May 22th, 2012

Economics & Finance

Liquid reserves estimated at U$D 1.6 billion

Liquid reserves at the Central Bank - reserves immediately available for imports and debt repayment - are shrinking rapidly. After a reduction of 17% year to date, total national reserves now stand at U$D 25.495 billion, the lowest point since 2007. However, since most of that amount is in gold bars, a report by the SINTESIS FINANCIERA research firm shows that disposable or liquid reserves are only U$D 1.6 billion which "would cover only ten days of imports". More in Spanish: (El Universal, 05-22-2012; http://www.eluniversal.com/economia/120522/caen-hasta-1600-millones-las-reservas-liquidas-del-bcv)

Public debt grows uncontrolled, Central Bank director says it must be reined in

The Finance Ministry reports that domestic public debt closed 2011 at U$D 34.690 billion, a jump of 62.2% over U$D 26.838 billion at the close of 2010. Foreign debt came to U$D 39.909 billion, that is 7.8% over U$D 37.35 billion the year before. Armando León, a director at Venezuela´s Central Bank says "At this time the debt is manageable but last year's growth pattern should not be replicated, we should not resemble other countries that are in crisis". León estimates imports will grow 35% this year and considers a drop in 6.9% food production during the first quarter 2012 to be "alarming". More in Spanish: (Tal Cual, 05-22-2102; http://www.talcualdigital.com/index.html and El Universal; http://www.eluniversal.com/economia/120522/armando-leon-considera-que-hay-que-frenar-el-aumento-de-la-deuda)

Agricultural imports rose 375%

Official figures on the National Statistics Institute web page show agricultural, vegetable and animal imports were above U$D 10 billion during the first quarter 2012, which is 375% above the same period last year. Beef and other animal products have had the most significant growth. More in Spanish: (El Nacional, 05-22-2012; http://www.el-nacional.com/)

Government says foreign deposits increase to U$D 40 billion

Balance of payments information released by the Central Bank (BCV) at the end of the first quarter shows that government financial authorities have cut authorizations of US dollars for private sector imports, while increasing foreign deposits and public debt. The government raised foreign deposits by U$D 4.13 billion to U$D 40.97 billion.

The BCV claimed overseas accounts have swollen due to "to increased deposits held by the National Development Fund (FONDEN), the investment funds backed by Chinese loans, and the deposits held by monetary authorities and state-run companies." (El Universal, 05-21-2012; http://www.eluniversal.com/economia/120521/venezuelas-foreign-deposits-increase-to-usd-40-billion)

Non-oil exports fall 8% in the first quarter

Venezuela would be the poorest country in the hemisphere -positions currently held by Haiti- were it not for oil. In the first quarter 2012, non-oil exports amounted to U$D 1.04 billion. This is 8% lower than that in the first quarter of 2011, and it would cover only 7.9% of the imports necessary to meet everyday demand of other kinds of products.

The official numbers highlight the failure of the government policy to reduce dependence on oil. (El Universal, 05-21-2012; http://www.eluniversal.com/economia/120521/non-oil-exports-fall-8-in-the-first-quarter)

Commodities

US Department of Energy projects Venezuela's 2012 oil revenue at U$D 63 billion

The pace of Venezuelan oil income for 2012 is similar to that recorded last year, according to estimates by the US Energy Information Administration, and data released by the Organization of the Petroleum Exporting Countries (OPEC). In a report released last week, the US Department of Energy said that between January and April 2011, Venezuela received U$D 21 billion from oil exports. If this trend continues unchanged, Venezuelan oil revenues would amount to USD 63 billion by the end of 2012. The report also shows that between January and April Venezuela s oil revenue per capita would amount to U$D 764. (El Universal, 05-21-2012; http://www.eluniversal.com/economia/120521/venezuelas-oil-revenue-in-2012-amount-to-usd-21-billion)

ECOPETROL's profit 85% more than PDVSA's in 2011, Colombia displaces Venezuela in world attention

