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 20, 2012

July 20th, 2012

Economics & Finance

Venezuelan economy to contract 3.5% after elections in 2013, after expansion during elections
Guest economists attending the FEDECÁMARAS Annual Meeting estimate that after the October 7 presidential elections spending dynamics “obviously driven by the elections” will post a significant reduction. They warn this drop will continue in 2013 and will result in an important deceleration of the economy. The Ministry for Planning and Finance projects annual expansion of 7% this year, closing around 7% for this quarter, led by construction, trade, manufacturing and finance. (Veneconomy, 07-18-2012;; more in Spanish: El Mundo, 07-19-2012,

Government has used up 90% of authorized credit for this year, according to a report by the Ministry of Planning and Finance which shows 90% of the originally authorized indebtedness, VEB 56.3 billion out of VEB 62.9 billion had been used by July 13th. More in Spanish: (El Universal, 07-20-2012;

Non-oil exports hit 60-year low
Non-oil private exports this year will end at a record low, according to Francisco Mendoza, a former president of the Venezuelan Association of Exporters (AVEX), who says: "This year we will go under the floor of less than U$D 1 billion in exports, which had not happened in Venezuela since the 1960's". The activity continues to decline due to serious obstacles faced by Venezuelan domestic manufacturers. "The outlook is pretty gloomy; competitiveness is becoming increasingly complex due to recently enacted laws, the situation (of delays) in ports, and the shortage of foreign exchange." (El Universal, 07-18-2012;

Private investment-to-GDP-ratio may be boosted to 20%
Jorge Botti, President of the Federation of Trade and Industry Chambers (FEDECÁMARAS), says it is possible to raise the private investment-to-GDP-ratio to 20%. He says that since the 1970's private investment in Venezuela has fallen steadily. "Private investment in Peru and Colombia exceeds 20%. Under similar circumstances, we could raise the production capacity of industries," Botti said during the 68th General Assembly of Fedecámaras. (El Universal, 07-18-2012;

Venezuela has the least transparent budget in Latin America, according to the Latin American Index for Budgetary Transparency (ILTP). Costa Rica, Ecuador and Mexico have the most transparent budgets in the region. More in Spanish: (Notitarde, 07-20-2012;


PDVSA, CHEVRON reach U$D 2 billion financing deal
State oil company PDVSA says it has reached an agreement with CHEVRON to secure U$D 2 billion in financing to boost oil production at PETROBOSCAN, a joint venture between the two companies. Since the end of 2010, the Energy Ministry has been pressuring some 20 joint ventures between PDVSA and foreign energy partners to find extra funding to raise output. The socialist administration of President Hugo Chavez has threatened to cancel the ventures' permits if they fail to hike production. PDVSA said CHEVRON would provide the funds to PETROBOSCAN at a rate of Libor plus 4.5%, and the last payment would be made in 2025. The agreement includes preliminary accords to make outstanding payments to PETROBOSCAN, PDVSA said. (Reuters,; The Washington Post,; Fox Business,

RUSORO adds another action against Venezuela at the ICSID
Russian-Canadian mining company RUSORO has filed a request for arbitration against the Bolivarian Republic of Venezuela following the nationalization of RUSORO's assets in the country, a move that has resulted in significant loss, according to the firm. The company commenced the arbitration at the International Centre for Settlement of Investment Disputes (ICSID), despite Venezuela's withdrawal from the organization, where the country faces a dozen lawsuits for up to U$D 45 billion. According to workers at RUSORO, production there has dropped since the government´s takeover. (El Universal, 07-18-2012;; Reuters;; and more in Spanish: El Universal, 07-20-2012;

The coke is still there: According to Víctor Hernández, from Anzoátegui’s Engineers’ Association (CIANZ), coordination to withdraw the coke from the Jose premises has been a total “disaster.” Displaying evidence, he said that in May 2012, PDVSA ended the contracts signed with Cuferca and TYC to handle and export the residues from the yards of the José Antonio Anzoátegui Industrial Complex and reassigned it to Energy Coal, which has also done nothing. (Veneconomy, 07-18-2012;

PDVSA sells more to Latin America than the U.S.
The yearly statistical report by the Organization of Petroleum Exporting Countries (OPEC) released this week said that Venezuela's oil exports to Latin America exceeded shipments to the United States last year. The data provided by OPEC, based on information provided by the Ministry of Petroleum and Mining indicate that exports in 2011 were on average 2.3 million barrels per day and the volume (just over 1 million barrels per day) were sent to Latin American countries. More in Spanish: (El Nacional, 07-19-2012;

Agricultural product imports rose 105.4% in 5 months for a total over U$D 2.14 billion, according to official statistics from the Institute for National Statistics. This is double the amount imported for these products during the same time frame last year. Rice imports rose by 435.8%, for 423,493.67 tons. More in Spanish: (El Nacional, 07-20-2012;

Logistics & Transport

Minister Elsa Gutierrez announced a new dock at the Port of Guanta
The Minister for Air and Water Transport, and President of National Port Authority (BOLIPUERTOS), CA. Elsa Gutierrez, announced the construction of a seventh pier at the marine terminal, for PDVSA machinery. She said:
"The pier will be 34 meters wide and will work primarily to facilitate the import of machinery for the growth of the oil industry in the east". More in Spanish: (Bolipuertos, 07-19-2012,


Chávez leads most polls, PREDIGMÁTICA gives Capriles a 4% lead
Two and a half months into the presidential elections, incumbent candidate Hugo Chávez leads the polls, according to Datanálisis (15.3 points ahead) and Hinterlaces (17 points ahead) but his health evolution, the elevated number of undecided voters or opposition candidate Henrique Capriles’ campaign could alter this situation, according to analysts. The PREDIGMATICA polling firm says results of a more recent June study of 1,600 polled reflects support for Henrique Capriles at 47.7% and President Chavez at 43.7%. (Veneconomy, 07-18-2012; and more in Spanish: Últimas Noticias, 07-20-2012;

Venezuela condemns Syria bombing, warns against intervention
Venezuela condemned the bombing in Damascus that killed the Syrian defense minister and President Bashar al-Assad's brother-in-law, urging foreign powers against military intervention. Socialist President Hugo Chavez has helped undermine sanctions against Syria by shipping diesel fuel to the embattled country, and has described the conflict there as an international conspiracy backed by Western powers. (Reuters, 07-18-2012;

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