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, March 27, 2012

March 27, 2012

Economics & Finance

CADIVI reduces allocation of foreign exchange for imports by 14%
During the first two months of this year the Currency Board (CADIVI), an agency in charge of allocating foreign currency for imports, has cut its allocations by 14% compared to the same period of 2011. Cuts have been uneven as approvals increased by 64% for the food sector and 40% for commerce, while the auto industry suffered a 39% cut and allocations to the health sector fell by 37%. (El Universal, 03-26-2012;

Industries down from 14,000 to 7,000 during the current regime, despite Chavez´s recent announced steps towards "a necessary industrialization". Additionally, price controls, expropriations, more taxes and special duties and legal uncertainties plague the economy, further endangering private sector development. (El Universal, 03-26-2012;

Banks purchase more government bonds to absorb excess liquidity
In the light of increased government spending on the way to elections, banks have increased their portfolios of bonds issued by the Ministry of Finance. The Bank Superintendent's office has issues statistics for the first two months of 2012 which show securities portfolios have jumped 16% to VEB 119 billion, even as the government is issuing an additional VEB 10 billion to create additional resources for agriculture. (El Universal, 03-26-2012;


Venezuela to pay U$D 420 million to Williams and Exterran
Oil and Energy Minister Rafael Ramirez says Venezuela will pay Williams Cos Inc and Exterran U$D 420 million for the 2009 nationalization of assets including a major gas injection project. He told reporters the deal meant the two companies would drop an arbitration case that is pending against Venezuela before a World Bank tribunal."We reached an agreement of U$D 420 million. They will drop the arbitration. They had been asking for U$D 1.2 billion," he said. (The Baltimore Sun, 03-24-2012;,0,1125392.story)

Government announces gas project will start production in December
The Oil and Energy Minister has announced that the Mariscal Sucre offshore gas project will begin production in December after years of delays and difficulties in attracting foreign partners. The government wants to develop natural gas production to meet growing domestic demand that has forced Venezuela to import from Colombia, despite sitting on some of the world's largest gas reserves. (Reuters, 03-24-2012;

Venezuela has over 30 million hectares available for production, according to President Chavez, who also says that to make it ready it will be necessary to supply funding, machinery, training, scientific and technical support. Chavez made is remarks in a phone call from Havana, Cuba. (AVN, 03-26-2012;


Chavez said he will return on Thursday, and that he will undergo five radiotherapy sessions in Cuba. He made his announcement in a telephone conversation on Sunday at noon. (El Universal, 03-26-2012;

Washington issues travel advisory related to Venezuela
The US government recommends its citizens, tourists or government personnel to take common-sense precautions when traveling to Venezuela to avoid being victims of murders, express kidnappings, extortion, robbery and drug trafficking activities. In an advisory issue by the US Embassy in Caracas citizens are warned to be careful in the Maiquetía Airport, the international airport serving Caracas, which is known to be "dangerous". They warn against complicity by airport officials wearing official uniforms or other official credentials but are part of criminal groups. (El Universal, 03-26-2012;

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