October 30th, 2012

Economics & Finance

Government plans to relax exchange controls, calls for higher tax collection

Planning and Finance Minister Jorge Giordani says exchange controls will remain, but with some modifications since he believes controls are "absolutely necessary" within Venezuela's economy. He also called for fiscal reform, saying domestic taxes are only 12% of that should be collected due to evasion, overpricing exports, manipulating foreign exchange and speculation. More in Spanish: (Últimas Noticias, 10-29-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/gobierno-preve-flexibilizar--el-control-de-cambio.aspx; Infolatam, 10-29-2012)

Giordani: Inflation will be fought with more production

The government is committed to increase production of tomatoes, potatoes, onions and paprika, in order to meet the inflation target for 2013, says Minister of Planning and Finance, Jorge Giordani. He said Venezuela can be self-sufficient in these areas "that lead to higher prices." More in Spanish: (El Mundo, 10-29-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/giordani--la-inflacion-se-combatira-con-mas-produc.aspx)

Venezuela's food basket hits USD 427.64 in September

The average price of the standard food basket in Venezuela amounted to VEB 1,881.96 (USD 427.67) in September 2012, according to a report prepared by the National Institute of Statistics (INE).

The figure represents a 2.5% increase compared to August, when the food basket price amounted to VEB 1,835.25 (USD 417.38). (El Universal, 10-29-2012; http://www.eluniversal.com/economia/121029/venezuelas-food-basket-hits-usd-42764-in-september)

Socialist plan calls for creating 450 communes per year

The communal State is under construction. You can feel it in communities. The Government's plan, presented by President Hugo Chávez sets the goal of "consolidating and supporting the people's power during 2013-2019, which will lead to the creation of 3,000 socialist communes, 450 communes per year, based on the demographic characteristics of the country's territorial development axis. (El Universal, 10-29-2012; http://www.eluniversal.com/economia/121029/socialist-plan-provides-for-creation-of-450-communes-per-year; http://www.eluniversal.com/economia/121029/venezuelas-public-spending-to-underpin-the-socialist-model-in-2013)

Giordani presents his arguments against devaluating the bolivar

In a recent interview, Planning and Finance Minister Jorge Giordani proposed seven reasons for not devaluating Venezuela's currency, he said: 1) Currency needs are being met by SITME and CADIVI; 2) we have a flourishing economy; 3) we do not need dollar denominated bonds, there is no need to pay 13% abroad; 4) we are applying planned indebtedness since early this year; 5) China provides funding at rates under 13%; 6) many foodstuffs can be produced domestically to abate inflation; 7) as to food imports - we can change consumer preferences. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/8-razones-que-da-el-ministro-giordani-para-no-deva.aspx)

Commodities

Growing doubts two months after explosion in Amuay refinery

More than 60 days have passed since the explosion resulting from a gas leak in Amuay refinery (northwestern Falcón state). The blast caused more than 40 deaths, six people missing, hundreds of injured, and damages in hundreds of dwellings and stores neighboring the refinery that belongs to state-run oil company Petróleos de Venezuela (Pdvsa) and is part of the Paraguaná Refining Center (CRP). To date, no official findings have been revealed concerning the causes of the gas leak that devastated the surroundings of Amuay refinery, including a detachment of the National Guard, the enterprise Puramin, and several stores, dwellings and buildings. (El Universal, 10-27-2012; http://www.eluniversal.com/economia/121027/growing-doubts-two-months-after-explosion-in-amuay-refinery)

Venezuela claims the EXXON lawsuit undermines trust in international arbitration

Venezuela's defense team at ICSID claimed, "The fact that the plaintiffs are well-known US companies that have managed to manipulate the international arbitration system by pretending to be Dutch companies, undermines the trust that we may feel towards international arbitration". (El Universal, 10-27-2012; http://www.eluniversal.com/economia/121027/venezuela-claims-that-exxon-lawsuit-seeks-its-ruin)

