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, September 28, 2012

September 28th, 2012

Economics & Finance

Chavez oil-fed fund obscures money trail in Venezuela
FONDEN is the largest of a handful of secretive funds that put decisions on how to spend tens of billions of dollars in the hands of President Chavez. Since its founding seven years ago, FONDEN has been funneling cash into hundreds of projects personally approved by Chavez but not reviewed by Congress -- from swimming-pool renovations for soldiers, to purchases of Russian fighter jets, to public housing and other projects with broad popular appeal. The fund now accounts for nearly a third of all investment in Venezuela and half of public investment, and last year received 25% of government revenue from the oil industry. All told, it has taken in close to U$D 100 billion of the nation's oil revenue in the past seven years. Finding out how much of that money FONDEN has spent, and on what, is not easy. This perception of secrecy has left investors unsure how to measure Venezuela's fiscal strength. Fitch Ratings this year warned it could downgrade the country's debt, in part because of transparency concerns. Those same concerns are also helping push up borrowing costs. "The visible portion that we can compare in Venezuela vis-a-vis other countries has declined considerably," said Erich Arispe, director in Fitch Ratings Sovereign Group. "I can't rate what I can't see." At the same time, Chavez is under growing opposition fire over abandoned or half-built projects, including some that received millions of dollars from FONDEN. A Reuters reporter at a FONDEN event who approached the finance minister -- the fund's president - to ask questions was physically restrained by two security personnel. (The Chicago Tribune, 09-26-2012;,0,6066004.story)

Central Bank loans to PDVSA stand at U$D 26.5 billion
Since 2007, Venezuelan state-owned oil company PDVSA has relied on public institutions to obtain financial resources for plans and programs assigned to it by the central Government, and the Central Bank of Venezuela (BCV) is its foremost contributor. According to BCV data, by August 26, 2011, financial aid to PDVSA amounted to U$D 12.9 billion. One year later, such figure increased to U$D 26.5 billion (105%). Although the Venezuelan oil basket has averaged U$D 100, oil revenues are not enough, considering the growing amount of liabilities. (El Universal, 09-27-2012;

PDVSA President: We are sliding into debt, but our assets have grown
Confronting criticism on rising indebtedness by the state-run oil company PDVSA, its president and also minister of Petroleum and Mining, Rafael Ramirez, says that although the oil company owes the Central Bank and private banks, "it is important to note that company assets have grown." "We were a U$D 37 billion oil company. Today the wealth of the company amounts to U$D 72 billion. Our assets have sparkled Our iron, our equipment, our machinery stand at USD 183 billion," Ramírez explained. (El Universal, 09-27-2012;

What is going on with Venezuelan gold reserves? A report by the International Monetary Fund (IMF) indicates Venezuela’s gold reserves –parts of the international reserves- are 362.05 tons after a 3.7 ton drop in August. Financial sources claim the Venezuelan Central Bank (BCV) sold another 1.8 ton lot this week. (Veneconomy, 09-27-2012;


Output begins at two Orinoco oil projects
Early production began on Thursday at two joint ventures with Russian and Vietnamese investors in the nation's huge Orinoco heavy crude belt.  The PETROMIRANDA project, where state oil company PDVSA is partnered with Russian companies including ROSNEFT and LUKOIL, began producing 1,500 barrels per day, a PDVSA source told Reuters. Oil Minister Rafael Ramirez says: "These are literally the first barrels that are being produced here ... We will also have early production today at our joint venture with Vietnam, PETROMACAREO." PDVSA's Russian partners have invested some U$D 800 million in PETROMIRANDA, Ramirez added, and the project was expected to be producing 6,000 bpd soon, eventually rising to 45,000 bpd. PETROMACAREO, where PDVSA is working with state-run Petrovietnam, began producing 800 bpd on Thursday, he said, and is forecast to be pumping some 4,000 bpd in the short term. (Reuters, 09-27-2012;