Colombia´s state owned firm ECOPETROL had profits 85% more than Venezuela's PDVSA in 2011, according to a comparative study by ECOANALITICA research firm. Although PDVSA's 2011 income was U$D 124.7 billion versus ECOPETROL'S U$D 30.4 billion, profits showed reverse results: PDVSA made only U$D 4.4 billion due to fund transfers to the government, and ECOPETROL made a net U$D 8.3 billion. Concurrently, Colombia is displacing Venezuela in the attention of world forums and markets because, according to expert Roger Tissot: "Venezuela is the more attractive country for its oil production potential and has the largest heavy oil reserves in the world, such as the Orinoco belt, but has had the worst economic performance in the region by high inflation, the high unemployment and policies to attract capital away". More in Spanish: (El Nacional, 05-22-2012; http://www.el-nacional.com/)

Colombia says will increase natgas flow to Venezuela

Colombia said on Friday it would send 50% more natural gas this year to neighboring Venezuela, which has yet to start producing the fuel commercially despite huge reserves. Colombia currently exports about 200 million cubic feet (mcf) of natural gas per day to Venezuela, but Energy Minister Mauricio Cardenas said that would rise to 300 mcf in September. "The supply of Colombian gas to Venezuela is going to increase, as will the flow of Venezuelan fuel to Colombia," Cardenas said during a meeting of energy officials in Caracas. (Reuters, 05-18-2012; http://www.reuters.com/article/2012/05/19/energy-colombia-venezuela-idUSL1E8GJ14O20120519; Fox Business, http://www.foxbusiness.com/news/2012/05/18/colombia-to-boost-natural-gas-supplies-to-venezuela-official/)

Venezuela sends third diesel shipment to Syria

Venezuela has sent a third shipment of diesel to Syria, the energy minister said on Friday, underscoring President Hugo Chavez's support of the Middle East country despite its intensified crackdown on protesters. Earlier this year, Venezuela's government said it had sent at least two shipments of fuel to Syria, potentially undermining Western sanctions as a rare supplier to the increasingly isolated regime of President Bashar al-Assad. A lawmaker from Chavez's socialist party said in March that another shipment was being prepared and Energy Minister Rafael Ramirez confirmed that it had been sent. (Reuters, 05-18-2012; http://www.reuters.com/article/2012/05/18/venezuela-syria-idUSL1E8GIJW720120518)

Politics

Chavez sets no date for registering candidacy

President Hugo Chavez placed a telephone call to a United Socialist Party meeting during which he said no date has yet been set to present his candidacy for reelection to the National Elections Board:"We have not set a date yet, it will be between the 1st and 11th of June". He had previously said he will no longer act as "a runaway horse", due to health problems, but said he will take over the reins of his reelection campaign after the 1st of July. "I have to accept it. I confess to the country that unfortunately I will no longer be the runaway horse you used to see around. Now, I am on a diet, work eight hours a day, and ask God to give me the strength of the buffalo rather than that of the horse." (El Universal, 05-19-2012; http://www.eluniversal.com/nacional-y-politica/120519/chavez-says-he-will-no-longer-be-a-runaway-horse; Reuters, http://www.reuters.com/article/2012/05/19/venezuela-chavez-idUSL1E8GIKJ420120519; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=507898&CategoryId=10717) and more in Spanish: (Tal Cual; http://www.talcualdigital.com/index.html)

...and says he will not respond to Uribe's accusations

During the same telephone conversation, Chavez said he will not respond to former Colombian President Álvaro Uribe Velez who accused him of supporting Colombia´s FARC guerrillas; but he did accuse Uribe of endangering regional peace toward the end of his administration. More in Spanish: (El Universal, 05-22-2012; http://www.eluniversal.com/internacional/120522/chavez-descarta-responder-a-las-acusaciones-de-uribe)

Road connecting Venezuela and Brazil closed for 96 hours

Trunk Road 10 that connects Venezuela with Brazil was blocked for 96 hours by a demonstration staged by indigenous miners of the Ikabarú community, in the Gran Sabana municipality, south the state of Bolívar. The blockade started on Thursday morning and demonstrators are still waiting for a response from Venezuelan authorities. Demonstrators are rejecting alleged abuses by National Guard troops who burnt a camp, equipments and attacked miners. The road blockade near the Wará Bridge, a few yards from the entrance of Santa Elena de Uairén town, restricted car traffic on the international road. (El Universal, 05-21-2012; http://www.eluniversal.com/economia/120521/road-connecting-venezuela-and-brazil-closed-for-96-hours)





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.