Electricity generation said to be reaching 20,000 MW

Electric Energy Minister Héctor Navarro says electricity generation has risen by almost 5,000 MW since the 2009 crisis and is not reaching 20,000 MW. More in Spanish: (AVN, 10-30-2012; http://www.avn.info.ve/contenido/generación-eléctrica-nacional-se-ubica-casi-20000-megavatios; http://www.avn.info.ve/contenido/ministerio-energía-eléctrica-cumple-tres-años-grandes-inversiones-curso)

International Trade

Turkey interested in Venezuelan oil

Turkey's ambassador to Caracas, Muhsin Tugrul Kiliçaslan, says a bilateral Energy Cooperation Agreement has been recently signed between Turkey and Venezuela, under which Venezuela sends oil to Turkey in exchange for the construction of dwellings. "We started the cooperation in the construction sector. It is a win-win situation for both parties. You (Venezuela) need construction and we (Turkey) are very good at it and we require oil," the ambassador remarked. (El Universal, 10-29-2012; http://www.eluniversal.com/economia/121029/turkey-interested-in-venezuelan-oil)

Logistics & Transport

Vessels waiting to enter port increased, government vows to improve operations

The weekend closed with 33 ships waiting at bay to enter the port of Puerto Cabello. Members of the maritime community need to double work shifts in order to speed up paperwork; and the state-run port authority, BOLIPUERTOS, says it will set up joint committees with shippers in order to improve operations in Venezuelan ports, after meeting with shipping line representatives. "New work commissions will be set up in order to tackle and propose mechanisms for further approach between ports and its users, with the purpose of improving port operations and boosting economic development." (El Universal, 10-29-2012; http://www.eluniversal.com/economia/121029/venezuelan-government-vows-to-improve-ports-operations; and more in Spanish: El Carabobeño, 10-29-2012; http://www.el-carabobeno.com/impreso/articulo/37028/-cifra-de-buques-en-espera-de-ingreso-al-puerto-aument-y-se-ubic-en-33)

A new passengers’ gangway will go into operation at Maiquetía, according to Maiquetía International Airport Institute (IAIM, in Spanish) General Director Luis Gustavo Graterol, who said tests had begun with a Boeing 757-200 plane last October 10. (Veneconomy, 10-29-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32568&idc=3)

Politics

Controversial Defense Minister suddenly replaced, nominated for Governor of Trujillo

In a surprise last minute move President Chavez replaced his Defense Minister, General Henry Rangel Silva, who has repeatedly been associated with drug trafficking complicity, and named him a candidate for Governor of the state of Trujillo, one of the poorest and smallest in the nation. Incumbent Governor and government party candidate Hugo Cabezas hurriedly withdrew his nomination. Rangel Silva served as Defense Minister since January this year and has been quickly replaced with Navy Chief, Admiral Diego Molero. More in Spanish: (AVN, 10-30-2012; http://www.avn.info.ve/contenido/chávez-designa-almirante-diego-molero-como-nuevo-ministro-para-defensa; El Universal, http://www.eluniversal.com/nacional-y-politica/121030/rangel-silva-pasa-de-ministro-de-defensa-a-candidato-en-trujillo)

Election Board allows pro government candidates to register after process was closed

The United Democratic Opposition is calling for the Elections Board to withdraw a decision to allow 7 pro government gubernatorial candidates, and 101 other citizens to register in different states long after the registration process was closed. Pro Government Board member Hernández has called the decision an exceptional situation with insignificant impact, but opposition representatives say it is illegal and will appeal to the Supreme Court, as well as the Organization of American States and MERCOSUR. (El Universal, 10-29-2012; http://www.eluniversal.com/nacional-y-politica/121029/former-electoral-body-member-requests-nullification-of-relocations; and more in Spanish: El Nacional; http://www.el-nacional.com/)

Government is willing to evaluate the cases of the 14 political prisoners, says attorney Gonzalo Himiob. He explained the government has asked legal reports indicating which legal benefits correspond to each of the prisoners, under the Constitution and laws. Of the 14, nine already qualify for parole, which has been repeatedly turned down by the courts. (Veneconomy, 10-29-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32570&idc=3)

October 26th, 2012

Economics & Finance

Venezuela cut gold holdings by 3.7 metric tons in August; more gold sales expected in December

