November 30th, 2012

Economics & Finance

Bank of America anticipates an improved scenario for Venezuelan bonds

The increasing chances for devaluation and spending cuts have led Bank of America improve its view of the financial standing of the Venezuelan government.  The bank believes spending cuts and funds derived from devaluation will broaden Venezuela's ability to repay principal amount and interest of bonds issued by the Republic and state-run oil holding Petróleos de Venezuela (PDVSA). According to Bank of America, Venezuela's public spending has lowered by 13% over the six weeks following the presidential election, which - together with potential exchange rate adjustment - could reduce the central government fiscal deficit from 8.8% of GDP in 2012 to 2.2% next year. (El Universal, 11-29-2012; http://www.eluniversal.com/economia/121129/bank-of-america-anticipates-a-better-scenario-for-venezuelan-bonds; Bloomberg, 11-28-2012; http://www.bloomberg.com/news/2012-11-28/venezuela-bonds-raised-to-a-buy-at-bofa-as-chavez-seeks-care-1-.html)

Excess liquidity clogs financial system

The government has injected so much liquidity into the economy that financial institutions are having problems accommodating the surplus. One financial institution executive says: "We are telling companies that have fixed term deposits that become due that we will renew them at zero interest rates, and many accept as they know they will not find anything different at other banks." During October banks held a monthly average VEB 34 billion above reserves required by the Central Banks, and at the close of November the amount jumped by 82% to VEB 62 billion. More in Spanish: (El Universal, 11-30-2012; http://www.eluniversal.com/economia/121130/se-dispara-el-exceso-de-bolivares-en-el-sistema-financiero)

Stricter price controls in place

The National Superintendent for Costs and Prices (SUNDECOP) has now extended its control basic food, to personal care and cleaning products, fruit juices, compotes, and water, which indicated that price controls are hardening rather than becoming more flexible. More in Spanish: (El Universal, 11-30-2012; http://www.eluniversal.com/economia/121130/gobierno-extiende-el-control-a-la-cadena-de-comercializacion)

Prices raised on coffee, rice and corn flour

New maximum authorized sale prices for precooked corn flour, white rice and ground coffee have been published, according to a joint resolution by the Ministries for Planning and Finance, Agriculture and Lands, Food and Industries. The new price for precooked corn flour per kilogram was set at VEB 5.59 for industry, 5.76 for wholesalers and 5.93 for retailers. The new price of white rice per kilogram was fixed at VEB 6.79 for industry, 6.99 for wholesalers and 7.20 for retailers. As for ground coffee, for industry the kilo will cost VEB 42.74, Bs. 44.02 for wholesalers; and Bs. 46.66 for retailers. (AVN, 11-28-2012; http://www.avn.info.ve/contenido/new-prices-coffee-rice-and-corn-flour; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=32993&idc=3; El Universal, http://www.eluniversal.com/economia/121128/rise-in-price-of-regulated-foodstuffs-published-in-official-gazette; Bloomberg, http://www.bloomberg.com/news/2012-11-27/venezuela-raises-prices-on-corn-flour-rice-coffee-loyo-says.html)

Commodities

PDVSA analyzing valuation and compensation for oil service companies expropriated in Zulia State

Three years after oil industry service companies were expropriated on the East Bank of Lake Maracaibo, PDVSA has announced it is negotiating valuations and repayment of 45 out of 141 expropriated in the region. Alfredo Hernández-Raffalli, President of the nation's Petroleum Chamber, considers it a "very important step for PDVSA to acknowledge the obligation to pay indemnities for assets expropriated", and says the process is advancing considerably. Eulogio del Pino, PDVSA Vice President for Exploration and Production, and Ricardo Coronado, Executive Director of its Western Division, told a group of over 30 company owners that repayment would take place before May 2013, but did not say whether repayment will be in cash or in bonds, as has been suggested in the past. Del Pino said "PDVSA acknowledges the investments they made and this is why we will do this transparently, through direct negotiations". Expropriated companies hope to that assets valued in foreign currency are paid for in foreign currency. More in Spanish: (El Universal, 11-30-2012; http://www.eluniversal.com/economia/121130/aspiran-a-que-pdvsa-pague-en-divisas-parte-de-las-expropiaciones)

Logistics & Transport

Business leaders call for expedited dispatches

CONSECOMERCIO's Customs Committee Chairperson, Cipriana Ramos, has charged that massive processing of merchandise has not worked, that the Port Authority (BOLIPUERTOS) has admitted to congestion, and is calling for direct dispatches from the docks. She asked the Port Authority to apply SIDUNEA customs processing procedures which call for electronic inspection and avoids sending merchandise to the yards. Ramos reports that BOLIPUERTOS has been using the discretionary "green light" system selectively, and should be available to all. More in Spanish: (Ultimas Noticias, 11-30-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/consecomercio-le-busca-la-vuelta-al-rollo-de-los-p.aspx  and El Nacional; http://www.el-nacional.com/)

