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.

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; http://www.bloomberg.com/news/2012-09-17/venezuela-s-currency-reserves-fall-to-five-year-low-before-vote.html)

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; http://www.eluniversal.com/economia/120918/111-millardos-traspasaron-pdvsa-y-el-bcv-al-fonden)

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; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/economia-venezolana-crece-junto-con-su-tendencia-i.aspx)

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; http://www.eluniversal.com/economia/120917/venezuelas-country-risk-shows-a-reduced-decrease)

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; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/desde-este-lunes-se-podran-abrir-cuentas-en-dolare.aspx)



Commodities

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; http://www.eluniversal.com/economia/120914/venezuelan-minister-of-energy-grants-energy-failures)

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; http://www.veneconomy.com/site/index.asp?ids=44&idt=32080&idc=3)



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; http://www.elmundo.com.ve/noticias/economia/internacional/paraguay-formaliza-rechazo-contra-ingreso-de-venez.aspx)



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; http://www.bolipuertos.gob.ve/noticia.aspx?id=6023)



Politics

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; http://www.reuters.com/article/2012/09/16/venezuela-election-idUSL1E8KG4QK20120916; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-capriles-slams-chavez-for-crying-over-his-lost-freedoms-instead-of-murder-victims/2012/09/16/6df8ebd4-0063-11e2-bbf0-e33b4ee2f0e8_story.html)

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; http://www.eluniversal.com/nacional-y-politica/120917/venezuelas-foreign-policy-decisive-in-presidential-election)

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; http://www.el-nacional.com/)

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; http://www.veneconomy.com/site/index.asp?ids=44&idt=32073&idc=1)

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; http://www.veneconomy.com/site/index.asp?ids=44&idt=32074&idc=1; The Washington Post, http://www.washingtonpost.com/world/the_americas/governments-of-venezuela-bolivia-reject-us-report-that-accuses-them-of-failing-in-drug-war/2012/09/15/9c5dccaa-ff8d-11e1-98c6-ec0a0a93f8eb_story.html)

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