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)