July 17th, 2012

Economics & Finance

SITME drives financial profits

Statistics from the Banking Superintendent show that this year's first semester has been highly profitable for financial organizations: profits are VEB 12.838 billion, which is an 132% jump from the same period last year. Analyst Francisco Faraco explains that "a large part of the increase in bank profits is from commissions on SITME operations". SITME is a system where companies use financial institutions to purchase foreign currency denominated bonds at the Central Bank, and then resell them abroad in order to obtain dollars. The report shows that SITME traded U$D 5.2 billion during the first semester this year, and bank commissions can be up to 3% on each transaction. More in Spanish: (El Universal, 07-17-2012; http://www.eluniversal.com/economia/120717/el-sitme-impulsa-ganancias-del-sistema-financiero)

Fiscal and exchange rate adjustments predicted for 2013

International investment bank analysts believe 2013 will bring about difficult but inevitable economic adjustments, depending on the price of oil and the fiscal and exchange adjustments that will take place even if there is a new government. Boris Segura, of Japan's NOMURA Securities, says high government officials are already analyzing variables that must be considered for an adjustment, such as exchange rates, export volume and the price of oil. More in Spanish: (El Mundo, 07-17-2012; http://www.elmundo.com.ve/noticias/economia/politica/se-avizora-un-ajuste-fiscal-y-cambiario-en-2013.aspx)

Venezuela bonds closed on the rise averaging 0.40 and 0.30 points

There has been special interest in the PDVSA 2021 after several market experts called it the most attractive bond on the Venezuela and PDVSA curve. It rose 0.50 points yesterday as the highest riser of the day. Venezuelan bonds closed positively, with a 0.40 point price variation, and PDVSA bonds varied 0.30 points. SITME traded U$D 40.42 million, mainly in PDVSA 2021 and Venezuela 2025. More in Spanish: (El Mundo, 07-17-2012; http://www.elmundo.com.ve/noticias/economia/mercados/bonos-venezolanos-cierran-con-subidas-promedio-de.aspx)

Excessive indebtedness increases danger of devaluation

According to Mexican economist Luis Pazos, controls, excessive indebtedness and uncontrolled use of oil industry resources are policies that are recurrent in Latin America, and that when countries such as Mexico take this route they have encountered supply problems, inordinate price increases and corruption. He said excessive indebtedness evolves into devaluation and high inflation; and that an excess in state intervention and nationalism benefit officials more than citizens. More in Spanish: (El Mundo, 07-17-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/endeudamientos-agresivos-aumentan-peligro-de-la-de.aspx)

Food now 23 times more expensive than 1998

Julio Borges, National Coordinator for Primero Justicia and Deputy to the National Assembly, insists that the Government has not been successful with their economic policies, which is reflected in the decline of food production.

According to Borges, as the country continues to import over 70% of what it consumes there is no way to fight inflation and wondered: "How can the President talk of independence, if we import almost everything we eat"? He adds: "According to Central Bank data accumulated inflation in foodstuffs through June 2012 was more than 27%, and when one calculates inflation for these last 14 years we can see food prices are 23 times more expensive than 14 years ago". More in Spanish: (Tal Cual, 07-16-2012; http://www.talcualdigital.com/index.html)

Commodities

OPEC certified Venezuela still has largest reserves

OPEC exports rose 40% in value in 2011 against the previous year, oil producing nations GDO rose 18% according to their latest report, prepared before a new rise in oil supplies this year could further strengthen their incomes. Earnings reported in the OPEC Yearly Statistic Report for 2012 reflect increased prices and stable production growth for many member nations last year. Proven reserves remained basically unchanged, and Venezuela continues to be the nation with highest reserves. More in Spanish: (Ultimas Noticias, 07-17-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/opep-certifico-que-venezuela-sigue-teniendo-las-ma.aspx; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/industria/opep-ratifica-que-venezuela-sigue-teniendo-las-may.aspx; El Universal, http://www.eluniversal.com/economia/120717/opep-reporta-baja-de-16-en-bombeo-de-crudo-venezolano)

