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, February 3, 2012

February 03rd, 2012

Economics & Finance

Public debt will exceed $ UD 200 billion
According to economists such as Orlando Ochoa and Jose Guerra, the cost of Venezuela's public debt is increasing as the Government strives to avoid possible currency devaluation during an election year; and to cover administrative costs and other acquired commitments. These experts say the implicit cost of such indebtedness has elevated the higher the cost of living in Venezuela, while it is dominated politics over economics. (Tal Cual, 02-01-2012;

ECONOMETRICA says investment will not increase over 0.6% in 2012
ECONOMETRICA, an economics research firm, is estimating that 2012 growth in the Venezuelan economy will not be matched by a significant rise in investment, which will remain stagnant. The firm raised projections in 3 scenarios based on the price of the Venezuelan basket of crude oil and derivatives: the optimistic U$D 120 per barrel, medium at U$D 100 and U$D 80 in a pessimistic scenario. In all 3 scenarios there is an expansion of GDP from 0.8% to 2.7% driven by private consumption, which will rise to 4%, and public spending us projected to increase to a cap of 7.5%. (El Nacional, 02-01-2012;

Central Bank to inject U$D 698 million into agriculture
President Chavez announced that the Central Bank of Venezuela (BCV) will grant VEB 3 billion (U$D 698 million) to the agricultural sector, in an operation that could increase inflationary pressures. There are indications that loans will be granted by the BCV by printing money, following a legal reform which allows the central bank to use a "direct credit method" in "programs that are considered a priority by the Executive Office and which are related to agriculture, manufacturing, construction, agribusiness and projects with an export potential." (El Universal, 02-01-2012;

The Revenue Service (SENIAT) has not submitted a report with a proposal to increase the value of Taxation Units, as announced by Ricardo Sanguino, chairman of the Permanent Finance and Economic Development Committee Deputy. In 2011, the Venezuelan Parliament approved a 17.25% increase in the value of Taxation Units, from Bs.65 to Bs.76. (Veneconomy, 02-01-2012;


Venezuela’s oil exports to US hit nine year low
Venezuela’s oil exports to the United States have dipped in recent months to their lowest level in nearly nine years, according to new U.S. government figures, reflecting a long-term trend of declining oil shipments during President Hugo Chavez’s 13-year-old government. The U.S. imported 764,000 barrels per day of Venezuelan crude oil and refined products such as gasoline in November, the last month for which figures are available, according to U.S. Energy Information Administration figures released this week.That was the lowest monthly amount since February 2003, when 613,000 barrels a day were imported at the end of an oil industry strike that hobbled Venezuela’s economy. The United States remains the top market for Venezuelan oil, but Chavez has been diversifying his country’s clientele by selling more to China and to allies in Latin America and the Caribbean. (The Washington Post, 02-02-2012;

PDVSA has failed to deliver guarantees for Abreu Lima Refinery in Brazil
A source at Brazil’s PETROBRAS has said PDVSA did not deliver guarantees or request an extension to deliver financial guarantees for the 10 billion Reais loan required for a 40% stake participation in the Abreu Lima Refinery project. The deadline expired on January 31. (Veneconomy, 02-01-2012;; El Universal;

COMSIGUA aims to produce 933,000 tons of briquettes in 2012
Briquette steelmaker Complejo Siderúrgico de Guayana (COMSIGUA) aims to produce 933,000 tons of briquettes, after it reached a production of 842,763 tons in 2011, 27% higher than the previous year. Company President Iván Hernández says COMSIGUA will undergo major maintenance for 45 days using Venezuelan workers and its own funds. There are 200,000 tons of briquettes have been stored at company headquarters in order to meet demand during the maintenance shutdown. (El Universal, 02-01-2012;

International Trade

Cuba says imports from US down sharply in 2010; trade with Venezuela nearly doubled
Cuban imports from the United States fell sharply in 2010 while the country increasingly turned to trade with ally Venezuela, according to newly released government statistics. The government also announced that agricultural food prices rose 20% last year in part due to shorter supply, even as authorities try to stimulate productivity with agrarian and economic reforms. Cuba’s National Statistics Office said the island imported U$D 410 million worth of goods from the U.S. in 2010, mostly food products. That was down from U$D 645 million the previous year and about U$D1 billion in 2008. Cuba has said in the past that it would be buying less from the United States, saying the embargo’s requirement that the transactions be done in cash was too restrictive. Increasingly it has turned to sources like China, Vietnam and Brazil in search of better terms. The document said trade with Venezuela, which has become Cuba’s main commercial partner under President Hugo Chavez, topped U$D 6 billion in 2010, nearly double the U$D 3.4 billion registered the year before. (The Washington Post, 02-01-2012;

Around 50% of trade between Ecuador and Venezuela is conducted in SUCRES (Unified Payment Compensation System), according to the Ecuadorean Ambassador to Caracas, Ramón Torres Galarza, who touted the system as one of the achievements of the Bolivarian Alliance of the People of the Americas (ALBA). More in Spanish: (Agencia Venezolana de Noticias, 02-03-2012;

Logistics & Transport

Caracas Airport: Bridge to Nowhere – ranked worst for business in Latin America
Perched in a narrow valley, 800 meters (0.5 miles) up in Venezuela’s coastal range, and separated from the Caribbean sea by mountains that rise to over 2,600 meters, Caracas is poorly endowed with suitable sites for an accessible airport. For more than half a century, it has relied on Maiquetia (officially, Simon Bolivar International Airport), built on a narrow coastal strip and linked to the capital by a steep, four-lane highway that has seen better days. Just how vulnerable that link is to disasters, both natural and man-made, was made abundantly clear in 2006, when one of the main viaducts on the route collapsed, forcing an average 50,000 vehicles a day onto a narrow, hastily-built by-pass and frequently turning what should be a 45-minute journey into a four- or five-hour nightmare. (Latin Business Chronicle, 02-01-2012;


US Intel chief: PSUV will have a hard time replacing Chávez
US Director of National Intelligence James Clapper said in written testimony to the Senate Intelligence Committee that Venezuelan President Hugo Chavez "announced that he is cancer-free, but there are still doubts about his health." According to the US intelligence chief, "there is no other leader (in Venezuela) who can match his (Chávez's) charisma, force of personality, or ability to manipulate politics and policy should he be unable to run again," Efe reported. (El Universal, 02-01-2012;

National Assembly elects Cilia Flores as Attorney General
The pro-Government majority at the National Assembly has approved the appointment of Cilia Flores as the new Attorney General, after President Chavez announced his proposal of appointing Cilia Flores to replace Carlos Escarra. (AVN, 01-02-2012;

General Luis Motta Domínguez appointed head of the National Land Institute. The former head of he National Guard has been placed in charge of “recovering land and put it into production”, according to President Chavez. More in Spanish: (Agencia Venezolana de Noticias, 02-03-2012;ínguez-como-presidente-del-instituto-nacional-tierras)

Venezuela asks the OAS to recess for a year, rethink role
Carmen Velasquez, Venezuelan representative to the OAS has proposed that the Hemispheric organization take a year off after the upcoming Cochabamba General Assembly next June, in order to concentrate on discussing a strategic vision for the organization. The idea – which was promptly supported by Nicaraguan and Uruguay - would imply calling off the 2013 General Assembly. Guatemala, which has offered to host the 2013 Assembly, said the meeting would be important for a debate among member nation foreign ministers, and should not be called off. More in Spanish: (El Nacional, 02-03-2012;

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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