Venezuela cut its gold holdings by 3.733 tons in August, data from the International Monetary Fund showed on Thursday, while Brazil added just under two tons of bullion to its reserves the following month. UBS expects tjhe nation will sell more gold in December, and says in a report that "Venezuela is a net seller of gold, 119000 ounces were sold in July and a larger sale is expected in December", (Reuters, 10-25-2012; http://www.reuters.com/article/2012/10/25/us-gold-central-banks-idUSBRE89O10L20121025; El Universal; http://www.eluniversal.com/economia/121025/imf-confirms-gold-sales-made-by-venezuelas-central-bank-in-august; and more in Spanish: El Universal; http://www.eluniversal.com/economia/121026/afirman-que-venezuela-preve-vender-mas-oro-en-diciembre)

2013 indebtedness estimated at U$D 27.1 billion

Planning and Finance Minister Jorge Giordani presented the National Assembly with both a draft Indebtedness Law and a draft Budget Law for fiscal year 2013, both of which aim at "furthering the transition towards the socialist productive model." Expenditure for next year was estimated at U$D 92.1 billion, while indebtedness was calculated at U$D 27.1 billion. Such estimates are based on "prudent and rational" macroeconomic premises, according to Giordani. The oil average price was calculated at U$D 55 per barrel; inflation at 14-16%; and economic growth at 6% of GDP. The foreign exchange rate will remain unchanged at VEB 4.30 per US dollar, the minister explained. (El Universal, 10-24-2012; http://www.eluniversal.com/economia/121024/venezuelas-indebtedness-estimated-at-usd-271-billion-in-2013)

An estimated 50% exchange adjustment is envisioned for 2013, according to Barclays and ECOANALÍTICA. Both firms anticipate a devaluation of at least 46% during the first quarter 2013. José Luis Saboin, Senior Economist with ECOANALÍTICA says "there is a fiscal deficit that is 15% of GDP, which is around U$D 40 billion, around half of oil income" He says an enlarged government role, along with patronage lead to spending more than comes in, we are referring to the "missions" and the housing programs". More in Spanish: (El Universal, 10-26-2012; http://www.eluniversal.com/economia/121026/pronostican-ajuste-cambiario-cercano-a-50-para-2013)

Over VEB 3.13 billion to keep prices down

The proposed 2013 fiscal budget, the resources allocated to the Ministry of Food 10% increase, from VEB 4.05 billion in 2012 to VEB 4.45 billion. More in Spanish: (El Nacional, 10-25-2012; http://www.el-nacional.com/)

Venezuela among nations placing most obstacles on investment

Venezuela is among the countries that place the most obstacles for opening a business, according to a study prepared by the World Bank entitled "Doing Business 2013." The survey measured indicators concerning the businesses environment. Venezuela ranks 180 out of 185 countries, just ahead of the Democratic Republic of Congo, Eritrea, the Republic of Congo, Chad, and the Central African Republic. Venezuela ranked 179 in 2011. The study measured several indicators, namely: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, and trading across borders. (El Universal, 10-24-2012; http://www.eluniversal.com/economia/121024/venezuela-among-the-countries-with-more-obstacles-to-investments)

Banks’ non-performing loans stood at 1.08% at the close of September, down 0.8 percentage points over the past 12 months, announced the Banking Superintendent's office SUDEBAN. It pointed out that since 1994 (the year of the banking crisis), the sector’s non-performing loans have been diminishing, going from 20% at the end of that year to 1.4% at the end of 2011. (Veneconomy, 10-24-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32515&idc=2)

Dividend repatriation backlog reported; companies expect exchange rate adjustment

According to a yearly poll by the Venezuelan American Chamber of Commerce and Industry (VenAmCham) 80% out of 238 respondents expect an exchange rate adjustment. 62% of those polled say they are enrolled with the Exchange Board (CADIVI) and 70% say they operate within international markets. Companies polled reported backed up dividend repatriation applications, on the order of U$$ 8 to 9 billion dollars. More in Spanish: (El Universal, 10-26-2012; http://www.eluniversal.com/economia/121026/empresas-aguardan-por-repatriacion-de-dividendos)