Venezuelan oil down 10 cents; averages U$D 92.77

The Venezuelan oil basket averaged this week U$D 92.77 per barrel, according to the Ministry of Petroleum and Mining's Twitter account. The price slipped back 10 cents from U$D 92.87 last week, due to volatility and mixed results in the main hydrocarbons markets. (El Universal, 07-13-2012; http://www.eluniversal.com/economia/120713/venezuelan-oil-sheds-10-cents-averages-usd-9277)

Uranium discovered in the Essequibo region

Canada based firm U3O8 has discovered "large quantities of uranium" during drillings it has been carrying out for over a year at the Kurupung Batholith project, in the Mazaruni district in western Essequibo territory which is disputed between Venezuela and Guyana. It is not confirmed whether Guyana consulted Venezuela when it granted these drilling rights, as required by the 1966 Geneva Agreement between both nations. ARGUS Metals said in may that it expected to start drilling for gold and uranium in an area northeast of the disputed territory, In February 2004 President Chavez said he would not opposed projects in the Essequibo in "water, communications, energy and agriculture, that would benefit its population". More in Spanish: (El Nacional, 07-17-2012; http://www.el-nacional.com/)

International Trade

Nicaragua guarantees milk and beef supply

Ariel Bucardo, Nicaraguan Minister for Agriculture and Forestry has stated that his country will continue exporting beef and milk to Venezuela for the remainder of 2012. The agreement requires delivery of 36,000 metric tons of beef and 24,000 tons of milk. Nicaragua also supplies Venezuela with black beans, cheese, powdered milk and coffee. The Minister says agreements have been fully met and will continue to do so. More in Spanish: (Tal Cual, 07-17-2012; http://www.talcualdigital.com/index.html)

Logistics & Transport

New container terminal to be built at Puerto Cabello

Minister Elsa Gutierrez, President of the National Port Authority, signed the final agreement with the China Harbour Engineering Company for building a new container terminal. The project is due for final delivery within 36 months. More in Spanish: (Bolipuertos, 07-16-2012; http://www.bolipuertos.gob.ve/noticia.aspx?id=5687)

Politics

Chavez: Venezuela is no threat, calls Obama a "good guy"

President Hugo Chavez denied on Friday that Venezuela was a threat to anyone, after U.S. presidential hopeful Mitt Romney criticized Barack Obama for playing down the risk posed by the socialist leader. Obama told a Spanish-language television station in an interview screened this week that Chavez's actions over recent years had not had a serious impact on the national security of the United States. Romney said Obama's comments were "stunning and shocking" and showed a pattern of weakness in the Democratic president's foreign policy. In an interview with a local Venezuelan television station on Friday, Chavez dismissed the allegations he posed any danger. "The Venezuela of today is no threat to anyone," he said. (Reuters, 07-14-2012; http://www.reuters.com/article/2012/07/14/us-venezuela-chavez-usa-idUSBRE86C13F20120714)

DATANALISIS show Chavez with lead over rival Capriles; C21 shows them neck and neck

Pollster firm DATANALISIS June poll shows President Hugo Chavez maintaining a 15% lead over opposition challenger Henrique Capriles in the run-up to the October 7 election. It has 46.1% of voters backing Chavez and 30.8% supporting Capriles, and shows 23% undecided. However, other recent polls show that the probability of political change has increase significantly over the last month. While polls vary widely, those giving President Hugo Chavez a large lead of around 10% points, all have a large percentage of undecided near the 30% level. The only pollster that has been showing levels of undecided near the 10% number are those of CONSULTORES 21, a pollster which has been quite accurate in the past. In the last poll, taken in the second half of June, the Chavez lead essentially collapsed, and the difference, which had been widening, basically collapsed to 0 in the second half of June. (Yahoo, Reuters, 07-16-2012; http://news.yahoo.com/venezuelas-chavez-maintains-lead-over-rival-capriles-poll-140656994.html; El Universal, http://www.eluniversal.com/nacional-y-politica/120717/para-datanalisis-23-aun-no-sabe-por-quien-votar)

Cardoso says Brazil's influence slips by not opposing Chavez

Former Brazilian President Fernando Henrique Cardoso says Brazil looses influence within South America by not opposing Hugo Chavez's leadership. He also criticized the way Venezuela was brought into MERCOSUR following the political crisis in Paraguay. More in Spanish: (El Universal, 07-16-2012; http://www.eluniversal.com/nacional-y-politica/120716/creen-que-brasil-pierde-influencia-por-chavez)