June 01st, 2012

Economics & Finance

JP Morgan projects Venezuela's economy to stall in 2013, inflation to reach 36%

JP Morgan foresees increased stagnation in Venezuela's economy in 2013. It estimates there will be zero growth in the production of goods and services, and inflation will accelerate to 36%. Spending is projected to drop from 7.9% to 2.3% in 2013. The report says 2012 growth, estimated to reach 5.5% by the end of the year, with 25% inflation, is "temporary, based on fiscal stimulation". More in Spanish: (El Nacional, 06-01-2012; http://www.el-nacional.com/)

Increased public debt absorbs excess bank liquidity

Massive growth in public indebtedness aimed at increasing spending and accelerating consumption has reached U$D 11.85 during the first four months of 2012 through the sale of bonds and Treasury bills to banks. Last January the banking system was U$D 11.65 billion above and beyond reserves required by the Central Bank. By April this amount was down to U$D 6.36 billion. (El Universal, 05-30-2012; http://www.eluniversal.com/economia/120530/debt-issue-chops-excessive-liquidity-in-banks)

U$D 2.32 billion bond issued to fund housing plan

The Central Bank has called on banks to buy certificates due in 2015 for VEB 10 billion (U$D 2.32 billion at the official exchange rate of VEB 4.30 per US dollar), with an interest rate of 3.75%. (El Universal, 05-31-2012; http://www.eluniversal.com/economia/120531/venezuela-issues-usd-232-billion-in-bonds-to-fund-housing-plan)

Anti-Monopoly Law being drafted

The National Assembly is considering a law to ban "monopolies, oligopolies and unfair competition" in "strategic products and connected activities". The draft exempts state owned companies from regulation. (El Universal, 05-30-2012; http://www.eluniversal.com/economia/120530/congress-subcommittee-approves-venezuelan-draft-antitrust-law)

IMD calls Venezuela least competitive nation, worse than Greece

Venezuela was the only nation to score worse than Greece in an annual survey of global competitiveness by the IMD business school. Venezuela placed last among the 59 countries because of the absence of “an effective legal environment” and lack of “competency in government,” according to IMD, which is based in Lausanne, Switzerland. Greece ranked 58th, scoring lowest in executives’ perceptions of “competency of government” and “research and development” culture. (Bloomberg, 05-30-2012; http://www.bloomberg.com/news/2012-05-30/venezuela-beats-greece-as-least-competitive-nation-imd-says.html)

Commodities

Oil prices trend down

NYMEX reports Texas oil dropped 1.46% to U$D 86.53 at the end of May, for an total decrease of 17.4%, the lowest since last October. London markets showed Brent below U$D 100 for the first time in 8 months, due to China industrial figures, fears about Spain and gloomy US indicators. The OPEC reference price dropped to U$D 101.06 per barrel. More in Spanish: (El Universal, 06-01-2012; http://www.eluniversal.com/economia/120601/precio-del-petroleo-en-nueva-york-cayo-17-en-mayo; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/industria/el-barril-de-brent-bajo-los-100-dolares-por-primer.aspx; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/industria/precio-de-cesta-referencial-opep-cae-a-$101,06-el-.aspx)

Q1 sale of oil and related products to US drops 13.6%

According to data from the US Department of Energy there has been a significant drop in Venezuelan oil exports to the US during 2012. Sales averaged 888,000 bpd during the first quarter, a drop of 13.6% from the same period last year. A sharp drop took place in January and February. More in Spanish: (El Universal, 06-01-2012; http://www.eluniversal.com/economia/120601/cayo-136-la-venta-de-crudo-y-derivados-a-eeuu-entre-enero-y-marzo)

PDVSA offers jet fuel cargo - trade

State oil company PDVSA has offered a jet fuel cargo in the spot market as part of its regular monthly oil product exports, traders said on Wednesday. The company is offering 240,000 barrels of jet fuel, though no other details including loading date and tender closing date have yet been given, one of the traders said. (Reuters, 05-30-2012; http://www.reuters.com/article/2012/05/30/venezuela-jet-export-idUSL4E8GU4UK20120530; El Universal; http://www.eluniversal.com/economia/120530/pdvsa-offers-fuel-to-singapore)

PDVSA owes U$D 26.7 million on its commitments to fund social programs in the United States, undertaken by CITGO, its US subsidiary. Most of the debt is due to delays in supplies that should have been provided to the Fuel for Heating program that supplies subsidized fuel to poor and Native American homes in the United States. (Veneconomy, 05-31-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30731&idc=4)

U$D 849.3 million assigned to bolster petrochemical industry

During his recent televised Cabinet meeting, President Chavez expenditures up to U$D 849.3 million to fund projects aimed at funding a dozen projects in the government owned petrochemical industry, among them a urea plant in Moron (Carabobo state) and the conclusion of a maritime terminal being built by a Chinese company. More in Spanish: (Ultimas Noticias, 05-31-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/aprobaron-un-realero-para-impulsar-la-petroquimica.aspx)

Electric system reports losses up to 30% due to theft

According to a report by the Electric Energy Ministry, the electric system is hit by "non technical losses of up to 30% of electricity that is generated and not paid for". The term refers to practices known as "stealing energy" which, if collected, would add up to 4,000-5,000 billion VEB per year. More in Spanish: (El Universal, 05-31-2012; http://www.eluniversal.com/economia/120531/a-30-llegan-las-perdidas-por-hurto-electrico)

Politics

Dan Rather reports Chavez "in last stage"

Uncertainty about President Chavez's illness has as prominent US journalist Dan Rather reports that a source close to the President is suffering from "rhabdomyosarcoma metasthasis" that has gone into its "final stage". The source also said inner government circles are deeply worried that Chavez has "only a few months" left to live after repeated visits to Cuba for chemo and radiotherapy sessions. More in Spanish: (Tal Cual, 05-31-2012; http://www.talcualdigital.com/index.html)

Chavez insists he will run, calls for power to remain in his hands

In a staged televised Cabinet meeting this week, President Chavez confirmed he will run in the October 7th national election and called on voters to keep him in office for another six years. More in Spanish: (Tal Cual, 05-31-2012; http://www.talcualdigital.com/index.html)







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.