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.

Friday, December 7, 2012

December 07th, 2012

Economics & Finance

The 2013 Budget Bill was passed by the National Assembly, with government votes only, as the opposition called the VEB 396.4 billion budget insufficient, “arbitrary and lacking any planning.” The 2013 Special Indebtedness Bill (VEB 116.6 billion) also passed with the dissenting votes by the opposition. (Veneconomy, 12-05-2012;

Venezuelan bonds rally as Chavez silence grows
Venezuelan bonds surged the most in two years, sending yields to the lowest level since February 2008, on speculation President Hugo Chavez’s health is too fragile for him to complete his third term. The yield on Venezuela’s benchmark 9.25% securities due in 2027 fell 33 basis points, or 0.33 percentage point, to 9.18% at 3:12 p.m. in Caracas, according to data compiled by Bloomberg. Yields have plunged 1.74 percentage points since mid-November. The bond’s price rose 2.62 cents today to 100.50 cents on the dollar, the biggest one-day rally since June 2010. Chavez said Nov. 1 that he planned to attend a MERCOSUR trade summit in Brasilia. Failure to appear would heighten speculation that the president’s health is worse than he has let on and increase the possibility he won’t complete a third six- year term set to begin in January, said Emilio Garcia, a bond trader at BancTrust & Co. in Caracas. (Bloomberg, 12-05-2012;;

60% of oil revenues go to imports, according to university professor and economist Luis Oliveros, who says, "60% has been directed to imports, 12% to different funds such as the FONDEN National Development Fund, and 2% to the international reserves, while capital outflows were 26%." (El Universal, 12-06-2012;

Dollar exchange rate should be around VEB 7.68:$ to be competitive, says CONINDUSTRIA President Carlos Larrazábal, upon presenting its Third Quarter 2012 Survey of 300 industrialists polled. Respondents noted a 47% drop in production, and warned that if there are no changes in public policies for 2013, growth will not go over 3%. (Veneconomy, 12-04-2012;; El Universal, 12-05-2012;

Venezuela is off the international investment radar screens
A study on international investment trends by the World Bank's Multilateral Investment Guarantee Agency (MIGA) shows that most companies point to China, India, Brazil and Russia, plus a list of 29 nations that included México, Colombia, Perú and Argentina; but not Venezuela.  More in Spanish: (El Universal, 12-07-2012;


S&P lowers Venezuela’s Siderurgica del Turbio to ‘CCC-’
Standard & Poor’s Ratings Services lowered its long-term corporate credit and senior unsecured ratings on Siderurgica del Turbio, S.A. (SIDETUR) to ‘CCC-’ from ‘B-’. In October 2012, the government of the Bolivarian Republic of Venezuela (B+/Stable/B) took control of SIDETUR’s operating assets, but it hasn’t announced the amount or time of the compensation. The government also required the transfer of all funds in the company’s local currency bank accounts. The U.S. dollar denominated reserve account associated with SIDETUR’s notes due 2016 was not affected. (Latin American Herald Tribune, 12-05-2012;

International Trade

Venezuela will apply MERCOSUR nomenclature
Tovar Nunes, spokesman of the Brazilian Foreign Ministry announced that Venezuela will immediately apply 28% of MERCOSUR's common tariff in order to accelerate incorporation into the organization. It aims to achieve full adaptation by 2016. (El Universal, 12-06-2012;; AVN, 12-06-2012; and more in Spanish: AVN;; El Universal,; El Mundo,

Argentina´s bilateral trade with Venezuela has grown 30% in one year, says Argentina's Ambassador to Venezuela Carlos Alberto Cheppi, who adds that total Argentine exports to Venezuela should close this year at U$D 2.3 billion, while Venezuelan exports to Argentina would be around U$D 1.5 billion, and most of these are fuel. More in Spanish: (AVN, 12-07-2012;

Venezuela to create joint venture with SAMSUNG
Venezuela and South Korean multinational SAMSUNG have agreed to a joint venture to manufacture telecommunications components, says Science and Technology Minister Ricardo Menendez. The Venezuelan government, which will own 51% of the company, considers the deal a “strategic alliance” to boost Venezuelan exports of electronic parts to its partners in MERCOSUR, the minister said. (Latin American Herald Tribune, 12-05-2012;