Ecuador and Venezuela to share U$D 13 billion Pacific refinery complex
Ecuador plans to process 84% of Ecuadorean and 16% of Venezuelan crude oil in the U$D 13 billion planned REFINERIA DEL PACIFICO, a refining and petrochemical complex project to be run by state oil companies of the two countries. The complex is expected to process 300,000 barrels of crude a day, but is still seeking new partners. Talks with China "are advancing well," Dow Jones reports. (The Wall Street Journal, 09-27-2012;

Venezuela and Russia agree to launch PETRO VICTORIA
The Venezuelan government has just signed a number of agreements with the Russian Federation, among them one that calls for setting up PETRO VICTORIA, to exploit two areas: Carabobo 2 North and Carabobo 4 West in the Orinoco oil belt. This agreement was entered into by PDVDSA and ROSNEFT, and must be approved by the National Assembly. Oil and Mining Minister Rafael Ramirez explained that Venezuela's investment with Russian companies amounts to U$D 38 billion and projects will also be developed in the Junin 6 in accordance with standing bilateral agreement on the joint exploitation of a group of oil and gas fields in the river basin. More in Spanish: (AVN;;ón-infraestructura-petrolera;; The Washington Post,

FLSmidth says wins U$D48 million Venezuela contract
Danish engineering group FLSmidth & Co A/S on Thursday said it had won a contract in Venezuela worth U$D 48 million for engineering, supply and installation of a feeding system for an aluminum smelter. The order had been placed by Venezuelan state-owned aluminum company CVG ALCASA, FLSmidth said in a statement.
The project is part of a U$D 400 million refurbishment plan of CVG ALCASA's technologies, it said. (Reuters, 09-27-2012;

Flour, pasta, vegetable oil, coffee, margarine, sugar and powdered milk are being rationed by government and private supermarkets, as reported by ULTIMAS NOTICIAS daily after checking several establishments. "There is not enough supply in food to meet the large demand", according to an employee at the government owned Bicentenario market who refused to be identified for fear of reprisals. More in Spanish: (Ultimas Noticias, 09-27-2012;

Logistics & Transport

Road connectivity between Colombia and Venezuela should improve with construction of the “Transversal de las Américas” in Colombian territory, according to Colombia´s National Agency for Infrastructure (ANI). The road project is to extend alongside the Northern departments, connecting Colombia to Venezuela and the Caribbean coast to the center of the country, via a unified road network. The works are expected to be concluded in seven years. (Veneconomy, 09-27-2012;


Chavez rival maintains lead in poll ahead of Oct. 7 election, bond markets rise
Opposition candidate Henrique Capriles Radonski maintained his lead over President Hugo Chavez in the latest survey from CONSULTORES 21; a Caracas- based polling company, less than three weeks before elections. Capriles had 48.1% against 46.2% for Chavez in a poll taken at the end of August, Consultores 21 President Luis Christiansen told a conference hosted by the Council of the Americas in New York. The survey of 1,000 people was taken in the last two weeks of August had a margin of error of 3.2 percentage points, Christiansen said. “If we were to make a linear projection for the election, it would be that Capriles will maintain an advantage of 2.5% over Chavez,” he said.  According to analyst Russell Dallen: "What has lit a fire under Venezuela markets today is the latest polling from respected firm Consultores 21 which shows Capriles leading against Chavez, and leading by more than the margin of error now. This has been like jet fuel for Venezuela bond markets, as the odds of electoral regime change increase." and direct quote from Mr. Dallen. (Bloomberg, 09-19-2012;

