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, May 4, 2012

May 04, 2012

Economics & Finance

Spending spree clouds future
As President Hugo Chavez clings to power while battling cancer, the country's future is further clouded by unbridled government spending that has no relation to the budget, financial analysts said. The strongest criticism of the government's spending spree comes in a Fitch Ratings special report that cited "opaque off-budget" expenditure undermining the transparency of Venezuela's public and external accounts. Fitch called it a "costly parallel fiscal policy." (UPI, 05-03-2012;
U$D 93 billion transferred to development fund since 2005
Jorge Giordani, Minister of Finance and Planning, announced that government entities have deposited U$D 93 billion in the National Development Fund (FONDEN) from 2005 to date. Contributions received by FONDEN - which funds government's investment projects - were U$D 45 billon from Central Bank "surplus" reserves and U$D 48 billion in transfers from state-run oil company Petróleos de Venezuela (PDVSA). (El Universal, 05-03-2012;

Gov't cuts dollar allocations for private sector's imports
During the first quarter, the Central Bank (BCV) authorized U$D 4.9 billion for imports -the lowest amount for the past six years, according to a report prepared by research firm SÍNTESIS FINANCIERA. Foreign exchange allocations for private sector's imports have dwindled as the US dollars held by the central bank have diminished due to transfers to the National Development Fund (FONDEN). (El Universal, 05-02-2012

VP claims FONDEN fosters economic, social development
Vice-President Elias Jaua claims the National Development Fund (FONDEN) has fostered economic and social growth in the country. "It used to be a reserve placed abroad, but now it is planted in fields, houses, railways, the national electrical system, as well as in the social development of our people and in agriculture," he said during the opening of the second Expo FONDEN. (AVN, 05-03-2012;

Business charges new Labor Law runs counter to the Constitution
Jorge Botti, President the Federation of Trade and Industry Chambers (FEDECÁMARAS), says the new Labor Law  "runs counter to the Constitution and laws," as well as conventions under the International Labor Organization (ILO).
He claimed that new provisions involve a heavy burden for small companies. "The law is more costly for medium and small enterprises." Botti also criticized the "coercive and punitive nature of some articles" in the law, and announced that they filed a complaint with the ILO rejecting the manner in which the law was drafted. (El Universal, 05-02-2012;

Government says inflation lower for fifth consecutive month
Finance Minister Jorge Giordani and Central Bank President Nelson Merentes held a joint press conference to announce that variation for the National Consumer Price Index was 0.8%, which would mean a decline for five months in a row. The report by the Central Bank and the National Statistics Institute claims that accrued variation for the first months of 2012 is 4.4%, and the annualized rate through April was 23.8%, down from 24.6% in March. (AVN, 05-03-2012;

Logistics & Transport

Venezuela's largest airport at the mercy of criminals, according to sources who say lack of surveillance and the non-compliance with a security plan approved a year and a half ago have made the largest airport of the country vulnerable to criminals. (El Universal, 05-03-2012;


Chavez health problems plunge Venezuela's future into doubt
Uncertainty rules in Venezuela, where President Hugo Chavez battles a cancer some believe has turned fatal. As Chavez shuttles between Venezuela and Cuba, where he is receiving treatment for a type of cancer he has declined to identify, speculation grows whether he'll be in shape to campaign for the Oct. 7 presidential election. Or if he will even be alive by then. With no clear successor in line because Chavez has not designated one, analysts see political and military leaders and others with an eye on power quietly maneuvering to take over, improve their lot or simply stay out of prison. (CNN, 05-02-2012;

Vice President Elias Jaua named Chairman of the Council of State
During a Cabinet meeting held last Wednesday, Vice-President Elias Jaua was confirmed as chairman of the recently created Council of State. Former Vice President Jose Vicente Rangel, the ambassador to the Organization of American States (OAS) Roy Chaderton, former Ombudsman German Amundarain, admiral Rafael Giacopini and writer Luis Brito Garcia will be the main members of the new body. (AVN, 05-03-2012;

UN spokesman says Venezuela's departure from InterAmerican Human Rights Commission "very serious"
Rupert Colville, spokesperson for the UN Human Rights High Commissioner says Venezuela's withdrawal from the InteAmerican Human Rights Commission would be "very serious" and urged the Venezuelan Government to "rethink its decision". Colville said that Venezuela while has not yet decided to withdraw from the IACHR, it has "taken the first step" in that direction by setting up a committee to evaluate leaving the regional organization. (Ultimas Noticias, 05-04-2012;

US: Venezuela will send a bad signal if it leaves the IACHR
The US government believes President Hugo Chávez will send a "bad signal" about respect for human rights in his country in the event of withdrawal from the Inter-American Commission on Human Rights (IACHR). "It would be deeply regrettable if Venezuela would decide to walk away from the Inter-American Commission on Human Rights (IACHR). Washington considers the body an effective and unique organization within the hemisphere," US State Department deputy spokesman Mark Toner told reporters during his daily press briefing. (El Universal, 05-03-2012;

Venezuela is 174th in economic freedom
A global listing - the 2012 Economic Freedom Index - compiled the Heritage Foundation and The Wall Street Journal shows Venezuela is 174th out of 179 countries rated in business freedom, respect for law and competitiveness, among others, due to economic restrictions. Venezuela scored 38.1 points out of 100 possible, in a global average of 59.5. The listing is headed by Hong Kong, which scored 89.9 points. Latin America's average was 60 points, and Venezuela was 28th out of 29 countries in the Hemisphere, one step ahead of Cuba. (El Universal, 05-04-2012; American cooperation to strengthen fight against organized crime)

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