Venezuela approves terms on U$D 417 million loans, AVN Reports
Venezuelan lawmakers approved the conditions of U$D 417 million of loans from Banco Bilbao Vizcaya Argentaria SA (BBVA) and Japan Bank for International Cooperation to finance transportation projects and a steel plant, the state news agency AVN said today on its website. BBVA will lend Venezuela 162 million euros (U$D 211 million) for a steel plant, while Japan Bank for International Cooperation will lend 17 million yens (U$D 206 million) to finance construction of warehouses for Caracas-Cua train line, according to the state news agency. (Bloomberg, 12-06-2012;

Logistics & Transport

Non-commercial air operations restricted in Maiquetía
The Ministry of Air and Aquatic Transportation, through the National Civil Aeronautics Institute (INAC), has confirmed an administrative decision whereby "air operations at Simón Bolívar International Airport of Maiquetía shall be restricted immediately for general aviation aircraft from 6 a.m. to 10 a.m. and from 4 p.m. to 7 p.m." (El Universal, 12-05-2012;

La Guaira Port expansion and modernization is 33% completed, according to Pedro Castro, Vice Minister for Air and Water Transportation, and Vice President of the Port Authority. The project has been under way for one year. More in Spanish: (Bolipuertos, 12-07-2012; Ultimas Noticias,; El Mundo,


Chavez arrives back after cancer treatment in Cuba
President Hugo Chavez arrived back in Caracas in the early hours of the morning Friday, according to a video released two hours later by state television, but not carried live. Chavez, accompanied by his daughter Maria, was received by Vice-President Nicolas Maduro, Diosdado Cabello, President of the National Assembly, and a very small group of  officials. In a sort of date stamp, he recalled that yesterday, December 6, marked 14 years of the start of the Bolivarian revolution. He said that would be echoed in the December 16 governor elections, 8 days from now. (Latin American Herald Tribune, 12-07-2012

Uncertainty increases due to Chavez's absence from MERCOSUR
After days awaiting confirmation, Brazil's Foreign Ministry finally announced that President Chavez would not attend the ongoing MERCOSUR Presidential Summit in Brasilia, which he had said he would - "God willing" - attend in a statement on November 1st. Nicolás Maduro, Vice President and Foreign Minister, also failed to attend the meeting; Venezuela's delegation was led by Vice Minister Verónica Guerrero. Former Minister Teodoro Petkoff, a political analyst and journalist, says the President's "health is pretty deteriorated", and "he is now really taking his treatment seriously". He says it is noteworthy that Chavez "is no longer doing things he enjoys: campaigning, supporting his candidates, attending summits..." (Infolatam, 12-07-2012;

Diosdado Cabello: The power behind the throne
Former Lieutenant Diosdado Cabello, President of the National Assembly and of the government's United Socialist Party has taken the front during the campaign for state governors, as his power within the party and public exposure grows exponentially. During the absence of President Chavez, Cabello is at the center of political debate, increasing rumors that point to him as the man destined to succeed Chavez. His priority during these weeks has been to position himself as the guardian of "chavista" legacies and values at stake during campaigns speeches in seven states, a role previously assigned to the President himself.  Governor Henrique Capriles Radonski, running for reelection in Miranda, centers his fire on Cabello, calling his opponent, former Vice President Elías Jaua, a "Cabello puppet". Cabello's positioning has created tension within party lines, with local leaders accusing Cabello of acting in an authoritarian and excluding manner. Freiman Páez, a dissident regional leader, describes the former coup participant as "the Stalin of Venezuelan politics". (Infolatam, 12-07-2012;

US seeks improved relations with Caracas, according to Mike Hammer, Assistant Secretary of State for Press, who adds that "unfortunately Caracas has not shown an interest in exchanging ambassadors". More in Spanish: (El Universal, 12-07-2012;

Norway closes diplomatic mission in Venezuela, citing rampant violent crime
Norway will close its embassy in Venezuela because of rampant crime and move the diplomatic mission to neighboring Colombia, its ambassador said Wednesday. Norwegian ambassador Lars Vaagen said the decision to move the embassy to Bogota next year was made after analyzing the problem of widespread violent crime in Venezuela. “We see the security situation as increasingly difficult,” Vaagen said in a telephone interview. Norway’s embassy in Caracas has been operating for almost 45 years. In polls, Venezuelans consistently rate violent crime as their top concern. (The Washington Post, 12-05-2012;; El Universal, 12-05-2012;; Fox News,

Transparency International calls Venezuela the most corrupt country in Latin America.
In its Annual Report, Transparency International, ranks Venezuela 165th along with Haiti, after both obtained 19 points in the 100-point scale. The two countries are ahead only of Afghanistan, North Korea, Somalia or Iraq, which were the most corrupt nations worldwide. (El Universal, 12-05-2012;; Fox Business,

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