Commodities

Curacao wants PDVSA to invest U$D1.5 billion in Isla refinery

Curacao could extend or renegotiate a lease of its Isla refinery to Venezuelan state oil company PDVSA if the latter agrees to invest U$D1.5 billion to upgrade the World War One-era facility, one of the Caribbean island's top politicians said. The 335,000 barrel per day (bpd) Isla refinery, which is crucial to the Dutch island nation's economy, has faced years of complaints from residents and environmental activists over pollution, but PDVSA has been reluctant to invest in it. "It is important to extend PDVSA's contract, but under certain conditions," Helmin Wiels, leader of the Sovereign People party which won the largest block at last week's parliamentary elections, told Reuters on Wednesday. (Reuters, 10-24-2012; http://www.reuters.com/article/2012/10/24/us-curacao-refinery-idUSBRE89N1GZ20121024)

VENALUM alumina inventory down to 8 days

The drop in alumina production by state CVG BAUXILUM company has lowered delivery of material to state owned aluminum processing companies, ALCASA and VENALUM. VENALUM has inventory available for just 8 days, according to members of the Workers Council, and this could lead to an even greater drop in the company's production levels, which are currently at 30% of capacity. More in Spanish: (El Universal, 10-26-2012; http://www.eluniversal.com/economia/121026/venalum-tiene-inventarios-de-alumina-solo-para-8-dias)

International Trade

Colombia-Venezuela border integration on hold

The agenda on Colombia-Venezuela border issues remains on hold after two meetings between both countries' foreign ministers were called off in the past few months. The appointment has been rescheduled for early November 2012. The electricity interconnection between Apure state (southwest Venezuela) and the Arauca department (Colombia), binational security, health and economy, and the construction of the National Border Assistance Center are the pending topics on the agenda, as stated in August by the governor of the Arauca department, José Facundo Castillo Cisneros. (El Universal, 10-25-2012; http://www.eluniversal.com/nacional-y-politica/121025/colombia-venezuela-border-integration-put-on-hold)

Logistics & Transport

Expropriated La Guaira port machinery lies idle

After the Government took over the assets of 26 private companies that operated the La Guaira Port Terminal it has yet to pay compensation and machinery remains idle. Port sources report this includes high value equipment from HYSTER, KALMAR and CATERPILLAR, which was used to offload vessels, as well as small pay loaders, trucks, and other equipment used to carry merchandise from the port to warehouses, all remain idle. More in Spanish: (El Nacional, 10-26-2012; http://www.el-nacional.com/)

Politics

In Latin America, incumbents winning and dominating as term limits are increasingly loosened

After four election wins, Venezuelan President Hugo Chavez is on track to completing at least 20 years in power, and supporters say they’re glad to have him in charge. City streets are still lined with campaign posters emblazoned with the president’s image. In a region where military dictators ruled by force for decades, millions of Latin Americans are backing a new crop of leaders extending their rule and dominating power through the ballot box. (The Washington Post, 10-24-2012; http://www.washingtonpost.com/world/the_americas/in-latin-america-incumbents-winning-and-dominating-as-term-limits-are-increasingly-loosened/2012/10/24/525e4106-1e01-11e2-8817-41b9a7aaabc7_story.html)



The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

October 23th, 2012

Economics & Finance

World Bank ranks Venezuela among the most difficult nations for business

In its report on "Doing Business 2013: Smart regulations for small and medium business", prepared jointly with the International Finance Corporation (IFC), the World Bank underlines "encouraging" and "important" efforts to improve business regulation in Latin America, headed by Chile, Perú, Colombia, México and Panama, and points to worsened conditions in other countries such as Argentina and Venezuela. Chile is 37th on the global rating, followed by Perú (43), Colombia (45), México (48) and Panama (61). Venezuela ranks 180th out of 185. More in Spanish: (Ultimas Noticias, 10-23-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-entre-los-paises-mas-complicados-para-ha.aspx)

Minister says there are no plans to devalue currency

Venezuela isn’t studying a devaluation of its currency next year and the government will maintain levels of spending similar to those in 2012, El Nacional reported, citing central bank President Nelson Merentes. The central bank is allowing foreign currency reserves to fluctuate between U$D2 billion and U$F 5 billion, the Caracas-based daily cited Merentes as saying. (Bloomberg, 10-19-2012; http://www.bloomberg.com/news/2012-10-19/venezuela-doesn-t-plan-to-devalue-currency-el-nacional-says.html)