Even if Chavez wins the election, his aura is gone
IMAGINE an election in which the incumbent routinely commandeers the nation’s airwaves for endless campaign broadcasts while his opponent gets just three minutes a day. The incumbent uses all the resources of the state—money, vehicles, buildings—for his campaign, and he has branded state social-welfare programs as his own personal gift. He controls the courts and the electoral authority. No wonder that Henrique Capriles, the opposition candidate, calls the contest between himself and Hugo Chávez, who has ruled Venezuela for almost 14 years, one of David against Goliath, and that one of his allies says that the election will be “free but not fair”. Yet despite all these unfair advantages, Goliath is threatened.  There are clear signs that Mr. Chávez’s appeal is finally fraying. Mr. Capriles is sensibly trying to close Venezuela’s partisan divide by promising to maintain and improve most of Mr. Chávez’s social programs, while pledging to crack down on corruption and boost the economy by seeking the foreign investment the president has shunned. For all these reasons, Mr. Capriles deserves to win, and he just might do so; and even if Mr. Chávez prevails once more, Latin America’s most controversial autocrat is a diminished figure. (The Economist;

Election Board director: "The ballot is secret, vote with confidence"
National Electoral Council (CNE) director Vicente Díaz emphasizes that balloting is secret, and has told Venezuelans to not allow "electoral scoundrels" to scare them. "Do not let them scare you because the ballot is secret. Vote with confidence and liberty because, first, your vote will count, second, it will be anonymous, and third, it will reflect the results you want for the country". (El Universal, 09-26-2012;

Ambassador: "a vote for Chávez is a vote for Fidel"
Venezuela's ambassador to Cuba, Edgardo Antonio Ramírez, said at a press conference in Havana that voting president-candidate Hugo Chávez Frías in the upcoming October 7 presidential election amounted to "voting Fidel (Castro, Cuba's ex-president), peace, and union in Latin America and the Caribbean." (El Universal, 09-27-2012;

Tuesday, September 25, 2012

September 25th, 2012

Economics & Finance

MORGAN STANLEY: Venezuela risks default if Chavez wins
Venezuela could default on its debt as early as the second half of 2013 if President Hugo Chavez wins re-election next month and fails to shore up the oil-producing nation's "increasingly fragile" balance sheet, Morgan Stanley said in a report by Charlie Devereux published by Bloomberg. One "tipping point" could be the U$D 4.3 billion in external debt payments that come due between August and November 2013, Morgan Stanley analyst Daniel Volberg wrote in a note to clients. (El Universal, 09-22-2012;

ConocoPhillips confirms that an international arbitration court ruled PDVSA must pay a U$D 66.8 million compensation for oil production cuts between 2006 and 2007. The International Trade Chamber Court, located in Paris, concluded PDVSA “violated” the agreements of the Petrozuata project in which ConocoPhillips participated “when it applied the project OPEC production cuts.” PDVSA has announced that it plans to appeal the ruling. (Veneconomy, 09-22-2012;; and more in Spanish: El Universal;; El Mundo,

Finance Ministry has used up 84% of planned debt for 2012
Although the price of crude oil remains above U$D 100 and petroleum industry flows remain high, the government continued to acquire debt in order to raise cash for the elections. Finance and Planning Ministry data shows that by 21 September bonds had been issued for VEB 79.4 billion, which is 84% of planned credit operations for the year, which are pegged at VEB 94.5 billion. More in Spanish: (El Universal, 09-25-2012;

Venezuela has the most controlled banking system in the Andean Region
A recent FITCH report shows that the local banking system faces an "uphill" battle to improve efficiency in a difficult environment It reveals that efficiency rates for Venezuelan banks are poor as compared to the rest of the region due to "high inflation and intense regulation and intervention" on the part of government. More in Spanish:  (Tal Cual, 09-25-2012;

15% inflation projected in 2013 budget
As the government analyzes macroeconomic premises for the 2013 budget, it appears the exchange rate will remain unchanged for next year, according to a report being prepared for the national budget, according to sources within the Planning and Finance Ministry. The same sources report the rate of inflation projected is 15%, far below that used for 2012, which was 20-22%. More in Spanish: (El Mundo, 09-25-2012;

