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, July 6, 2012

July 06th, 2012

Economics & Finance

MERCOSUR entry translates into more imports, more government weight in the economy
Industry Minister Ricardo Menéndez has stressed that one of the advantages of joining the South American trading area was to have cheaper food imports, at zero tariffs; but Ismael Pérez Vigil, Executive President of the National Industrial Council (CONINDUSTRIA) warns that joining "21st Century Socialism" and the MERCOSUR will increase strengthen an economy based on imports, which is what Venezuelan industrialists fear the. Perez Vigil added that it will also increase the government's weight within the economy. Minister Menéndez said MERCOSUR entry: "will bring tariffs down to zero and, certainly, make those goods cheaper."He noted that 52% of Venezuela's purchases from Mercosur Member States are tied to foodstuff (El Universal, 07-05-2012; and

Questions raised on Venezuela joining MERCOSUR
More than six years after Hugo Chavez said that joining MERCOSUR was Venezuela's destiny, the presidents of Argentina, Brazil and Uruguay have decided that his oil-rich nation will finally become the fifth full member of the common market. Venezuela holds the world's largest crude oil reserves and the move potentially links the region's top energy and agricultural suppliers. But the decision at last week's summit to welcome Venezuela into Mercosur after the leaders temporarily suspended Paraguay has brought questions about the move's timing and legality. Such decisions must be unanimous under Mercosur rules, and Paraguay's senate has long objected to Venezuela's membership. Uruguay's President José Mujica has taken "full responsibility" for allowing Venezuela's entry after his Foreign Minister criticized the manner in which the decision was taken. (Fox News, 07-04-2012; and more in Spanish: El Universal;

ECONOMÉTRICA alerts of quick increase in foreign debt service
The Government's aggressive use of foreign debt since 2007 will translate into a higher exposure by the national and state owned Petróleos de Venezuela (PDVSA) over the next five years, says the ECONOMÉTRICA analysis firm. Their report adds that there is a worrisome increase in the rate of debt service payments to hard currency income for oil exports. More in Spanish: (El Universal, 07-06-2012;

Year-end inflation may close at 20%
Eudomar Tovar, First Vice President at the Central Bank believes inflation could close the year between 20-22%, under budget projections. He based his statement on the Consumer Price Index for June, saying "there is a significant decrease in the trend to accelerated inflationary increase...which indicates to us we will close the year below the budgeted this sense it is necessary to continue working on productivity". More in Spanish: (Últimas Noticias, 07-06-2012;


PDVSA sends 2.3% of production to MERCOSUR
After seven years of trying to diversify export destinations, PDVSA has raised remittances to China, but not to the four nations within the MERCOSUR trade bloc. Exports to Argentina, Brazil, Paraguay and Uruguay were 2.3% of total volume last year, with a tendency to diminish as Argentina and Brazil spur exploration in order to reduce imports. More in Spanish: (El Nacional, 07-06-2012;

Paraguay opens bid to replace PDVSA as a fuel source
A decision by Venezuela to paralyze fuel shipments to Paraguay has led the latter to seek other sources, according to PETROPAR President Sergio Escobar. More in Spanish: (El Universal, 07-06-2012;

Maintenance shutdown at PETROPIAR
PETROPIAR, a heavy crude oil upgrader jointly operated by state-run oil holding Petróleos de Venezuela (PDVSA) and US CHEVRON, will stop operating for 46 days for maintenance and also to expand its processing capacity by 17% to 210,000 barrels per day (bpd).  PDVSA promised that the downtime scheduled from July 8 through August 23 would not impact production. (El Universal, 07-04-2012;

Venezuelan Construction Chamber (CVC, after its initials in Spanish) reports there are 107,000 ongoing housing construction developments paralyzed at by the end of this year’s first quarter, up 18.8% from the same period in 2011 (80,000 housing units). CVC Chief Gilbert Dao pointed out that in addition, some 90,000 projects (up 12.5% from the 80,000 in the first quarter of 2011) which have not even begun work. (Veneconomy, 07-04-2012)

International Trade

Belarus to develop a space station in Venezuela
Belarus is to take part in the construction of a space station for satellite launching in Aragua state (central-northern Venezuela), says Venezuelan Ambassador to Minsk Américo Díaz Núñez, adding that the space station will be just one of the projects to be jointly executed by Venezuela, China and Belarus. "The satellites are currently manufactured in China, but an agreement has been reached to assemble them in Venezuela," he added. (El Universal, 07-04-2012;; Latin American Herald Tribune,

And also a thermo-electric plant
China, Belarus and Venezuela will build a thermo-electric plant in the Santa Inés industrial zone in Barinas state, a project estimated at U$D 900 million. It will be financed by China while Belarus offers the technology. It is expected to be ready in three years. (Veneconomy, 07-04-2012)

Logistics & Transport

Delays at customs have increased in the last two weeks, said CONSECOMERCIO Customs Committee chief Cipriana Ramos. She pointed out an increase of imports has resulted in a collapse of communication systems and that the merchandise could be subjected to up to five inspections in light of the number of agencies and requirements at local ports. (Veneconomy, 07-04-2012)

27 ships idle at port, waiting docking and two ships have remained at dock, waiting to be unloaded, for almost three weeks, according to a confidential report from the Puerto Cabello harbor made public by Carabobo state Legislative Council Deputy Neidy Rosal. Eleven of the 27 ships carry grain. (Veneconomy, 07-04-2012)


Global leftists close ranks with Chavez
120 leftist parties from all over the world and 400 international delegates within the so-called Sao Paulo Forum are meeting for the first time in Caracas, in support of President Hugo Chávez for his third reelection. Their master document reads: "US meddling and influence can be felt in the Bolivarian Republic of Venezuela through several attempts at influencing the Venezuelan election, promoting undemocratic clues ahead of the election of October 2012. For the Venezuelan and hemispheric left, the reelection of Commander Hugo Chávez is of the essence," they admonished. (El Universal, 07-04-2012;; AVN, 07-04-2012;

Paraguay accuses Chavez of meddling, withdraws envoy
Paraguay's new government ordered home its ambassador in Venezuela on Wednesday after accusing President Hugo Chavez's government of meddling in an attempt avert the impeachment of the leftist Paraguayan president's last month. The swift impeachment of Paraguay's former President Fernando Lugo drew strong criticism from left-leaning governments in South America. Chavez ordered Venezuela's ambassador to leave Paraguay and halted oil shipments in protest. (Reuters, 07-04-2012;; El Universal;

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