2013 budget premises to be presented to National Assembly, oil projections probably unchanged

Planning and Finance Minister Jorge Giordani is to present the premises for the 2013 Annual Budget and the Special Indebtedness Tax, along with the Annual Operational Plan before the National Assembly today, says Finance Committee Chairman Ricardo Sanguino. According to economist Luis Oliveros premises used for the oil industry will remain basically unchanged, estimating average oil prices at U$D 50 per barrel and production around 3.1 million BPD. (Veneconomy, 10-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32489&idc=2 and more in Spanish: El Mundo; http://www.elmundo.com.ve/)

Economist says Venezuela will have no income problems in 2013

Economist Carlos Quenan estimates that due to tension in the Middle East and China's economic recovery oil prices will remain around U$D 100 per barrel and Venezuela will continue to sail untroubled. More in Spanish: (El Mundo, 10-23-2012; http://www.elmundo.com.ve/noticias/economia/mercados/proyectan-un-2013-sin-problemas-de-ingresos-para-l.aspx)

Public spending estimated at VEB 528.8 billion by year end

According to ECOANALÍTICA, public spending will continue to grow and close 2012 around VEB 528.8 billion. Original estimates for 2012 were VEB 297.8 billion, but due to special authorizations it will rise by 77.6%, More in Spanish: (El Universal, 10-23-2012; http://www.eluniversal.com/economia/121023/calculan-que-el-gasto-de-2012-terminara-en-bs-5288-millardos)

Gov't seeks stronger State presence in Venezuelan economy

Just a few months before reelected President Hugo Chávez begins his next term, clear signals are being sent that further steps will be taken to deepen the socialist model in Venezuela. The Government's goal is to reinforce the presence of the State in all sectors of Venezuelan economy. As soon as Juan Carlos Loyo was reappointed as minister of Agriculture and Lands, he stressed that he would continue the lands "recovery" policy currently in place. "Moving forward, continuing the lands recovery policy. Thus, it is not expropriation; it is recovery; it is about going back to the very beginning, to the lands of the people and the indigenous tribes. However, this time we are incorporating efficient production and efficient trade. We do not want to see agriculture products ending up in the hands of speculators but in the hands of Venezuelan families," Loyo said recently after being appointed. (El Universal, 10-22-2012; http://www.eluniversal.com/economia/121022/govt-seeks-stronger-state-presence-in-venezuelan-economy)

Venezuelan bonds are good business

Alexis Mena, f the SOFTLINE economic consultant firm says that at first sight taking a position in Venezuelan bonds appears sensible as the nation has never once defaulted on its debt payments. He says prices have held firm and some are even overvalued. More in Spanish: (Tal Cual, 22-10-2012; http://www.talcualdigital.com/index.html)

Unemployment rate in September at 7.3%

Unemployment rate in September stood at 7.3%, a reduction of 1.0% versus September 2011 (8.3%), according to the monthly report on the workforce issued by the government´s National Statistics Institute (INE). In absolute terms, this means 1,010,510 jobless last month. Out of them, 897,417 were laid off and the other 113,093 unsuccessfully looked for their first job. In September 12,795,897 people were working, most of them in the formal sector of the economy (59%). (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/unemployment-rate-in-september-at-73)

Commodities

CVG BAUXILUM stops operations due to lack of inputs

The shortage of polymers used for alumina refining has forced the shutdown of the last operational stage at CVG BAUXILUM, which is the first link in aluminum industry production process. Workers say this is the first time that the plant has been paralyzed by shortages of any of the inputs. In addition, workers at BAUXILUM mines have gone on strike due to delays in wage payments. More in Spanish: (El Nacional, 10-22-2012; http://www.el-nacional.com/; El Universal, 10-23-2012; http://www.eluniversal.com/economia/121023/trabajadores-de-minas-de-bauxilum-inician-paro)