Hugo Chavez’s record: A gusher of oil money in Venezuela, and some ask where it’s gone
Nearly 14 years after President Hugo Chavez took office, and despite the biggest oil bonanza in Venezuela’s history, there’s little outward sign of the nearly one trillion petrodollars that have flowed into the country. The populist president has used the oil wealth to buttress his support through cash handouts, state-run grocery stores and a gamut of other social programs. With more money in the economy, incomes are higher and the number of people living in poverty has fallen. Yet some experts say Chavez could have done much more to improve the country’s infrastructure, boost its economy and invest in the very oil industry that keeps Venezuela afloat.  Venezuela now ranks among the most violent and corrupt places on earth. (The Washington Post, 09-25-2012;


Amuay refinery not fully back after one month, explosion cause still a mystery.
Thirty days after the explosion at the Amuay refinery which killed 42 people, and damaged nine crude oil storage tanks and adjacent facilities and housing, causes for the accident have not been divulged, nor has refining activity recovered fully at the Paraguana Refining Complex, the second largest in the world. Labor leader Wills Rangel, president of the United Oil Workers Federation estimates recovery at 80%, but Yvan Freites, Secretary General of the United Oil Workers of Falcón State, which operates the refinery at Cardon says three key units remain paralyzed and adds that "the plant will not be ready this year". Freites presumes there is no gasoline being processed at Amuay or it is being produced with components imported by PDVSA. Authorities have yet to provide information on the real causes for the explosion, and reinsurance firms are on the ground evaluating the situation. PDVSA President Rafael Ramírez has announced the damaged refinery currently processed 330.000 barrels per day of crude oil, which is 51% of what it refined prior to the explosion. (El Universal, 09-25-2012;; and more in Spanish: El Mundo,

UBS: PDVSA must issue more bonds to meet debt
According to Swiss bank USB if PDVSA really wants to raise crude oil production it will need another bond issue to meet accumulated debt before the year is up. More in Spanish: (El Nacional, 09-25-2012;

Venezuela’s export barrel dropped U$D 2.31 to average U$D 102.76/bbl. this week, mostly due to a greater than expected increase of crude inventories in the United States, according to the Venezuelan Oil and Mining Ministry. The average for September is U$D 103.96/bbl. and the average for the year-to-date is U$D 105.30/bbl. after posting an average of U$D 101.06/bbl. in 2011. (Veneconomy, 09-22-2012;

In the 90’s PDVSA had one of the best lightning rod systems in the world,” former PDVSA Refining manager Javier Larrañaga told El Nacional. He explained he was surprised at fire at El Palito Refinery. PDVSA admitted the lightning rod systems at the El Palito Refinery cannot withstand high discharges despite the fact that the north of Carabobo state is considered as one of the regions in the country with the most lighting discharges. (Veneconomy, 09-22-2012;

China backs giant Venezuela goldmine
Chinese and Venezuelan officials have signed an agreement to jointly develop one of the world's biggest gold mines, the Las Cristinas asset near a town bearing the name of the mythical golden city of El Dorado. The agreement to develop the Las Cristinas gold mine was signed by officials of the Venezuelan Government and Chinese company China International Trust and Investment Corp (CITIC) at the weekend. It comes as a blow to Western mining companies that had eyed the massive deposit, such as Canada's Crystallex International Corp, which has appealed to the World Bank arbitration body for U$D 3.7 billion in compensation after its development permit was cancelled. The Las Cristinas ore body, in southern Bolivar state, is estimated to contain 17 million ounces of gold. (The West Australian, 09-24-2012;;  AVN, 09-22-2012;; Veneconomy,

International Trade

Trade from Colombia to Venezuela up to U$D 1.5 billion
Exports from Colombia to Venezuela reached U$D 1.5 billion, according to Colombia's National Statistics Department (DANE). This represents an overall trade growth of 65.4% compared with the same period last year, when exports were U$D 907 million. The figures were far from favorable to Venezuela as it sold only U$D 403 million to Colombia during the first seven months of this year. (El Universal, 09-22-2012;


