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, April 10, 2012

April 10, 2012

Economics & Finance

Government may grab workers' social benefits
In a radical change to Venezuela's labor law, President Hugo Chávez announced that, under the amended labor law, funds for social benefits for all workers, both public and private, shall be deposited in a fund managed by the government. According to Chavez: "There is a proposal in the labor bill to create a state-run Fund for Management of Workers' Social Benefits, in which the money of the social benefits of all workers, both public and private, will be deposited. The operations of this fund would be governed by a special law". (El Universal, 04-09-2012;

State run agribusiness unsuccessful Venezuela
Expropriations and seizures by the government have not necessarily resulted in increased productivity. The agribusiness infrastructure established by the government did not yield the expected results in 2011. The annual reports and accounts of the ministries of Agriculture and Land and Food clearly show the inability to implement projects and improve productivity because of financial constraints. (El Universal, 04-09-2012;

Inflation eats up most of the minimum wage increase, and may increase
Minimum wage workers will be paid 15% more from May 1 and they will get a second 15% hike in September. While this adjustment seems to be high, much of the increase is devoured by Venezuela's huge inflation rate. After deducting price increases, the purchasing power of workers will not grow significantly. According to Henkel García, of the ECONOMÉTRICA research firm, if local inflation stays at 26% this year, purchasing power will be only 4.8% higher in September than in September 2011. FEDECAMARAS President Jorge Botti points out that the decreed salary increases will further impact inflation and carry it to 30% (El Universal, 04-09-2012; and more in Spanish: Tal Cual;

More bonds may be issued to inject money into Sitme
According to ECONANALÍTICA analyst Asdrubal Oliveros, the government will soon issue more debt in order pay for imports and battle food shortages during the election year, while keeping inflation under 22% - a policy which Oliveros terms "crazy". More in Spanish: (Tal Cual, 04-09-2012;

Bank of the South to be launched with U$D 7 billion
Eudomar Tovar, first Vice-President of the Central Bank of Venezuela, says Latin America is heading toward a new financial architecture that will boost trade integration based on complementarity instead of competition. "Complementarity seeks to strengthen the industrial network of every Latin American country. We must take into account that there is no way to promote integration process only through tariff reduction," he explained. (El Universal, 04-07-2012;


Global environment is suitable for oil investment
Alejandro Grisanti, an economist with Barclays Capital is positive that Venezuela's geopolitical situation is its main asset. "Venezuela, because of her geopolitical situation, is at an exceptional point in time, the best possible time to enhance and pursue further investment in the oil sector", despite the fact that  the oil industry operates at more than 13% below the numbers recorded one decade ago, the failure to materialize expansion plans and continued operational troubles. (El Universal, 04-07-2012;

PDVSA implements oil spill contingency plan in Catatumbo River
State-run oil company Petróleos de Venezuela reports that it is monitoring events related to a ruptured oil pipeline as a result of an alleged explosive attack. The spill was detected on Saturday, April 7 by Empresa Colombiana de Petróleos (ECOPETROL). PDVSA said in a statement that the oil spill occurred in an area of Catatumbo River, in Colombian territory, at about 11:30 a.m. on Saturday in an area known as Filogrogingo, in Norte de Santander Department. (El Universal, 04-09-2012;

Flour now appears scarce
A survey carried out by a team from the ULTIMAS NOTICIAS daily newspaper shows that precooked corn flour is now scarce at six outlets visited in Caracas. Precooked corn flour is the basis for preparing the traditional Venezuelan "arepa". More in Spanish: (Últimas Noticias, 04-09-2012;

International Trade

Imports from Colombia rose 51.9% in a year
Venezuelan imports from Colombia rose 51.9% between February 2011 and March of this year, according to latest figures released by Colombia´s National Bureau of Statistics (DANE). Venezuela bought goods for U$D 160.45 million at the end of February this year, compared with U$D 105.61 million for the same month of 2011, which is an increase of 51.9%. Over the first two months of the year the country has accumulated purchases of U$D 296.7 million from Colombia, an increase of 62.7% over the $ 182.34 million for the same period of 2011. More in Spanish: (El Mundo, 04-10-2012,,9--en-un.aspx)


Sobbing Chavez returns to Cuba for more treatment
President Hugo Chavez has returned to Cuba for a third round of radiotherapy to treat a recurrence of his cancer. The President told Venezuelans he was returning to Cuba for more treatment after an emotional plea for his life at an Easter mass. Speaking through tears he asked Jesus to "Give me your crown, Christ, give it to me, I will bleed, give me your cross, a hundred crosses, but give me life, because I still have things left to do for the (Venezuelan) people and for the homeland," he said during Thursday night's mass. The exact nature of President Chavez's cancer has not been disclosed, fuelling rumors that his health may be worse than officially stated. Just hours before leaving for Havana, the Venezuelan leader unveiled a 32.25% increase in the minimum wage, to be introduced in two stages later this year. (BBC News, 04-08-2012;

Chavez exit won’t mean Venezuela’s problems out the door
This week’s Summit of the Americas, which opens on Saturday in Cartagena, Colombia, may well be President Hugo Chavez’s last. Right now, though, there’s no guarantee that whoever, or whatever, succeeds Chavez will necessarily bring a change for the better. Chavez, who faces elections in October, has just left Venezuela for another round of radiation therapy in Cuba to treat a mystery cancer first disclosed last June. It’s uncertain if he will be healthy enough to campaign, or how long he will live if he is re-elected. (Bloomberg, 04-09-2012;

Venezuela termed "high risk" by FITCH
The next few years will be difficult for Venezuela's economy despite speculation about the health of President Chavez and a surge by presidential candidate Henrique Capriles Radonski. In a recent memo, FITCH Ratings Agency again called Venezuela a "risky country" for investors due to severe macro-economic distortions arising from the current exchange controls, the highest inflation in Latin America and increasing indebtedness. More in Spanish: (Tal Cual;

Kidnapped foreign diplomat freed in Venezuela
A Costa Rican diplomat kidnapped in Venezuela has been freed, Venezuela's minister for justice and the interior said Tuesday. The diplomat, Guillermo Cholele, was reported kidnapped Sunday night. "Through investigative work and political pressure, we have achieved the liberation of the Costa Rican diplomat," Minister Tareck El Aissami said on his Twitter account. Cholele is in good physical shape and health, and was under police protection on his way to be reunited with his family, he said. According to a police report, Cholele did have a small wound on his head where he had apparently been hit. (CNN, 04-10-2012;; El Universal, 04-09-2012;

Eleven diplomats have been attacked since 2010 in Venezuela
At least 11 diplomats have been attacked by criminals between 2010 and 2012 in Venezuela, according to unofficial records kept by Venezuelan daily newspaper El Universal. (El Universal, 04-09-2012;

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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