March 16, 2012

Economics & Finance

Moody's ratifies Venezuela's debt ratings

Moody’s credit rating agency confirmed Venezuela's debt rating last Tuesday, but warned that if the government's financial position further deteriorates because of higher spending or a sudden decline in oil prices, downward pressure would be placed on ratings. Moody's said in a statement that it confirmed Venezuela's "B2" foreign currency government bond rating. The outlook for the rating is stable, Reuters reported. The credit rating agency also confirmed Venezuela's "B1" local currency government bond rating. Moody's said that the outlook of the rating is stable, the news agency added. (El Universal, 03-14-2012; http://www.eluniversal.com/economia/120314/moodys-ratifies-venezuelas-debt-ratings; Reuters, http://www.reuters.com/article/2012/03/13/idUSWNA238620120313)

‘Fair’ Costs and Prices Law is simply a sophistication of controls that are not new and have been in force here for the last nine years, says DATANÁLISIS CEO Luis Vicente León. He points out controls in Venezuela have historically only made problems worse and have fed inflation. (Veneconomy, 03-14-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29783&idc=3)

CADIVI and banks evaluate new procedures for imports

Currency Board (CADIVI) authorities and representatives of the public and private authorized exchange operators have been meeting to analyze new procedures that are coming in place for renewing or withdrawing applications for foreign exchange for import of goods. The procedures seek to simplify procedures and shorten response times, according to CADIVI information. More in Spanish: (AVN, 03-14-2012; http://www.avn.info.ve/node/103230)

Paralyzed plant provides MERCAL and PDVAL

1,200 workers at the DEMASECA plant, a key provider of cornmeal to PDVAL and MERCAL, have stopped activities in search of a new collective bargaining agreement after waiting 8 months to begin wage discussions after the Government expropriated the company – which processes and stores wheat flour, cornmeal, oil, pasta, rice and oats. Actual Government occupation has not taken place and plant owners do not want to sign a new contract because of the expropriation decree. The plant produces 18 tons per day of corn flour. More in Spanish: (El Nacional, 03-14-2012; http://www.el-nacional.com/)

Commodities

RUSORO expects Venezuela gold takeover as talks fail

RUSORO Mining Ltd., the last remaining publicly traded gold miner in Venezuela, expects its gold assets in the South American country to be taken over after a deadline to negotiate with the government lapsed, Chief Executive Officer Andre Agapov said. The stock slid 12%. RUSORO is preparing to seek international arbitration to obtain compensation for the assets as the Venezuelan government’s joint venture offers undervalue the company’s gold resources, Agapov said today in a phone interview from New York.“As of today, all the assets will be nationalized and they will take control of operations,” Agapov said. RUSORO would be the fifth mining company seeking compensation from Venezuela through the World Bank’s arbitration court following nationalizations. (Business Week, 03-15-2012; http://www.businessweek.com/news/2012-03-15/rusoro-expects-venezuela-gold-takeover-as-talks-fail)

Politics

Rumors in Venezuela as Chavez returns

When President Hugo Chavez returns to Venezuela this week after an operation in Cuba to remove a cancerous lesion, he will find a country swirling with rumors. With less than seven months to go before presidential elections, few know the true state of the socialist leader’s health. It is unclear whether he will even be able to stand, let alone campaign effectively, as he faces several weeks of radiotherapy and perhaps other treatment following his return from Havana. The uncertainty has focused attention on who could replace the founder of the “Bolivarian revolution”, who has attempted to keep himself in the limelight with Twitter messages, telephone calls and cabinet meetings on state television, as well as releasing occasional photographs. (Financial Times, http://www.ft.com/intl/cms/s/0/02632d92-6dd0-11e1-b9c7-00144feab49a.html#axzz1pBgiLwP8)

Venezuela rebuts Guyana's application at the UN

Venezuela has rejected an application submitted by Guyana to the United Nations Commission on the Limits of Continental Shelf, which seeks to extend its continental shelf. It has reminded the UN that the territory west of the Essequibo River is the subject of a territorial sovereignty dispute "inherited from colonialism" and subject to the Geneva Agreement of 1966 and, as such, to the Good Offices of the UN Secretary-General, "to which Venezuela is fully committed." (El Universal, 03-14-2012; http://www.eluniversal.com/nacional-y-politica/120314/venezuela-rebuts-guyanas-application-at-the-un)

Government refuses access to the UN and the Inter American Human Rights Commission

Representatives from the UN and the Inter-American Commission on Human Rights (IACHR) will find closed doors in Venezuela, unless the Government "deems it appropriate" to invite them in”. The Government made its position clear in a final report sent to the Human Rights Council United Nations in response to the Universal Periodic Review of Human Rights which the country underwent in October. More in Spanish: (El Universal, 03-15-2012; http://www.eluniversal.com/nacional-y-politica/120315/gobierno-rechaza-abrirle-las-puertas-a-la-onu-y-a-la-cidh)

PDVSA oil spill exposes fissures in Chavez’s Socialist Party

An oil spill at a facility operated by Venezuela’s state oil company has sparked the first public spat in the ruling party since President Hugo Chavez was diagnosed with cancer in June. While PDVSA President Rafael Ramirez told reporters Feb. 29 that 5,000 to 6,000 barrels of oil had been spilled and that the water supply was fit for drinking. Jose Gregorio Briceño, a government loyalist and governor of Monagas state, an oil producing region in the east of the country, said the government is trying to restart a water treatment plant that has been off line for more than a month when there are still traces of oil in the river that supplies the state capital Maturin. He also said that PSUV party officials, including the party’s vice president, Diosdado Cabello, are taking advantage of Chavez’s absence while he recovers from an operation in Cuba, to attack him. (Bloomberg, 03-13-2012; http://www.bloomberg.com/news/2012-03-13/venezuelan-oil-spill-exposes-fissures-in-chavez-s-ruling-socialist-party.html)

Improved US-Venezuela relations need to be based on “specific progress”, according to US Deputy Chief of Mission James Derham, who spoke at an Inter American Dialogue event in Washington this week. He said the US is interested in improving its “very complicated” relations with Venezuela but that it has to go beyond rhetoric. More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/120316/eeuu-aboga-por-avances-concretos-en-relacion-con-venezuela)