DATANALISIS: Capriles edges toward Chavez as vote nears
Opposition candidate Henrique Capriles edged closer to President Hugo Chavez in a recent DATANALISIS poll, according to two sources that have seen the poll. The recent poll shows support for Capriles, growing in the waning days of the campaign as he continues campaigning across the country. The survey showed Capriles with 37.2% of the vote compared with 47.3% for Chavez, closer than the 12.5% difference registered in their last survey. The poll, which had a margin of error of 2.4 percent, was conducted between August 25 and September 5, the sources said. This leaves 15.5% undecided. DATANALISIS did not immediately respond to requests for confirmation of the details, and another well-known pollster, CONSULTORES 21, has the candidate’s neck-and-neck. (REUTERS, 09-24-2012;

Key PSUV leader says if Chavez loses he will concede
Aristóbulo Istúriz, vice president of the pro government United Socialist Party promises to control extremists and in exchange asks that Capriles do the same with "nuts" in the opposition. He said: "If Chavez loses, he will concede, as he did with state governments, mayoralties and congressional elections"; and added "We must abandon triumphalism and turn polls into votes. Zero smugness. In order to guarantee peace and harmony on October 8 we need to win with a broad margin. The problem is not to win but rather the advantage in favor. Victory must be decisive to avoid destabilization". (El Nacional, 09-25-2012;

UNASUR confirms Venezuela's electoral system is reliable
The heads of both campaigns and authorities at Venezuela's National Electoral Council (CNE) all confirm that country's electoral system is reliable, the Union of South American Nations (UNASUR) said in a statement released Sunday. "None of the spokespeople questioned the system's technological strength," says the communique issued from Quito by regional bloc. (AVN, 09-23-2012;; El Universal,

"Ghetto Chavez" and the battle for Venezuela's youth vote
In Venezuela's biggest slum, a graffiti artist stencils a painting of President Hugo Chavez dunking a basketball.
Another has him rapping to hip-hop music, and another doing a wheelie on a motorcycle. "Chavez el mio" ("My Chavez") reads a slogan on one of the series of striking campaign images ahead of the October 7 election.
It is a new look for the 58-year-old president, who is seeking another six-year term in a tight race despite undergoing cancer surgery three times since June 2011. (Reuters, 09-23-2012;

Friday, September 21, 2012

September 21th, 2012

Economics & Finance

Reserves fall to five-year low before vote
Venezuela’s international reserves fell to near their lowest level in five years as the government boosts spending ahead of next month’s presidential election.  The central bank said reserves fell U$D 300 million between Sept. 13 and Sept. 14 to U$D 25.2 billion, nearing the lowest since July 30, 2007, according to figures released today by the central bank. Reserves dipped to U$D 25 billion on May 31, and were below U$D 25.2 billion two days in June. (Bloomberg, 09-20-2012;; El Universal;

2012 budget exceeds its U$D 93 billion cap
Venezuela's 2012 budget initially was set at U$D 69.2 billion, yet new liabilities and government demands have forced the government to approve additional funding, increasing the budget by 36% (to U$D 94.4 billion). Since January, the National Assembly has approved AN additional U$D 25.1 billion, and last Tuesday it authorized yet another U$D 1.9 billion. (El Universal, 09-20-2012;

Elections ignite investor enthusiasm
Interest has risen in Venezuelan sovereign debt bonds as Presidential elections draw closer and several polls show opposition candidate Henrique Capriles gaining. Capriles has pledged to correct fiscal imbalances and carry out reforms. Brian Coulton, an investment strategy official at Legal & General Investment Management in London says "Venezuela is being watched very closely. Investors have become enthusiastic with signs that the opposition is gaining ground". More in Spanish: (El Nacional, 09-21-2012;

CADIVI allocates less FOREX to business
A study by the Venezuelan American Chamber of Commerce shows that currency allocated to major firms has slowed down over the past weeks, particularly in food, personal care, home products and the automotive industry. VENAMCHAM General Manager Carlos Tejera reports that 68% of firms in consumer products from all sectors report fewer approvals by the currency board. More in Spanish: (El Nacional, 09-21-2012;

