Chavez's battle with cancer and the possibility of a new presidential election look likely to delay key economic policy decisions including a sharp currency devaluation needed to shore up public finances. Chavez spent heavily this year in giving new apartments, home appliances and cash payments to poor Venezuelans to ensure his re-election, weakening the nation's fiscal position. Economists have widely predicted the devaluation would come this month or in early 2013 because the spending spree expanded a yawning fiscal deficit. Devaluing eases fiscal pressure by giving the government more local bolivar currency for each dollar brought in by oil exports. (Reuters, 12-17-2012; http://www.reuters.com/article/2012/12/17/venezuela-chavez-economy-idUSL1E8NH0P020121217)

Postponing devaluation will result in shortages

Fedecámaras Chief Jorge Botti insisted on the need to have adjustments in terms of foreign currency rates that ease access to businessmen. Botti said that if an adjustment in the rate is not decreed “immediately, it could result in shortages at the beginning of 2013.” (Veneconomy, 12-14-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33251&idc=2)

Financial system profits rose by 93% this year, according to a report by the Banking Superintendent for the close of November. Bank profits rose to VEB 13.555 billion, which is U$D 3.152 billion at the official exchange rate, far above last year. Benefits derive primarily from investments in public bonds, commissions on FOREX provided by SITME and a rise in credits. The Government has triggered public spending during the election year to levels far above oil income and tax collections, so it continuously sells the banking system bonds that offer tax free dividends. More in Spanish: (El Universal, 12-18-2012; http://www.eluniversal.com/economia/121218/aumentan-93-ganancias-del-sistema-financiero)

Venezuela is among the 20 nations with highest flow of illicit capital, according to a Global Financial Integrity report which indicates that the flow of illicit capital from crime, corruption, tax evasion and overpricing are estimated around U$D 3.790 billion from 2001 to 2010. The total amount of illicit capital going to fiscal havens or banks in developed nation was almost U$D 6 billion. More in Spanish: (El Mundo, 12-18-2012; http://www.elmundo.com.ve/noticias/economia/internacional/venezuela-entre-los-20-paises-con-mayores-flujos-d.aspx)

Commodities

Basic staple sales dropped by 1% in November, according to the Food Industry Chamber (CAVIDEA). Lower sales, as compared to 2011, were reported in wheat flour (32,04%), pasteurized milk (17,49%), rice (12,73%), corn wheat (5,98%), margarine (8,78%) and tomato sauce (0,42%). More in Spanish: (El Universal, 12-18-2012; http://www.eluniversal.com/economia/121218/1-cayeron-ventas-de-alimentos-basicos-durante-noviembre)

International Trade

CNPC makes second bonus payment toward developing oil block

China National Petroleum Corp., the country’s largest energy company, made a second payment toward a U$D 900 million signing bonus it must make to develop the Junin 4 oil block in Venezuela, Petroleos de Venezuela SA said today. It paid U$D 180 million, PDVSA said. The bonus will be paid in several installments and is in addition to capital needed to produce and refine crude at the Orinoco Belt field. State-run PDVSA and CNPC signed an accord in April 2010 to invest U$D 16.3 billion in a joint venture that will produce 400,000 barrels a day in 2016. CNPC will be a minority partner. (Bloomberg, 12-15-2012; http://www.bloomberg.com/news/2012-12-15/cnpc-makes-second-bonus-payment-toward-developing-oil-block.html)

Politics

Maduro has not spoken to Chávez

Vice President Nicolás Maduro said yesterday: "We have not been in direct communication with him. We are respectful of his treatment and as soon as we have the first reaction we will report it". More in Spanish: (Tal Cual, 12-18-2012; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/elecciones-2012/121218/maduro-no-ha-conversado-directamente-con-chavez)

"His illness is terminal and those close to him know it", says Dr. José Rafael Marquina, a Naples, Florida, based physician and specialist in internal medicine and intensive care medicine. "He will not return, at least not in his previous condition". Dr. Marquina has been openly reporting to media on President Chavez's illness for over a year, often anticipating information that is later confirmed officially. More in Spanish: (Tal Cual, 12-18-2012; http://www.talcualdigital.com/index.html)

