October 12, 2012

Economics & Finance

Government allocates U$D 3.5 billion in eight months

In 2003, ahead of a presidential election, President Hugo Chávez Frías launched so-called missions to replace social programs then in place. For nine years, the missions have become banners for the Government, which in turn has financed them using funds from different sources. From January to August this year, U$D 3.5 billion were allocated to standing missions (programs created since 2003) plus the so-called great missions (launched in 2011) with funding from the official budget, additional credit, and contributions from state-run oil company PDVSA. Official data shows that funding out of the yearly budget was U$D 837.2 million, non-budgeted funding was U$D 1.1 billion (over the last eight months), and transfers from the oil company U$D 1.4 billion. (El Universal, 10-10-2012; http://www.eluniversal.com/economia/121010/venezuelan-government-allocates-usd-35-billion-in-eight-months)

Venezuela compensates TERNIUM for nationalization of Sidor

The TERNIUM steel company, owned by Argentina´s TECHINT group, says Venezuela has finally paid off its debt on compensation for the nationalization of the SIDOR steel complex. TERNIUM shareholder SIDERAR says it "has duly received payment for the amount that had not been settled upon the compensation agreed in May 2009 for the transfer of its assets in Sidor," which total U$D 136.7 million. The payment was reported to have been made by Venezuelan Corporation of Guayana (CVG). (El Universal, 10-10-2012; http://www.eluniversal.com/economia/121010/venezuela-compensates-ternium-for-nationalization-of-sidor)

ECOANALÍTICA estimates inflation rate at 21% ending 2012

Last Tuesday, the Central Bank (BCV) published for the National Consumer Price Index (NCPI) in September, a monthly variation of 1.6% for an accrued amount of 11.5% and annualized inflation at 18%. Since the end of 2012 is three months away, the budget goal of 20-22% inflation becomes probable, and could be even below such estimate.

According to José Luis Saboín, an economist with the ECONOANALÍTICA think-tank, inflation at year end will be around 21%. The analyst explained that prices usually accelerate during the last quarter of the year due to seasonal consumption. (El Universal, 10-10-2012; http://www.eluniversal.com/economia/121010/inflation-rate-estimated-at-21-ending-2012)

Venezuelan bonds fall after Chávez's re-election

Amidst an outlook where investors reckon that the victory of Hugo Chávez in the October 7 presidential election would translate into the radicalization of the political process, and not quite effective measures to slow down indebtedness and fiscal deficit, Venezuelan bonds have registered a substantial fall.

The Global 27, which is the most representative paper of the Venezuelan bond basket, lost 4.54 percentage points, the deepest fall in four years, and ended at 86.63% of its value. (El Universal, 10-10-2012; http://www.eluniversal.com/economia/121010/venezuelan-bonds-fall-after-chavezs-re-election; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=606081&CategoryId=10717)

Commodities

PDVSA reports four accidents in six weeks

Over the past six weeks, four accidents have hit different facilities of state-run oil company Petróleos de Venezuela (PDVSA). 45 accidents have taken place in Venezuela's state oil firm to date this year. In addition to the explosion at the  Amuay refinery (northwestern Falcón state) on August 25; on September 19, lightning hit two storage tanks at El Palito refinery (northern Carabobo state), which caused a fire that lasted two days. Iván Freitez, executive secretary of the United Federation of Venezuelan Oil Workers (FUTPV) claimed this fire was not normal in that type of installation. He explained that if high flames were present in the flare through which gases are burnt-, it was a sign of a gas leak, or a failure in procedure. "The flames should have been lower," he said, and added that burning fuels is not frequent inside the refinery. (El Universal, 10-10-2012; http://www.eluniversal.com/economia/121010/pdvsa-has-recorded-four-accidents-in-six-weeks)

Politics

Chávez formally proclaimed President elect of Venezuela

On Wednesday, Tibisay Lucena, the president of the National Electoral Council (CNE), proclaimed Hugo Chávez elected president of Venezuela for the 2013-2019 presidential terms, after winning the October 7 presidential election. (El Universal, 10-10-2012; http://www.eluniversal.com/nacional-y-politica/121010/chavez-proclaimed-elected-president-of-venezuela)

Venezuela’s new Vice President is Nicolás Maduro, as announced by President Chávez after he was formally proclaimed President for the 2013-2019 term by the National Electoral Council (CNE). Elías Jaua who was Chávez’ Vice President until yesterday will run for the Governorship of Miranda. Chávez did not name the person to replace Maduro at the Ministry of Foreign Affairs. (Veneconomy, 10-11-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32402&idc=1; AVN; http://www.avn.info.ve/contenido/nicolas-maduro-new-venezuelan-vice-president; Reuters, http://www.reuters.com/article/2012/10/11/us-venezuela-election-vicepresident-idUSBRE8991QN20121011; Fox News, http://www.foxnews.com/world/2012/10/10/hugo-chavez-names-new-vice-president-in-venezuela-choosing-longtime-foreign/)

Office to monitor public institutions created

In order to reaffirm leadership, re-elected President Hugo Chávez has turned to self-criticism. Throughout his presidential campaign he called for more efficiency and announced the creation of a ministry responsible for following up on government plans. On Tuesday he said he would transform the Ministry of the Secretariat into a "powerful ministry able to monitor plans and programs," which is pretty much similar to what he had said in previous days. (El Universal, 10-10-2012; http://www.eluniversal.com/nacional-y-politica/121010/office-to-monitor-public-institutions-created-in-2010)

Henrique Capriles Radonski registered his candidacy to be re-elected in Miranda State

Former opposition presidential candidate Capriles returned to his position as Governor of Miranda State and registered to run for reelection next December 16th. (Veneconomy, 10-11-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32400&idc=1)