Cheap credit fails to drive industry
The government is forcing the banking system to grant low interest credits to industry, agriculture, tourism and small business, but according to a study by ECOANALITICA results are beneath expectations. More in Spanish: (El Universal, 09-21-2012;

Government claims unemployment down from 8.3% to 7.9% since last year, in a report by the National Statistics Institute. More in Spanish: (AVN, 09-21-2012;ó-83-79-entre-agosto-2011-2012; El Universal,

Debt repayment will impact public finances
In 2013, Venezuela must to pay U$D 9 billion in foreign currency bond maturities, according to Angel García Banchs, President of the ECONOMETRICA consulting firm. Although international market conditions may allow Venezuela to issue new bonds in order to pay maturities, García says that when the US monetary policy changes, maturities will be increasingly difficult for the next five years. (El Universal, 09-20-2012;


Government sees refinery fire out soon
A fire caused by lightning at Venezuela's 146,000-barrel-per-day El Palito refinery ignited two naphtha storage tanks.
The incident revived painful memories of last month's disaster at the 645,000-bpd Amuay plant, the country's biggest oil refinery, when a gas leak caused an explosion that killed 42 people, injured dozens and damaged 1,600 homes. Asdrúbal Chavez, Vice-President of Refining, Trade and Supply of state oil company PDVSA (and a cousin of President Chavez), says the fire, is currently affecting one naphtha storage tank only, adding that the situation is "completely under control." He also said other refinery facilities are operating normally. President Chavez says the fire will be extinguished shortly and ruled out sabotage. (Reuters, 09-20-2012;; El Universal, 09-20-2012;; Bloomberg,; The Washington Post,; El Universal, 09-20-2012;; and more in Spanish: El Universal, 09-21-2012;

Venezuela and China agree to increase cement production
The Government and the Catic Beijing Chinese firm have signed an agreement to increase production at the Cementos Andino plant in Trujillo state, from 750,000 to 1.2 million tons per year. The plant is expected to double production over 16 months after a U$D 239.76 million investment. More in Spanish: (AVN, 09-21-2012;ón-cementos-andino; El Universal,

International Trade

Colombian trade with Venezuela is expected to reach U$D 3 billion this year, according to Colombian Trade, Industry and Tourism Minister Sergio Díaz Granados, who foresees  20% growth over 2011. More in Spanish: (El Mundo, 09-21-2012;$.aspx)

Logistics & Transport

Nine cargo food ships waiting at anchor in bay
There are 25 ships waiting at anchor in areas A and B of the bay of Puerto Cabello for entry into the local docks. The number increased since last Monday. Nine freighters: Day Dream Believer, Bassic Ocean, Marataha Promise, Emely Balket, Ijsselborg, Basic Brave, Pamir, Tampa and Tao UBC Brave are bearing food in bulk loads as yellow corn, paddy rice, malt and sugar. More in Spanish: (El Carabobeño, 09-20-2012;


Henrique Capriles met with Colombian President Juan Manuel Santos
Colombian President Juan Manuel Santos met with Presidential candidate Henrique Capriles Radonski, in his office at the Bogotá Presidential Palace. At the meeting, President Santos reaffirmed Colombia's neutrality toward the Venezuelan elections, hoped for a massive and peaceful participation of the Venezuelan people, and addressed the need to continue harmonious efforts to foster Colombia-Venezuela relations. (El Universal, 09-20-2012;

Chavez cites telephone tracking poll showing him 14.7% points above Capriles
According to the alleged DATANALISIS telephone tracking poll, President Chavez now has a 43.8% vote intention, against 29.1% for Capriles. The report is said to show that on the basis of 1200 telephone calls to people somewhat certain and very sure they will vote, 8.8% did not answer and 14.4% said they "didn´t know", which amounts to 23.2% potential swing votes. The President reported these results on national television but did not clarify how he obtained them. More in Spanish: (El Universal, 09-21-2012;