Chávez's candidates win 20 governor's offices; opposition obtains three

The ruling United Socialist Party of Venezuela (PSUV) has won 20 governor's offices, compared to 3 obtained by the opposition Unified Democratic Panel (MUD), according to Tibisay Lucena, head of the National Elections Board. MUD candidates retained the governor's offices in the states of Lara, Miranda and Amazonas. Pro-government candidates won in the remaining states. Lucena said late on Sunday that the results in Bolívar state indicated that ruling party candidate Francisco Rangel Gómez had obtained 43.57% of the votes against 42.34% won by opposition leader Andrés Velásquez. (El Universal, 12-16-2012; http://www.eluniversal.com/nacional-y-politica/121216/chavezs-candidates-win-20-governors-offices-dissenters-obtain-three; AVN, http://www.avn.info.ve/contenido/gubernatorial-election-results-graphics; Reuters, http://www.reuters.com/article/2012/12/17/venezuela-chavez-idUSL1E8NH1R320121217; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=657223&CategoryId=10717)

Velásquez condemns militarization at the National Elections Board, challenges results

Andrés Velásquez, opposition candidate for the Unified Democratic Panel (MUD) in Bolívar state, went to the state office of the National Electoral Board to challenge results of the gubernatorial election held on December 16. He held voting logs in his hands and was joined by local residents: "Allow me to tell the country that we formally declare a fraudulent process in the specific case of Bolívar state. We cannot accept this election result; therefore, we will proceed to challenge it," exclaimed the leader of opposition Causa R party - who also protested that the military did not allow him access to Board offices. Velásquez claims 126 polling stations have not yet been counted. (El Universal, 12-17-2012; http://www.eluniversal.com/nacional-y-politica/121217/velasquez-regrets-militarization-due-to-protests-against-cne; http://www.eluniversal.com/nacional-y-politica/121217/military-detachment-shields-cne-office-in-ciudad-bolivar; and more in Spanish: Tal Cual; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/elecciones-2012/121218/velasquez-asegura-que-faltan-126-actas-por-contabilizar)

Capriles: We will eventually defeat the abuse of power

"I'm extremely happy for the people of Miranda state," said Henrique Capriles Radonski in his first speech after his reelection as governor of Miranda state. He congratulated Henri Falcón (Lara state) and Liborio Guarulla (Amazonas state) on their victory. However, he said he could not feel happy for Venezuela, as pro-government candidates won 20 out of 23 gubernatorial offices. Henrique Capriles, who was reelected in Miranda state, will have to contend with a pro-government majority of one in the State Assembly, as will Henri Falcón in Lara. (El Universal, 12-16-2012; http://www.eluniversal.com/nacional-y-politica/121216/capriles-we-will-defeat-the-abuse-of-power-eventually; Bloomberg, http://www.bloomberg.com/news/2012-12-17/capriles-defeats-chavez-candidate-in-venezuela-regional-vote-1-.html; more in Spanish: Tal Cual; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/elecciones-2012/121218/capriles-y-falcon-con-trabas-legislativas)

Opposition leaders not satisfied with the election results, will continue the fight

Ramón Guillermo Aveledo, Executive secretary of opposition Unified Democratic Panel (MUD) said the results of the gubernatorial vote held on Sunday show that "no one will surrender." He noted that the opposition campaign was conducted under "very difficult circumstances". Metropolitan Caracas Mayor Antonio Ledezma, who was the group's national coordinator, said they will continue to wage battle, and that unity was more necessary than ever. (El Universal, 12-16-2012; http://www.eluniversal.com/nacional-y-politica/121216/opposition-leader-we-are-not-satisfied-with-the-election-results; and more in Spanish: Tal Cual; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/elecciones-2012/121218/ledezma-dice-que-resultado-del-16d-obliga-a-reinventarse; http://www.eluniversal.com/nacional-y-politica/elecciones-2012/121218/la-mesa-de-la-unidad-se-revisa-y-se-recompone-a-la-luz-del-16-d)



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.