August 10th, 2012

Economics & Finance

Bank of America forecasts devaluation in Venezuela in 2013

In its latest report on Venezuela, dated August 8, Bank of America estimated that, due to the fiscal imbalance, Venezuelan authorities may resort to currency devaluation in the first quarter of 2013. According to Bank of America, if President Hugo Chávez is reelected, the government would increase the exchange rate to VEB 7.5 per US dollar.

Historically, currency devaluation in Venezuela leads to economic recession. Therefore, such a move would have a cost in 2013, but the economy would grow again ahead of the upcoming parliamentary election of 2015. (El Universal, 08-09-2012; http://www.eluniversal.com/economia/120809/bank-of-america-forecasts-devaluation-in-venezuela-in-2013)

BBVA forecasts growth in Venezuela's economy will be third highest in Latin America this year

A report by the BBVA Spanish banking group published this week says Venezuela's economy will grow 4.6% this year, the third highest rate in Latin America, and one whole point about the regional median of 3.2%. Growth is being pushed by a 13.5% rise in internal demand as well as high international commodity prices. More in Spanish: (AVN, 08-10-2012; http://www.avn.info.ve/contenido/bbva-prevé-que-economía-venezolana-será-tercera-mayor-crecimiento-américa-latina)

An 48.5% increase in imports helps gov't curb inflation in Venezuela

Central Bank and Finance Ministry authorities are pointing to the drop in inflation. Yes prices have slowed down due to a historic increase in imports and an artificially low US dollar exchange rate, both of which are damaging the economy. During the first quarter this year, accumulated inflation was just 3.5%, the lowest in the past four years. On the other hand, imports jumped 48.5% (U$D 13.2 billion), the highest level since 1997. (El Universal, 08-09-2012; http://www.eluniversal.com/economia/120809/a-485-increase-in-imports-helps-govt-curb-inflation-in-venezuela; http://www.eluniversal.com/economia/120807/venezuelas-july-inflation-stands-at-1; http://www.eluniversal.com/economia/120807/president-chavez-claims-inflation-is-under-control)

Preliminary census data puts Venezuela's population at 28,946,101

Elías Eljuri, president of the National Statistics Institute (INE), reports that Census 2011 shows there are 28,946,101 Venezuelans. He says his is a referential approximation, but not yet the official number. He also said population density is 29.7 people per km2, and added that the states with highest growth in population are Zulia, Miranda, Capital District, Lara, Anzoátegui, Bolívar and Táchira. (El Universal, 08-08-2012; http://www.eluniversal.com/economia/120808/preliminary-census-data-put-venezuelas-population-at-28946101)

US dollar denominated bank accounts to be available in Venezuela soon

Nelson Merentes, President of the Central Banks, says there will soon be new exchange regulations that will make it legal to open US dollar denominated bank accounts in Venezuela. Details have not been defined as to the minimum deposit required within the Foreign Currency Denominated Securities Transaction System (Sitme), for the purchase of bonds in US dollars. (El Universal, 08-08-2012; http://www.eluniversal.com/economia/120808/bank-accounts-in-us-dollars-available-in-venezuela-soon)

EXTERRAN shares double as Venezuela agrees to pay U$D 442 million for nationalized assets

EXTERRAN Holdings, Inc. agreed to settle its suit against Venezuela over assets nationalized in 2009 by Venezuela's state oil and gas giant Petroleos de Venezuela, S.A. (PDVSA) Gas, S.A. for approximately U$D 442 million, the company said. EXTERRAN received an initial payment of approximately U$D 177 million in cash at closing (U$D 50 million of which will be used to repay insurance proceeds previously collected under the policy EXTERRAN maintained for the risk of expropriation), and is due to receive the remaining principal amount of approximately U$D 265 million in periodic cash payments through the third quarter 2016. (Latin American Herald Tribune, 08-07-2012; http://www.laht.com/article.asp?ArticleId=554563&CategoryId=10717; Fox Business, http://www.foxbusiness.com/news/2012/08/07/exterran-completes-sale-nationalized-venezuelan-assets-for-442-million/)

Commodities

Oil exports to the US fell by 15.75% during the first semester this year, according to the Venezuelan American Chamber of Commerce and Industry (VENAMCHAM), quoting US Census Bureau figures which show US oil imports from Venezuela dropping from U$D 22.039 billion during the first semester last year to U$D 18.567 billion this year. More in Spanish: (El Universal, 08-10-2012; http://www.eluniversal.com/economia/120810/exportaciones-de-petroleo-a-eeuu-cayeron-1575)

30 oil drills paralyzed by workers demanding back pay

Around 44 workers in Monagas state stopped work at over 30 drills in protest over working conditions, according to labor leader Gregorio Rodríguez. Companies hit by the protest are Schlumberger, Petrex Venezuela, China National Petroleum, Bonjai, Punta de Mata, Tejero, Maturín and Jusepín. (El Universal, 08-10-2012; http://www.eluniversal.com/economia/120810/petroleros-paralizaron-30-taladros-por-pagos-atrasados)

Local chemicals industry threatened by MERCOSUR

The Association of Chemical and Petrochemical Manufacturers (ASOQUIM) says differences in scale and current policies, including exchange and price controls, place Venezuelan production at a disadvantage and are a threat to the nation's chemical and petrochemical industries. More in Spanish: (El Universal, 08-10-2012; http://www.eluniversal.com/economia/120810/temen-que-con-el-mercosur-se-debilite-la-industria-quimica)

Debts to labor and providers endanger SIDOR's solvency as total U$D 3 billion debt surpasses the total value the steel industry was valued at when re-nationalized in 2008, More in Spanish: (El Mundo, 08-10-2012, http://www.elmundo.com.ve/noticias/economia/industrias/deudas-laborales-y-con-proveedores-comprometen-pat.aspx)

Logistics & Transport

Export clearance in Venezuelan ports takes over 15 days

According to President Chavez, Venezuela's recent entry into the Common Market of the South (MERCOSUR) will increase the country's capacity to export. However, at the port of Puerto Cabello, export procedures take at least 15 days, as revealed during recent discussions between the local Chamber of Commerce and port authorities. (El Universal, 08-09-2012; http://www.eluniversal.com/economia/120809/export-clearance-in-venezuelan-ports-takes-over-15-days)

 “This is a disaster since the Cubans took control of the Puerto Cabello dock,” says Carabobo Governor Henrique Salas Feo. He said that there are 31 ships anchored off the shores for a month now, 14 of which carry grains. Salas explained the national government must pay Bs.65.000 a day for each ship that is delayed and for 31 ships that represents almost Bs.2 million a day. (Veneconomy, 08-09-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31635&idc=3)

Politics

Capriles charges that "food prices have risene 2067% under Chavez "

Presidential candidate Henrique Capriles Radonski has charged that over 80% of food consumed in Venezuela is now imported, and denies government claims that Venezuela has achieved what it calls "sovereignty in nutrition". Capriles says the government is not interested in the well being of local farmers, and showed figures proving that the country has 30 million hectares available for agriculture and forestry, yet when inflation is factored into the rise in imports prices have risen 2067% since 1998, and the basic food basket costs more than the basic salary. His figures show the scarcity index has risen from 1% in 1999 to 11.7% in 2012. Scarcity at the state owned MERCAL distribution system can be as high as 50%. More in Spanish: (El Nacional, 08-10-2012; http://www.el-nacional.com/)