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 25, 2012

May 25th, 2012

Economics & Finance

Consumption soars 5.7% and US dollar shortage intensifies
After a huge dose of public spending, including wage hikes and increased subsidies, the Government has once again elevated private consumption, which has soared to 5.7% in the first quarter 2012. The problem is that higher demand forces authorities to increase and speed up the authorizations of US dollars within an economy that is highly dependent on imported products and finished goods. In order to meet demand, imports have climbed 48.5%. (El Universal, 05-23-2012;

GDP numbers point to deteriorated manufacturing sector
Figures for the first quarter of 2012 released by the Central Bank (BCV) confirm that the manufacturing sector is "quite deteriorated," according to Carlos Larrazábal, head of the National Industry Federation (CONINDUSTRIA). He said statistics for over 300 industries are very discouraging as they show growth of only 0.7% during the first quarter this year, as opposed a reported overall growth by 5.6% year to date. Food and agribusiness dropped by 6.9% and has been falling for four consecutive quarters. Overall Central Bank information shows that agriculture, industry, mining and oil have dropped 10 percentage points within national GDP in the 1998-2011 periods, during the Chavez Administration. They steadily fell from 42.4% to 32.1% over all these years, with the exception of 2003. (El Universal, 05-23-2012;; and more in Spanish: El Nacional;; Tal Cual;; El Universal, 05-24-2012;

Private construction has dropped 10.6% over nine consecutive quarters, said Venezuelan Construction Chamber chief Gilbert Dao. The Central Bank (BCV) itself admits the few supplies obtained are being absorbed by official housing programs. (Veneconomy, 05-21-2012;

Private sector holds over U$D 143 billion abroad, despite exchange controls
Central Bank figures on balance of payments reveal that between the first quarter 2003 and the first quarter this year private sector deposits abroad have grown 248% from U$D 41.268 billion to U$D 143.638 billion, despite exchange controls. One of the means used to send capital abroad is the instrument devised by the Government itself to obtain financing and reduce liquidity domestically: these are the dollar denominated bonds issued by PDVSA and the Finance Ministry, which companies and individuals purchase and sell abroad in order to obtain hard currency. More in Spanish: (El Universal, 05-25-2012;

Draft antitrust bill sets more ways to expropriate
The National Assembly is speeding up an Antitrust Law which aims to establish that goods used to produce essential products could be declared of public utility, and it provides for additional mechanisms for expropriation. (El Universal, 05-23-2012;

Reserves lower due to drop in gold prices
As gold prices continue to drop so do reserves held by Venezuela's Central Bank, which holds 11,76 million troy ounces as 73% of its international reserves. More in Spanish: (El Universal, 05-24-2012;


PDVSA loses U$D 21 billion in  China financing schemes
The recent amendment to the financing agreement between China and Venezuela, approved Tuesday by the National Assembly, calls for PDVSA to increase crude oil shipments to China to 530,000 BPD (barrels per day) at discounted prices - which means the national oil company will receive U$D 21 billion less per year for exports. Venezuela has two agreements with China, both paid for in oil. One is the "Great Volume Fund", a U$D 20 billion loan by China, of which 10 billion yuan are exclusively earmarked for imports from China. This credit is repaid by exporting 300,000 BPD. The new amendment raised the figure to 530,000 BPD. More in Spanish: (El Nacional, 05-25-2012;

Crude oil prices under U$D 90 for the first time in six months due to an increase in US reserves to their highest level since 1990, due mainly to fears on Greece's possible exit from the euro and the situation with Iran. More in Spanish: (El Universal, 05-24-2012;

PDVSA royalty contribution down 76% in January, according to the Central Bank monthly report. Analysts claim that one of the elements that bears upon this calculation is the oil barrel reference price used in royalty transfers. More in Spanish: (El Universal, 05-24-2012;

International Trade

Loopholes detected  in Venezuela-Colombia trade agreement
Asdrubal Oliveros, of the ECOANALITICA research firm says the recent trade agreement by Venezuela and Colombia is "significant progress" in bilateral relations, but, that it continues to have "loopholes" in matters concerning transportation, investment protection and dispute resolution that were previously covered by the Andean Community. More in Spanish: (El Universal, 05-24-2012;

585 trade operations have been made using the Sucre (Single System of Regional Compensation, in Spanish) for U$D 208 million in the first four months of this year, according to Central Bank (BCV) first Vice President and chief of the Sucre Regional Monetary Council Eudomar Tovar today. (Veneconomy, 05-22-2012;