It seems impossible to raise oil production by 522,000 barrels per day (bpd) as planned by PDVSA in its work schedule for the Orinoco Oil Belt for this year, say sources in the local oil industry. Current production is 1.2 million bpd. There is no other known additional pumping besides early production announced last September by joint ventures PETROMIRANDA and PETROMACAREO in the Junín 6 and 2 blocs. (Veneconomy, 10-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32486&idc=4)

Venezuelan oil basket climbs to U$D 102.47

Venezuelan oil prices slightly surged during the week of October 15-19, ending at U$D 102.47 per barrel on average, the Ministry of Petroleum and Mining reported. This means a hike of U$D 0.35 in the value of the Venezuelan oil basket over its price last week. The Ministry explained that "the hikes recorded ending last week allowed the average prices of crude oils to finish this period on the rise, backed by the concern about the supplies due to geopolitical tension in the Middle East and maintenance work in the North Sea." (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/venezuelan-oil-basket-climbs-to-usd-10247)

International Trade

Venezuela-Colombia trade agreement enters info force

Trade relations between Colombia and Venezuela have entered a new stage, following the entry into force of the Partial Scope Agreement (AAP), which will regulate bilateral trade, according to the Colombian Ministry of Trade.

The AAP will allow the entry of Colombian exports into the Venezuelan market free from tariffs, the ministry explained. The Agreement contains about 4,921 product lines for Colombia and 4,713 product lines for Venezuela, AFP cited. However, the Binational Chamber of Commerce says application of the agreement will be delayed at several customs offices that have not yet adapted to the new system. (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/venezuela-colombia-trade-agreement-enters-info-force; and more in Spanish: El Mundo, http://www.elmundo.com.ve/)

Meat imports from Brazil up 25% this year

Venezuela bought 188,000 tons of meat from Brazil for a total of U$D 590 million, as the volume of beef imports rose 25% year to date, above the same period last year. More in Spanish: (El Mundo, 10-22-2012; http://www.elmundo.com.ve/noticias/economia/banca/importacion--de-carne-desde-brasil-sube-25--este-a.aspx)

Rules for Venezuela's adjustment to MERCOSUR will be completed before year-end, according to Isabel Delgado, Executive Secretary of the Presidential Commission for the accession of Venezuela to the Southern Common Market (Mercosur), who announced the new rules "will be largely completed by the end of the year." More in Spanish: (AVN, 10-22-2012; http://www.avn.info.ve/contenido/adecuación-normativa-sobre-ingreso-venezuela-al-mercosur-concluirá-antes-fin-año)

Colombia is an ally in supplying local market, according to statements by the Agriculture and Land Ministers of both nations, Juan Carlos Loyo y Carlos Osorio, who say the doors are open for broader integration. More in Spanish: (Últimas Noticias, 10-22-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/colombia-es-aliada-para-el-abastecimiento-local.aspx)

Logistics & Transport

Venezuela may invest U$D 300 Million to start flights to Beijing and Moscow

Venezuela is considering investments of up to U$D 300 million for the purchase of long-range aircraft to begin intercontinental flights to “allied” countries like China and Russia, according to Elsa Gutiérrez, Minister for Aquatic and Air Transport. She said that after strengthening national and regional connections with the purchase of six Brazilian EMBRAER aircraft at a cost of U$D 270 million, state airline CONVIASA is now working on buying aircraft “to serve different international destinations with direct flights.”“When we say Russia and China, we’re not talking just about Russia and China and nothing else – we want to be able to offer Venezuelans and businessmen access and connection facilities in a competitive but not an unregulated way,” she said in stressing the importance of connecting Caracas with the capitals of those two countries. (Latin American Herald Tribune, 10-19-2012; http://www.laht.com/article.asp?ArticleId=613896&CategoryId=10717)

Politics

Gubernatorial election campaign starts on November 1

Sandra Oblitas, the Vice-President of the National Electoral Council (CNE), reported on Friday that the election campaign for state governors starts on December 16. She explained that the regulations have been endorsed and the whole election process is being assessed.