Cardinal Urosa calls on Venezuelans to vote "bravely" on October 7th, and
Caracas Archbishop Jorge Cardinal Urosa also called voting a "serious moral obligation", and called on Venezuelans to vote massively on October 7th, "according to their own conscience".  He added: "Only God will know for whom we vote. Reject improper threats."  More in Spanish: (El Universal, 09-21-2012;

Cancer? What cancer? Chavez's health off radar as vote nears
Just months ago, it was the issue dominating Venezuela and its presidential campaign. Now Hugo Chavez's bout with cancer is barely mentioned as his Oct. 7 re-election bid approaches. Once-frenetic rumors about Chavez's health have cooled to almost nothing while voters prepare to decide who will lead Venezuela - and control its vast oil reserves - for the next six years. Chavez, a socialist firebrand known for lambasting the U.S. "empire," faces market-friendly challenger Henrique Capriles, a 40-year-old lawyer and state governor who has vowed to end the seizure of private businesses and create jobs by attracting private investment. (Reuters, 09-19-2012;

Some 40 Latin American and international organizations on Human Rights said Wednesday Venezuela’s departure from the Inter American Court will have “serious repercussions” for Venezuelans. They asked the Venezuelan State to reconsider its decision and called on the OAS member countries to “urge Venezuela not to deprive its citizens from access to the highest court of the regional system of human rights protection.” (Veneconomy, 09-19-2012;

Tuesday, September 18, 2012

September 18th, 2012

Economics & Finance

Currency reserves fall to five-year low before vote
Venezuela’s international reserves fell to their lowest level in more than five years, according to figures released today by the central bank. The central bank said reserves fell U$D 300 million between Sept. 13 and Sept. 14 to U$D 25.2 billion, the lowest since July 30, 2007. Venezuela’s reserves have fallen from U$D 42.5 billion in January 2009 as President Hugo Chavez orders the central bank to help fund social spending with the nation’s reserves. Chavez is boosting spending this year as he seeks to win a third term in next month’s presidential election. (Bloomberg, 09-17-2012;

U$D $11,1 billion transferred from PDVSA to FONDEN and the Central Bank
Petróleos de Venezuela (PDVSA) and Venezuela's Central Bank has raised cash available to the National Development Fund (FONDEN), which is the government's instrument to fund projects and welfare. According to official data from the oil industry and the Central Bank, FONDEN received U$D 11.1 billion in deposits during the first semester of this year. By the end of June PDVSA had transferred U$D 7.6 billion. More in Spanish: (El Universal, 09-18-2012;

The economy grows as imports soar and inflation persists
Imports into Venezuela increased by 25.3% during the first semester 2012, and exports rose only 7.9%. Public oil imports were U$D 4.905 billion. In the meantime, GDP growth is among the largest in region, and the nation has its highest rate of inflation, according to data from the UN Economic Commission for Latin America and the Caribbean. More in Spanish: (El Mundo, 09-18-2012;

Venezuela's country risk decreasing steadily
Venezuela's indicator of sovereign risk has decreased constantly over the past weeks as the Emerging Markets Bond Index Plus (EMBI+) shrank by more than 200 points, in comparison with that registered late last year, and hit 924 points above US Treasury Bonds last week (September 10 - September 14). This means that there has been a slowdown in the markets' perception of risk and possible sovereign debt default, despite the fact that Venezuela remains among the world's riskiest countries. (El Universal, 09-17-2012;

Dollar denominated accounts authorized in local banks
Starting yesterday individuals and companies may open dollar denominated accounts in Venezuelan banks, according to a Central Bank resolution - published in the Official Gazette number 40,002. No minimum amount is required for opening these accounts. More in Spanish: (Ultimas Noticias, 09-17-2012;