Logistics & Transport

Port system "collapsing" due to massive imports
Carlos Larrazábal, head of the National Industry Federation, says the situation at Venezuelan ports has become "extremely serious" since the Government took over control and launched a large scale import policy. "The problem is due to the larger volume of imports. We imported U$D 13 billion during the first quarter and are headed toward U$D 50 billion in imports, an unheard of figure for an economy this size". State agencies such as CASA and PDVAL use Puerto Cabello - the nation's main port - for permanent storage. Refrigerated containers bringing in food from South American nations have been stored at Cartagena (Colombia), Colón (Panamá) and Kingston (Jamaica). More in Spanish: (El Universal, 05-24-2012;; El Nacional;

Serious delays reported at Puerto Cabello
31 vessels were reported in the Puerto Cabello harbor this Monday, bearing bulk, containers and assorted cargo. 23 ships remained in the bay, waiting to dock, according to sources close to the Puerto Cabello Port Authority. The situation is critical as Puerto Cabello is not equipped to manage the overload and Carabobo State Legislator Neidy Rosal says it takes up to two weeks to offload cargo that should normally be processed in 24 to 72 hours, mainly due to electricity outages which encumber all procedures. More in Spanish: (El Carabobeño, 05-22-2012;;; Notitarde;;)

Freightage to Venezuela 60% more expensive
Antonio Landaeta, President of FEDECAMARAS in Carabobo State says that due to the saturation at Puerto Cabello freightage to Venezuela costs 60% more than shipping to countries like Colombia or Chile. He says higher costs are due to delays in offloading cargo. 22 of the ships awaiting to discharge cargo at Puerto Cabello are grain carriers and their offloading is slow since there are only three or four docks equipped to service grain shipments that take longer to offload than containers. More in Spanish: (Tal Cual, 05-24-2012; and El Universal, 05-23-2012;

Multinational companies holding Venezuela inventories in Panama
According to Panamanian business sources, warehouses in the Colón Free Zone in Panama are increasingly storing more merchandise destined to Venezuela due to decisions by multinational companies to lower inventories held locally here due to the risk of expropriation. This seems to be particularly the case with pharmaceutical and personal care products. More in Spanish: (El Nacional, 05-24-2012;


Chavez reappears, leads cabinet meeting
President Hugo Chavez reappeared on Tuesday in a live television broadcast, the first time he has been seen in public view since returning from cancer treatment in Cuba almost two weeks ago. Chavez spoke in a strong voice and did not appear tired during the broadcast, which lasted more than two hours. He made no reference to his health, of which few details are known. (Reuters, 05-22-2012;; The Washington Post,

Colombian and Venezuelan armies militarize the border
Colombia and Venezuela have militarized both sides of the border in order to persecute members of the Colombian Revolutionary Armed Forces (FARC) who last Monday killed 12 Colombian troops. The Colombia-Venezuela Northwest border was taken over by security forces from both countries in an attempt to lay siege to the members of the FARC Front 59 that is based in Venezuela, according to Colombian authorities. (El Universal, 05-23-2012;

Venezuela sent Syria 35,000 tons of diesel oil
A Venezuelan ship loaded with 35,000 tons of diesel oil has arrived to port in Syria, according to that nation's Oil Minister Sufian Alao. Syrians have been facing fuel scarcities for months due to international sanctions that have led Western oil companies to interrupt supplies to this country. More in Spanish: (El Mundo, 05-24-2012,

....and rejects US State Department human rights report
A Department of State reports points out Cuba and Venezuela as countries where respect for human rights concerns the United States. The "Human Rights Practices 2011" report says the Chavez regime has continued using the judiciary to "intimidate and persecute political, union and business leaders, and civil society". The Chavez government called the report an "unacceptable interference into internal affairs".  More in Spanish: (AVN, 05-25-2012;  and El Universal;

Romney calls Chavez, Castro a "great danger"
Republican candidate Mitt Romney terms the Castro regime in Cuba and Venezuelan President Hugo Chavez a "great danger" to the United States and the world and says the United States should pay more attention to Latin America. According to the GOP presidential candidate Chavez and Castro "are a great danger to the United States and to people around the world... we must promote our values, free enterprise, democracy". More in Spanish: (El Universal, 05-24-2012;

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.

No comments:

Post a Comment