September 14th, 2012

Economics & Finance

Chavez 67% spending surge sets up devaluation after vote

President Hugo Chavez’s 67% increase in government spending is setting the stage for a currency devaluation after national elections next month. As the 58-year-old president boosts wages and builds houses for the poor to win a third term, the bolivar is tumbling in unregulated markets to a level 62% weaker than the regulated exchange rate, compared with a 50% difference at the end of 2011. Most individuals and businesses now pay 11.19 bolivars per dollar versus 8.63 at the start of the year and the fixed 4.3 bolivar official rate. (Bloomberg, 09-13-2012; http://www.bloomberg.com/news/2012-09-13/chavez-67-spending-increase-sets-up-devaluation-after-election.html)

Inflation in food prices doubles the average for Latin America

A 31 July report by the UN's Food and Agriculture Organization shows that Venezuela has the highest rate of inflation in food prices in the Hemisphere. The cost of food rose 21.7% from July 2011 to July 2012, which doubles the 8.7% regional average. Colombia came in with 3.8%, Perú 4.6%, Chile 6.5%, Brazil 8.7% and Argentina 10.09%. More in Spanish: (El Universal, 09-14-2012; http://www.eluniversal.com/economia/120914/inflacion-de-alimentos-duplica-al-promedio-de-america-latina)

Credit rises 52-96% year to date through August

According to the Banking Superintendent, net credit growth rose 52.96%, as it increased from VEB 223.386 million in August 2011 to VEB 341.699 million in August 2012. The amount is 44.97% of total active bank assets. More in Spanish: (El Mundo, 09-14-2012; http://www.avn.info.ve/contenido/sudeban-créditos-registran-aumento-anual-5296-para-agosto)

Commodities

SIDOR will continue in the red due to operating limitations, basic industries reaching rock bottom

SIDOR, Venezuela's government iron and steel producing company, may lose U$D 673.4 million by the end of 2012, and estimates a 42% rise in losses during 2013, going up to U$D 958 million. The figures are reflected in the company's 2012 Annual Budget, which also sets expected production at 4 million tons of liquid steel, doubling current output, as it continues to direct funds to "social" expenditure on individuals and communities. (El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/venezuelan-steel-company-to-suffer-losses-upon-numerous-limitations; and more in Spanish: El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/venezuelan-basic-industries-at-rock-bottom)

PDVSA says Amuay refinery operates at 52% capacity and under evaluation by reinsurance companies

Oil Minister Rafael Ramírez announced that reinsurance companies are evaluating damage at the Amuay refinery which -he said- is operating at 52% capacity. More in Spanish: (El Mundo, 09-13-2012;  http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa--amuay-opera-a-52--y-esta-siendo-evaluada-po.aspx; and El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/amuay-refinery-processes-300000-bpd)

           

OPEC reports 1.8% lower Venezuelan oil output

Venezuelan oil output dropped by 1.8% last August compared with the same month last year, according to statistics collected by the Organization of Petroleum Exporting Countries (OPEC) in its monthly report. The oil cartel reports oil drilling was 2.35 million barrels per day (bpd) in August, 43,000 barrels less than the average in August 2011. More in Spanish: (El Universal, 09-13-2012; http://www.eluniversal.com/economia/120912/opec-reports-lower-venezuelan-oil-output-at-18)

Venezuela, Argentina discuss Orinoco oil belt projects

Rafael Ramírez, Minister of Petroleum and Mining Rafael Ramírez, and Argentina´s Planning Minister Julio De Vido, inaugurated meetings between some 150 businessmen from both countries to discuss cooperation in the development of the Orinoco oil belt. More in Spanish: (El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/venezuela-argentina-sketch-works-at-orinoco-oil-belt)

Brazil may extend deadline for Venezuela’s PDVSA participation in refinery

Brazil may extend the deadline for Venezuelan state oil firm Petroleos de Venezuela S.A. to provide loan guarantees and secure its participation in the bi-national Abreu e Lima heavy-oil refinery, the CEO of Brazilian state-controlled energy company PETROBRAS said. Maria das Gracas Foster said PDVSA is in the “final” phase of securing a loan needed to pay for its 40% stake in the refinery, although the November deadline is approaching. “If they don’t present the guarantees in November, I’m going to discuss a new deadline because I want them (PDVSA) to be a part of this project,” Foster said in a Senate hearing. (Latin American Herald Tribune, 09-12-2012; http://www.laht.com/article.asp?ArticleId=576227&CategoryId=10717)

International Trade

Predicting 18.8% rise in imports from the country

The UN's Economic Commission for Latin America and the Caribbean is estimating that Venezuela will continue to increase imports through the end of the year. It projects imports will increase by 18.8% by the end of the year, after a rise of 25.3% in the first semester. Venezuela's rate of imports is the highest of the region, much above the 6.2% projected average increase. More in Spanish: (El Nacional, 09-14-2012; http://www.el-nacional.com/)

Logistics & Transport

Blackouts hit operations at main Venezuelan port

Continued blackouts at the port of Puerto Cabello, in Carabobo state are jeopardizing the operations in the main Venezuelan port. According to sources close to the terminal, electric power supply has been fitful, including extended lapses since last week. On September 5th, a 12 hour blackout interrupted commodity exports. (El Universal, 09-12-2012; http://www.eluniversal.com/economia/120912/blackouts-hit-operations-in-main-venezuelan-port)

Politics

Former Justice confirms Chavez manipulates the Supreme Court

Former Supreme Court Justice Eladio Aponte has confessed that President Hugo Chavez personally ordered him to sentence former police officials accused for participating in the failed effort to replace him - Chavez - in 2002, to 30 years imprisonment. He added that the case "proves political persecution through the Judiciary". Aponte, who is currently in the US witness protection programs, made is revelation through a notarized statement recorded in Costa Rica last April and divulged yesterday in Miami by attorney Carlos Ramírez López, at the former magistrate's request. More in Spanish: (Tal Cual, 09-14-2012; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/120914/aponte-aponte-chavez-ordeno-condenar-a-comisarios-del-11a)

Capriles quickly fires high ranking ally following allegations of improper campaign funding activity

Opposition Presidential candidate Henrique Capriles Radonski moved swiftly to expel Congressman Juan Carlos Caldera, one of the highest officials in his own party, after pro Government television aired a clandestine tape showing the Congressman - who is also the opposition candidate for Mayor of the Sucre District in metropolitan Caracas - taking an unreported campaign contribution. Concealed cameras filmed Caldera a little less than U$D 4000 from Luis Peña, an emissary of pro-Chavez tycoon Wilmer Ruperti. The money was intended for Caldera's race for the mayoralty, Although Caldera has admitted his own entrapment, Capriles and the Justice First Party expelled him for unauthorized use of the candidate's name in soliciting funds, and demanded an investigation. Honesty and transparency are among the key goals of the Capriles campaign. More in Spanish: (El Universal, 09-14-2012; http://www.eluniversal.com/nacional-y-politica/120914/capriles-expulsa-a-caldera-y-exige-investigacion; El Universal; http://www.eluniversal.com/nacional-y-politica/120914/el-diputado-acusado-dice-que-recibio-bs-40-mil-de-ruperti; El Universal; http://www.eluniversal.com/nacional-y-politica/120914/primero-justicia-suspendio-a-caldera-de-toda-militancia; El Nacional; http://www.el-nacional.com/)