She informed that the CNE system got a positive score of the "highest turnout" in the presidential election of October 7. The senior officer remembered that around 15 million voters cast their ballots on October 7. (El Universal, 10-19-2012; http://www.eluniversal.com/nacional-y-politica/121019/gubernatorial-election-campaign-starts-on-november-1)

Mitt Romney charges Obama with weakness toward Chavez

During the last of three debates, Republican presidential candidate Mitt Romney charged that President Barack Obama showed weakness internationally by coming closer to Hugo Chávez, Fidel Castro and Mahmud Ahmadinejad. More in Spanish: (El Universal, 10-23-2012; http://www.eluniversal.com/internacional/estados-unidos-2012/121023/mitt-romney-obama-mostro-debilidad-al-acercarse-a-chavez)

October 19th, 2012

Economics & Finance

Devaluation inevitable

Ricardo Sanguino, the chairman of the Finance Committee, says there are no plans to make changes in the foreign exchange policy for 2013. However, a number of economists say that the government will be forced to devalue the bolivar in order to cope with the fiscal deficit, which some estimate could reach 19% of GDP by year-end. (Veneconomy, 10-17-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32450&idc=2)

Imports drop 6.57%

Data from the Foreign Exchange Administration Commission (CADIVI) shows that import permits, not counting operations through ALADI and the Sucre, have plunged 6.57%. Such limitations have had a negative impact on companies that depend on foreign currency to import raw materials and equipment for domestic output. For products regulated by the National Superintendent for Fair Costs and Prices (SUNDECOP), delays can remain for as many as 250 days. (El Universal, 10-18-2012; http://www.eluniversal.com/economia/121018/venezuelan-regular-imports-drop-657)

Government plans to build housing units on 60,000 hectares

The government plans to acquire up to 60,000 hectares of land in order to meet goals set within the "Great Housing Mission - Venezuela," says Ricardo Molina, Minister of Housing and Habitat. The official explained that, so far, the government has 13,000 hectares of land, where 260,000 dwellings have been built since mid-April. (El Universal, 10-18-2012; http://www.eluniversal.com/economia/121018/venezuelan-government-plans-to-build-dwellings-in-60000-hectares)

ELECAR bonds due in 2018 rally most since March

Bonds sold by state-owned utility Electricidad de Caracas rallied, pushing yields down the most since March 19, as investors sought the highest yield in Venezuela. Yields on the 8.5% bonds due in 2018 fell 53 basis points, or 0.53 percentage point, to 14.76% at 3:19 p.m. in Caracas, according to data compiled by Bloomberg. The bond’s price rose 1.64 cent to 77.04 cents on the dollar. “ELECAR offers the highest yield in Venezuela and is the farthest outlier on the Venezuela curve at over 14 percent,” says Russ Dallen, the head bond trader at Caracas Capital Markets in Miami. "It is being drawn back down toward the curve.” (Bloomberg, 10-17-2012; http://www.bloomberg.com/news/2012-10-17/elecar-bonds-due-in-2018-rally-most-since-march-caracas-mover.html)

Commodities

PDVSA expects total oil output at 3.13 mln bpd

State oil company PDVSA expects a total oil output at 3.13 million barrels per day (BPD) in 2012, according to Fadi Kabboul, executive director, corporate planning. The company's total oil output in the previous year was 2.975 million bpd. (Reuters, 10-17-2012; http://www.reuters.com/article/2012/10/17/pdvsa-oil-output-idUSI8E8KO01620121017; El Universal; http://www.eluniversal.com/economia/121017/venezuelas-oil-exports-to-asia-to-jump-to-28-million-bdp)

BAUXILUM again turns to GLENCORE for support

Swiss multinational GLENCORE may again come to the rescue of state owned CVB BAUXILIM, which now expects to receive U$D 31.6 million following their decision to establish an addenda to their standing contract or future alumina sales, which currently calls for them to supply GLENCORE with 1 million 400 of alumina through 2018. Industry directors were forced to do so due to lack of resources that has led to a drop in production. More in Spanish: (El Universal, 10-18-2012; http://www.eluniversal.com/economia/121018/bauxilum-apela-a-nuevo-rescate-de-la-trasnacional-glencore)

SIDOR has had no exports for 4 months

Steel product exports from state owned SIDOR not only plunged 83.4% during the first semester this year, but they went down to zero June to September. More in Spanish: (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/sidor-tiene-cuatro-meses-sin-exportar-productos)