Electric Energy Minister admits failures
Héctor Navarro, Minister for Electric Energy, has admitted power failures over the last two weeks within the National Electricity System (SEN) due to problems in the power generation units. The minister also said that energy demand increased early in September 323MW with respect to figures recorded in 2011, yet he did not reveal overall consumption. "Demand is currently met and maintenance plans are already in place." (El Universal, 09-14-2012;

Labor leaders and workers within Venezuela’s basic industries denounce security failures that bring about deterioration and risky conditions for employees. Alcasa’s Union Secretary General Henry Arias said “it is a miracle that no catastrophes have occurred” in companies such as ALCASA, SIDOR, VENALUM and BAUXILUM. He pointed out 18 workers have died in the last four years as a result of safety deficiencies. (Veneconomy, 09-17-2012;

International Trade

Paraguay formally rejects Venezuela in MERCOSUR
Paraguay filed a formal protest against the MERCOSUR decision to suspend it following the ouster of former President Fernando Lugo and the incorporate Venezuela as a full member of the bloc. The government of President Federico Franco, who replaced Lugo after a swift impeachment, said the protest was a result of "serious abuses committed" More in Spanish: (El Mundo, 09-17-2012;

Logistics & Transport

La Guaira port modernization 18.55% ahead
Work on modernizing the port of La Guaira has progressed 18.55%, according to information provided by the Deputy Minister of Popular Power for Water and Air Transport and Port Authority Vice President, General Pedro Castro. The contract calls for implementation in 10 months and is scheduled for completion in 2014. More in Spanish: (Bolipuertos, 09-17-2012;


Opposition chides Chavez over recent weeping jag
The opposition presidential candidate has chided Hugo Chavez for publicly weeping over the loss of freedom he has had to contend with during his 14 years in power, all part of an increasingly dramatic campaign ahead of the Oct. 7 vote. Facing his toughest-ever re-election challenge, socialist "revolutionary" Chavez teared up during a televised speech on Saturday, lamenting the loss of his freedom to roam anonymously through Venezuela's towns and countryside.  Henrique Capriles, the business-friendly candidate seeking to unseat Chavez, told a rally that the incumbent should not be crying for himself but for the Venezuelans who have suffered rising crime and economic mismanagement under his rule. (Reuters; 09-16-2012;; The Washington Post,

Presidential elections decisive to Venezuela's foreign policy
Foreign diplomatic missions appointed to Venezuela are closely keeping track of the Venezuelan political process as the effects of the results of the upcoming Venezuelan presidential election will extend beyond the country's borders.
After 14 years in office and hoping to extend his rule to 20 years, President Hugo Chávez aims to continue privileging countries with common ideological interests that opposing US interests. Opposition presidential candidate Henrique Capriles Radonski seeks a return to Venezuela's historic institutional position, with strong ties in the Western world, ready to give special treatment to its main business partners such as the US or Colombia, and keen on achieving the Latin American integration through institutions such as the Organization of American States (OAS), the Andean Community of Nations (CAN), and MERCOSUR. (El Universal, 09-17-2012;

Growing failure rate in voting machines concerns experts on both sides
Experts from both sides of the Presidential elections are concerned with failures in voting equipment which are emerging during the production audit, which show over 600 units programmed for the forthcoming voting process. More in Spanish: (El Nacional, 09-18-2012;

Former Colombian President Álvaro Uribe insists Chávez has been an “accompliceof the Colombian guerrilla FARC and explained this was evidenced after Rodrigo Granda was captured by Colombia in 2004, when Chavez broke diplomatic relations. Uribe said “Granda had travelled to Caracas with Chávez's authorization” to participate in a political event, and says that "proves his complicity with terrorism.” (Veneconomy, 09-16-2012;

The US includes Bolivia, Myanmar and Venezuela as having “failed” during the last 12 months to make significant efforts to comply with obligations with to which they had committed with international anti-narcotics agreements. Bolivia and Venezuela are the two countries in Latin America where there are no US ambassadors at the moment. (Veneconomy, 09-16-2012;; The Washington Post,