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, October 9, 2012

October 09th, 2012

Economics & Finance

Expropriation of strategic companies in Venezuela will remain on recently re-elected President Chávez’ agenda says his Vice President Elías Jaua. He explained that Chávez will strengthen “control over strategic parts of the economy” such as energy, people’s food, inputs for construction” (Veneconomy, 10-08-2012;; Reuters, 10-07-2012;

Controls to remain
Luis Vicente León, of DATANALISIS, has spoken to the economic scenario and expectations for a new economic policy. He foresees a devaluation that could be more than 60% during the first quarter 2013, and adds "It needs it and has the capital to do so".  He also expects continued exchange controls, but believes it is possible there will be a bigger opening for imports. IESA Economics Professor José Manuel Puente believes the exchange rate could be adjusted at any time, and says the socialist project will be expanded and will mean more economic imbalance. Puente adds that the Central Bank is selling gold reserves in order to maintain liquidity and a secondary exchange market. More in Spanish: (Tal Cual;; El Universal,

Fitch warns about the deficit, saying "the reelected government faces the challenge of adjusting its exchange policy and there continues to be great uncertainty on whether it will be able to curb the fiscal deficit while sustaining economic growth and fighting inflation." It adds that rapid expansion in public spending led to an enlarged deficit, which is estimated at 6.9% if GDP in the case of the national government, while international reserves have diminished as oil income was sent to "non transparent special funds". More in Spanish: (El Universal;

CITI forecasts slight drop in Venezuelan bonds
Several international financial research sources have estimated the short term impact of the Chavez reelection. CITI estimates as light drop in Venezuelan bonds as markets open, but says they will not drop more than 150 points. It added: "In a poll of 100 investors, only 16% said they would lower their position if Chavez won, and 40% said they would sustain the fall." More in Spanish: (El Nacional;

Chavez win called by BOFA sparks selloff as Barclays flops
State-oil company bonds tumbled after President Hugo Chavez won re-election by more than 10 percentage points in a vote that some polls had showed was too close to call. Notes due 2017 from Petroleos de Venezuela SA (PDVSA), fell 2.63 cents to 87.11 cents on the dollar as of 1:11 p.m. in New York, where trading was limited because of a holiday. The currency slid to a record low in unregulated trading. (Bloomberg,


Analysis: Chavez win keeps Venezuela oil policy intact
President Hugo Chavez's re-election on Sunday means Venezuela's state oil company PDVSA will remain highly politicized and will continue its discount supply deals with his socialist allies. Critics say Chavez has hobbled PDVSA with the weight of his government's financial demands - it helps pay for everything from sports teams to health clinics and home building - meaning it has neglected to invest enough in the oil business. (Reuters, 10-08-2012;; Bloomberg,

Food industry expects price adjustments, following strict controls held in place during the election campaign.  During the previous two years adjustments had been made on a steady basis to avoid inflation. More in Spanish: (El Universal;


Hugo Chavez beats Henrique Capriles in Venezuela’s presidential election
Fighting for his political life, President Hugo Chavez overcame a vigorous challenge by Henrique Capriles in Sunday’s presidential election, receiving another six-year term that will give the populist firebrand the opportunity to complete the consolidation of what he calls 21st century socialism in one of the world’s great oil powers. The victory, announced by the National Electoral Council late Sunday, gave Chavez the win with 54.4% of the vote, while Capriles took 44.9%. In winning his fourth presidential election since 1998, Chavez captured just over 7.4 million votes to 6.1 million for his adversary, turning back what had been a determined battle by Capriles, a 40-year-old former governor. “I congratulate the opposition and the leaders of the opposition, because they recognize the victory of the people,” Chavez told throngs of supporters gathered outside the presidential palace. “That’s why I send them this greeting and extend my arms to them, because we are all brothers in the fatherland of Bolivar.” The electoral mission of the Union of South American Nations (Unasur) called the experience a "superb lesson". The representative of the European Union for External Relations, Catherine Ashton, asked Venezuelan President Hugo Chávez to avail himself of his renewed government to reach out a hand to all the sectors of the society and foster fundamental liberties; OAS Secretary General José Miguel Insulza spoke of an "exemplary election process" and said they were "good for the region as they show the only option for nations is democracy"; and several Latin American Presidents, including Argentina and Cuba congratulated Chavez on his victory. (The Washington Post, 10-07-2012;; Latin American Herald Tribune,; El Universal, 10-08-2012;;; and more in Spanish: Tal Cual;

Opposition votes grew since 2006, but not enough
Although the reelected President took 55% of the vote, across the board figures show the opposition gained by up to 24 points over 2006 results in some states, such as Amazonas. The increase was not enough to overcome pro Chavez votes, which remained stagnant but did not diminish. The opposition became a majority in the Andean states of Mérida (51,41%)  and Táchira (56,41%); and in populous Miranda, around Caracas, the difference was a mere 0,2% in favor of Chávez. In Zulia, however, the opposition lost 2.11 points since 2006; whereas in Lara and Monagas, where both governors turned against Chavez, the opposition also gained, by 15.38 and 12.16 points, respectively. More in Spanish:  (Tal Cual;

Chavez telephoned Capriles
According to campaign chief Armando Briquet President Hugo Chavez telephoned Henrique Capriles and for the first time called him by his name as opposed to the epithets and insults he had used during the campaign. Briquet denied the call was "the beginning of a dialogue", yet underlined the need for "mutual recognition, lowering tension, insults and disqualification of those who disagree". He said Capriles said what he had to say and Chavez also expressed his views, and if that leads to a dialogue it is welcome. More in Spanish: (Tal Cual;; El Universal,

Romney: Chávez's and Castro bothers' ideology has failed
US presidential candidate Mitt Romney says Latin America is resisting the "failed ideology" of reelected President Hugo Chávez and the Castro brothers in Cuba, in a speech on foreign policy that did not specifically address the results of the Venezuelan presidential election held on Sunday. Romney says, "Our neighbors in Latin America want to resist the failed ideology of Hugo Chávez and the Castro brothers and deepen ties with the United States on trade, energy, and security," AFP cited. (El Universal, 10-08-2012;

Sigh of relief’ in Cuba as ally and oil benefactor Hugo Chavez wins reelection in Venezuela
President Hugo Chavez’s reelection was welcome news on the streets and in the halls of power of Cuba, which relies on Venezuela for a big chunk of its economy through trade and preferential oil shipments. Chavez counts former Cuban President Fidel Castro as a friend and mentor, and his opponent, Henrique Capriles, had promised to change a relationship he described as financing Cuba’s political model. (The Washington Post, 10-08-2012;

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