International Trade

Venezuela and Saudi Arabia hold talks on double taxation

Representatives of both governments have begun a second round of talks to review technical and legal issues as they seek to develop a working agenda. More in Spanish: (El Carabobeño, 10-18-2012; http://www.el-carabobeno.com/impreso/articulo/35754/venezuela-y-arabia-saudita-buscan-evitar-doble-tributacin)

Logistics & Transport

New port glitch

Ships are now being submitted to one-to-two day delays prior to leaving port, while the authorities make “sub-aquatic” inspections of departing vessels. (Veneconomy, 10-17-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32454&idc=3)

Miranda Satellite to register 350 images per day

A total 350 daily images may be registered by the Miranda Satellite on Venezuela's strategic areas, which would be used to speed up planning for agricultural, urban, industrial, environmental, hydrological, climate and frontier matters. (AVN, 10-18-2012; http://www.avn.info.ve/contenido/satellite-miranda-report-350-images-day)

Politics

Chavez should prepare for succession: Lula

According to former two-time Brazilian President Luiz Inacio Lula da Silva, Venezuela's newly re-elected president, Hugo Chavez, should start preparing to hand over powe. Lula made the statement in a newspaper interview published Thursday. Chavez, who says he has fully recovered from cancer, beat opposition challenger Henrique Capriles by 11 percentage points on October 7, giving him a third term. "There was an election in Venezuela, where two people ran, and I thought Chavez would be best for Venezuela. I also think that comrade Chavez should start preparing his succession," Lula, a close Chavez ally, was quoted as telling Argentine daily La Nacion. (Reuters, 10-18-2012; http://www.reuters.com/article/2012/10/18/us-venezuela-chavez-lula-idUSBRE89H12620121018; El Universal; http://www.eluniversal.com/nacional-y-politica/121018/brazils-ex-president-lula-chavez-should-be-working-on-his-succession; Bloomberg, http://www.bloomberg.com/news/2012-10-18/lula-urges-venezuela-s-chavez-to-groom-successor-la-nacion-says.html)

Venezuela reverses credentials of Paraguayan diplomats "in reciprocity"

The Venezuelan government reversed the "credentials and visas" of the Paraguayan diplomatic staff in reciprocity for the departure of Venezuelan diplomats from Paraguay, according to a source in the Venezuelan Foreign Office.

The same source confirmed that the reversal of the credentials is "just an administrative step" grandingfor the Paraguayan diplomatic staff " reasonable term" to leave the country after the departure of Venezuelan diplomats from Paraguay. (El Universal, 10-17-2012; http://www.eluniversal.com/nacional-y-politica/121017/venezuela-reverses-credentials-of-paraguayan-diplomats-in-reciprocity; http://www.eluniversal.com/nacional-y-politica/121017/venezuelan-dissent-eviction-of-paraguayans-disregards-diplomatic-pract; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-government-is-expelling-the-last-of-paraguays-diplomats-in-caracas-envoy-says/2012/10/17/57cbeab8-18ab-11e2-a346-f24efc680b8d_story.html; Fox News, http://www.foxnews.com/world/2012/10/17/venezuela-government-is-expelling-last-paraguay-diplomats-in-caracas-envoy-says/)

9,357 nominations for regional elections

The National Elections Board (CNE) has received 9,357 nominations of candidates running for governor and state assemblymen in the upcoming December 16th elections. 135 nominees were registered as candidates for 23 Governnorships. (AVN, 10-18-2012; http://www.avn.info.ve/contenido/9357-nominations-regional-elections)

NGO Director: no fraud, but "electoral corruption" on October 7

"There was no fraud on October 7, but electoral corruption by military officers," says Rocio San Miguel, Director of the Control Ciudadano NGO. She says that a document leaked by the Ministry of Defense shows tasks performed by National Guard officers in mobilizing the pro-government activists on Election Day, and includes testimony from grassroots activists, drivers, and motorcycle riders which should provide sufficient grounds for the Attorney General to conduct an inquiry into the matter. (El Universal, 10-16-2012; http://www.eluniversal.com/nacional-y-politica/121016/ngo-director-no-fraud-but-electoral-corruption-on-o-7)