December 21th, 2012

Economics & Finance

Foreign debt payments projected to increase by 48% in 2013

The ECOANALÍTICA think tank is saying that next year's oil income will not be enough to cover foreign debt obligations and imports. "Considering our U$D 104 estimated average oil price and projected 2.22 million BPD exports, we see that oil income will be insufficient to meet the economy's FOREX needs." Increased debt service in 2013 will call for U$D 18.425 billion outflows, which is a 48% jump over 2012. More in Spanish: (El Universal, 12-21-2012; http://www.eluniversal.com/economia/121221/pagos-por-concepto-de-deuda-externa-aumentan-48-en-2013)

Serious devaluation required in view of large fiscal deficit

According to a report on Venezuela's economic outlook compiled by economists José Guerra, Sary Levy, Luis Bruzco, Isaac Mencía, and Luis Oliveros, "size of the (Venezuelan) fiscal deficit will require a serious revision of the foreign exchange rate" in 2013  They explained that the gap between income and expenditure stands at 17% of the gross domestic product (GDP). Also, Venezuela's debt is escalating rapidly, so the country will have no other choice but to devaluate in order to obtain more bolivars per each dollar. (El Universal, 12-19-2012; http://www.eluniversal.com/economia/121219/serious-devaluation-needed-in-venezuela-amidst-large-fiscal-deficit)

Average cost of regulated food basket was Bs.1,989.09 in November, up 2.69%. Accrued variation through November 2012 is 14.23%, down from 24.76% posted for the same period in 2011. (Veneconomy, 12-20-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33273&idc=3)

Government says unemployment dropped to 6.4% in November, claims inflation will be under 20%

Unemployment rates in Venezuela rated 6.4% during t November 2012, according to a monthly report on the workforce drafted by the National Statistics Institute (INE). The report claims 115,714 people found a paid job, so unemployment registered a month-to-month drop since October, when it was 7.3%. The Institute also said inflation may be under the 20% goal for the year. (AVN, 12-20-2012; http://www.avn.info.ve/contenido/unemployment-dropped-64-cent-november and more in Spanish: Últimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ine-desempleo-subio-a-6-4-en-noviembre.aspx)

Communes to receive more funding than mayor's offices

Venezuela's Budget Law for fiscal year 2013 provides some U$D 4.9 billion to the Inter-territorial Compensation Fund (FCI) for the projects and plans submitted by states and municipalities, as well as communal councils. However, in distributing the funds, authorities benefit so-called communes over the rest. As per the Budget Law, U$D 1.6 billion will be allocated to states; U$D 1.2 billion to municipalities, and U$D 2.04 billion to the "people's power" and community based plans. Funding for communal councils and communes exceeds that allocated to municipalities by 69% and to states by 25%. (El Universal, 12-19-2012; http://www.eluniversal.com/economia/121219/venezuelan-communes-to-get-more-funds-than-mayors-offices)

Commodities

Sugar import tariff set at 50%, by the Nutrition Ministry and the Planning and Finance Ministry. The ruling establishes 132,013 tons of sugar will be purchased abroad, through companies that guarantee imports and distribution into the local market. (El Nacional, 12-21-2012; http://www.el-nacional.com/)

International Trade

Venezuela-Colombia trade up 32.9%

Venezuela-Colombia trade rose 32.9% in January-November compared to the same period time last year, according to data from Colombia's National Tax and Customs Agency (DIAN), based on estimates from the Venezuelan-Colombian Chamber of Economic Integration (CAVECOL). The information shows that total bilateral trade was U$D 2.68 billion, compared to U$D 2.02 billion last year.  (El Universal, 12-19-2012; http://www.eluniversal.com/economia/121219/venezuela-colombia-trade-up-329)

Venezuela became Guyana's second largest trading partner during the first half of 2012, due largely to energy exchanges within PETROCARIBE. According to the Guyanese statistics department Guyana imported U$D 147.6 million, which is 15.6% of all imports, and exported U$D 62.7 million to Venezuela, which includes around 60% of Guyana's rice production. More in Spanish: (El Nacional, 12-21-2012; http://www.el-nacional.com/)

Logistics & Transport

Only four out of 24 docks for commercial trade at La Guaira Port are operational, says Rusvel Gutierrez, head of the Vargas state Industrial and Customs Agents Chamber. He also said the government is investing in two high draught docks through the ALBA ports agreement at a time when there are 20 docks in the area waiting for maintenance. (Veneconomy, 12-20-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33276&idc=3)

