Economics & Finance
Economic adjustments on hold
President Hugo Chávez's announcement about another surgery and hint about his possible disability not only changes the political scene, but also economic prospects. Experts had considered devaluation imminent in view of the significant fiscal deficit and pressure on foreign exchange, but now the situation is again unclear. Chavez appealed to Venezuelans to elect Vice President and Foreign Minister Nicolás Maduro should he become absent, which would bring on another election and continued manipulation of the economy. Maduro, speaking at a public event, says exchange controls "can improve and will improve". (El Universal, 12-10-2012; http://www.eluniversal.com/economia/121210/economic-adjustments-on-hold-in-the-current-state-of-affairs; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/nicolas-maduro-dijo-que-se-va-a-mejorar-el-control.aspx)
Venezuelan bonds rally, CDS fall on Chavez successor news
Venezuelan dollar bonds rallied sharply on Monday and debt insurance costs tumbled after the nomination of a successor by ailing President Hugo Chavez raised the prospect of his departure from office after 14 years in power. Venezuelan yield spreads over U.S. Treasuries fell 56 basis points to 758 bps, the narrowest since August 2008, on JP Morgan's EMBI Global index. The most-traded 2027 dollar bond jumped 2.3 cents on the dollar to 101.092. Chavez stunned Venezuela at the weekend with an announcement he had suffered a setback in his long-term battle with cancer and named Vice President and Foreign Minister Nicolas Maduro to take over, should he become incapacitated.
"This is the first time Chavez has been forthcoming on any kind of succession arrangement. With that, expectations are mounting that the Chavez ... rule will be coming to an end in the foreseeable future," said Stuart Culverhouse, head of research at Exotic brokerage in London. (Reuters, 12-10-2012; http://www.reuters.com/article/2012/12/10/venezuela-bonds-idUSL5E8NA8LX20121210; Bloomberg, http://www.bloomberg.com/news/2012-12-09/venezuela-s-chavez-says-he-needs-more-cancer-surgery-in-cuba-1-.html)
Pre-cooked corn flour, sugar, chicken and oil have been missing from market shelves for almost two weeks. Supermarket a personnel explains that providers are delivering fewer quantities and those customers “must get in line and run to get the items.” Street vendors said they overcharge the staples because they must pay more for the products. (Veneconomy, 12-10-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33161&idc=3)
Chavez back to Cuba for cancer treatment
President Hugo Chavez left for Cuba early on Monday for another round of cancer surgery, two days after he said tests showed "malignant cells" had appeared in the same part of the body where he had earlier undergone operations. Information Minister Ernesto Villegas said Chavez's Havana-bound plane had left Caracas at about 1:30 a.m. (0600 GMT). On Saturday, Chavez said he would undergo another operation in the coming days. "Unfortunately, during these exhaustive exams they found some malignant cells in the same (pelvic) area" he said then. "It is absolutely necessary, absolutely essential, that I undergo a new surgical intervention." He enthusiastically said "always towards victory. Long live the homeland!," attempting to send a calming message to Venezuelans. As he left for Havana he made it clear he was not turning over the presidency, but simply delegating his powers. He also formally swore in (Reuters, 12-10-2012; http://www.reuters.com/article/2012/12/10/venezuela-chavez-idUSL1E8NA0Y920121210; http://www.reuters.com/article/2012/12/10/us-venezuela-chavez-idUSBRE8B90CB20121210; El Universal, http://www.eluniversal.com/nacional-y-politica/121210/president-chavez-sets-off-for-havana; AVN, 12-10-2012; http://www.avn.info.ve/contenido/chavez-always-towards-life; CNN, http://edition.cnn.com/2012/12/10/world/americas/cuba-chavez/index.html?iref=allsearch; Fox News, http://www.foxnews.com/world/2012/12/08/venezuela-chavez-says-cancer-back-plans-surgery/; The Washington Post, http://www.washingtonpost.com/world/venezuelan-president-hugo-chavez-anoints-successor-and-heads-to-cuba-for-surgery/2012/12/09/ee8f9b9a-4220-11e2-8c8f-fbebf7ccab4e_story.html; and more in Spanish: El Universal; http://www.eluniversal.com/nacional-y-politica/121211/chavez-dice-que-no-entrega-el-mando-politico-sino-lo-delega)
Maduro is acting head of State
The National Assembly has once again rejected the term "temporary absence" in reference to the absence of President Hugo Chávez, who returned to Cuba to undergo cancer treatment. However, both the manner in which the leader spoke of trip to Cuba and the fact that he appointed Vice-President Nicolás Maduro as his political successor clearly indicate he has handed over all his powers. José Peña Solís, a former member of the Venezuelan Supreme Court says" "This time it is different from what has happened before. The president considered a scenario in which he may end up being physically or mentally unable to be in office. Thus, this time there are more reasons to believe that the Presidency is vacant and, therefore, Vice-President Maduro must fill that position". (El Universal, 12-10-2012; http://www.eluniversal.com/nacional-y-politica/121210/former-justices-maduro-is-the-acting-head-of-state; Reuters, 12-09-2012; http://www.reuters.com/article/2012/12/09/us-venezuela-chavez-maduro-idUSBRE8B806V20121209; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=654971&CategoryId=10718; Bloomberg, http://www.bloomberg.com/news/2012-12-09/venezuela-s-chavez-says-he-needs-more-cancer-surgery-in-cuba-1-.html; CNN, http://edition.cnn.com/2012/12/09/world/americas/venezuela-maduro/index.html?iref=allsearch)
Chávez took the first step towards his substitution, according to DATANÁLISIS President Luis Vicente León, who says Chavez did just what he ought to do. "I believe his message was clear and accurate. That is the first step towards his substitution," León remarked and added that by doing so Chávez staves off division within the revolutionary ranks. (El Universal, 12-10-2012; http://www.eluniversal.com/nacional-y-politica/121210/analyst-chavez-took-the-first-step-towards-his-substitution)
Everything set for Sunday regional electionsCarlos Quintero, Director of information technology of the National Electoral Council, has announced that "all technical, logistic and operational elements are ready" for regional elections December 16. Audits ended last Sunday, Dec. 09, when experts tested the running of the voting system. (AVN, 12-10-2012; http://www.avn.info.ve/contenido/everything-set-sunday-regional-elections)
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.