Politics

Chávez undergoing treatment in Cuba for the 11th time in 17 months

President Hugo Chávez missed attending Military Aviation Day ceremonies on the anniversary of the coup d'état that took place on November 27, 1992. More than one year after the Venezuelan president was diagnosed with cancer and for the 11th time since June 2011, again travelled to Cuba to undergo treatment. This time, he will be receiving a "special treatment:" hyperbaric oxygen therapy. Chávez was last seen in public on November 15 during a meeting with his cabinet. Twelve days later, he made the news as National Assembly's President Diosdado Cabello read out a statement issued by Chávez asking permission to leave the country to undergo the previously mentioned therapy. (El Universal, 11-28-2012; http://www.eluniversal.com/nacional-y-politica/121128/chavez-to-undergo-treatment-in-cuba-for-the-11th-time-in-17-months; http://www.eluniversal.com/nacional-y-politica/121127/president-chavez-to-undergo-in-cuba-hyperbaric-oxygen-therapy; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=651406&CategoryId=10718; Reuters, http://www.reuters.com/article/2012/11/29/venezuela-chavez-cuba-idUSL1E8MS27B20121129; http://www.reuters.com/article/2012/11/29/venezuela-chavez-idUSL1E8MT8ZS20121129; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-returns-to-cuba-for-more-medical-treatment-this-time-in-hyperbaric-chamber/2012/11/28/b2012446-396a-11e2-9258-ac7c78d5c680_story.html; CNN, http://edition.cnn.com/2012/11/28/world/americas/venezuela-chavez-cuba/index.html?iref=allsearch)

Chávez misses second summit meeting in two weeks

President Hugo Chavez is not attending a South American Nations Union (UNASUR) meeting currently underway in Perú, the second such summit he has not attended in two weeks. His absences could rise to 3 if he cannot attend a MERCOSUR Heads of State meeting scheduled to be held in Brasilia on December 7th. More in Spanish: (El Universal, 11-30-2012; http://www.eluniversal.com/nacional-y-politica/121130/chavez-se-pierde-su-segunda-cumbre-en-dos-semanas)

Maduro claims Chavez "is well"

Nicolas Maduro, Venezuela's Executive Vice President and Foreign Minister said yesterday that President Hugo Chávez "is well, very well, and will return much better". The Vice President said "Chavez won the October 7th elections and will continue to be President for the remainder of this decade and beyond." More in Spanish: (El Universal, 11-30-2012; http://www.eluniversal.com/nacional-y-politica/121130/maduro-asegura-que-el-mandatario-esta-bien)

New Presidential succession legislation proposed

With President Chavez again in Cuba for special cancer treatment, the debate has begun anew over who would succeed him if he becomes unable to serve the entire term of office he was reelected to, or if he is unable to reach his new term which begins on January 10th. Given differing opinions on who should succeed if he dies or becomes unable to serve, Luis Herrera, a professor of Constitutional Law at the Catholic University, proposes the enactment of a new law to clear away all doubts. More in Spanish: (El Universal, 11-30-2012; http://www.eluniversal.com/nacional-y-politica/121130/proponen-despejar-dudas-sobre-sucesion-presidencial-en-una-ley)

Opposition governor in Venezuela charges his supporters were attacked during campaign event

Henri Falcon, opposition governor of Lara state in central Venezuela says he and his followers were attacked with guns, tear gas and stones during a political event, presumably by rival ruling party supporters. Falcon, who is running for re-election in Lara, said six people were injured in the violence, though he didn't describe the injuries or their severity. The alleged attack took place during a campaign swing in northeast Barquisimeto, capital of Lara state. (Fox News, 11-27-2012; http://www.foxnews.com/world/2012/11/27/opposition-governor-in-venezuela-says-his-supporters-attacked-during-campaign/#ixzz2DdrJDpV8)

Venezuela is calling for full UN Membership for Palestine

Venezuela's Ambassador to the UN, Jorge Valero, has called for Palestine's full membership in the United Nations and accused Israel of "state terrorism" against the Palestinian people. More in Spanish: (AVN, 11-30-2012; http://www.avn.info.ve/contenido/valero-venezuela-siempre-ha-condenado-agresiones-israel%C3%ADes-contra-pueblo-palestino)

First Venezuelan Mayor in Florida

Luigi Bora, a Venezuelan businessman, was sworn in as Mayor of Doral, in South Florida. (Veneconomy, 11-28-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33009&idc=1)



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.