Politics

Supreme Court Could Rule on Chavez Inauguration, Officials Say

Top Venezuelan officials have opened the possibility that cancer-stricken President Hugo Chavez may not have to be sworn-in Jan. 10 to start a new six-year term, as stipulated in the country’s constitution. Vice President Nicolas Maduro said yesterday that while he’s praying for the president’s recovery in Cuba, and added that the country’s constitutional court “has a great capacity to interpret the constitution” about the swearing-in date. On Dec. 18 National Assembly President Diosdado Cabello told reporters that there is precedent for delaying inaugurations in Venezuela. These comments raised opposition concerns that the government may try to delay the ceremony and subsequent national elections if Chavez is too ill to take office. “The president should present himself on January 10 and take his oath,” says opposition alliance secretary Ramon Jose Medina. “The date is constitutionally set and can’t be changed for personal opinions or political convenience.” (Bloomberg, 12-20-2012; http://www.bloomberg.com/news/2012-12-19/maduro-says-high-court-can-decide-issue-of-chavez-taking-office.html; El Universal, 12-19-2012; http://www.eluniversal.com/nacional-y-politica/121219/venezuelas-vp-we-work-under-the-premise-of-chavezs-recovery; http://www.eluniversal.com/nacional-y-politica/121219/congress-speaker-hints-possibility-of-adjourning-chavezs-inauguration-; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-has-respiratory-infection-after-cancer-surgery-official-says/2012/12/18/6b8e3528-4971-11e2-8af9-9b50cb4605a7_story.html; http://www.washingtonpost.com/world/the_americas/venezuela-vp-says-government-sticking-to-plan-for-chavez-inauguration-after-cancer-surgery/2012/12/19/89b4693a-4a3b-11e2-8af9-9b50cb4605a7_story.html; Fox News, http://www.foxnews.com/world/2012/12/20/chavez-ally-defends-idea-pushing-back-jan-10-inauguration-if-needed-after/)

Supreme Court President says there are no constitutional doubts over the President's term

Luisa Estela Morales, President of Venezuela's Supreme Court, says there are no constitutional issues over the term of President Chavez. She said: "It is important to know that for the moment there is no constitutional issue to decide. The President has complied with his constitutional duty to seek permission from the National Assembly to be absent for more than 5 days". She added that legal opinions about his stay in Cuba are "out of context", and said this was not "a legal, but rather a constitutional affair. Do not lose sight of this". More in Spanish: (AVN, 12-21-2012; http://www.avn.info.ve/contenido/presidenta-del-tsj-aclara-que-no-hay-duda-constitucional-sobre-ejercicio-del-presidente; El Universal, http://www.eluniversal.com/nacional-y-politica/121221/sobre-asuncion-de-chavez-no-existe-duda-constitucional)

Constitutional experts say President Chávez must take office next January 10

A group of Venezuelan constitutional experts rejected ruling party Diosdado Cabello's proposal for postponing the date reelected President Hugo Chávez should to take office for presidential term 2013-2019. President Chavez has often said: "everything within the Constitution is acceptable, outside the Constitution, it is not"; and today, these same words are used by Chávez's foes to dismiss suggestions of postponing the date (January 10) the Venezuelan president is to take office for presidential term 2013-2019 in order to let him recover from his fourth surgery. (El Universal, 12-20-2012; http://www.eluniversal.com/nacional-y-politica/121220/venezuelan-experts-president-chavez-must-take-office-next-january-10)

Chávez is stabilizing steadily and is fully conscious, says Vice President Nicolás Maduro, who read a medical report out of Havana which claims the President is undergoing a rigorous and constant treatment after his operation two weeks ago. He said a respiratory infection is also being treated. More in Spanish: (AVN, 12-21-2012; http://www.avn.info.ve/contenido/presidente-chávez-agradece-victoria-del-16-diciembre; El Universal, http://www.eluniversal.com/nacional-y-politica/121221/maduro-asegura-que-chavez-esta-bien-y-consciente)

Municipal elections postponed to May 26, 2013. According to an announcement made by Elections Board President Tibisay Lucena. She said the call for elections will be made during the last week of January 2013, when the registry will be opened for 15 days in order to receive new inscriptions, that political organizations may present nominations to each municipal board on February 15-22; and that the campaign will take place from April 25 through May 25 next year.  More in Spanish: (AVN, 12-21-2012; http://www.avn.info.ve/contenido/tibisay-lucena-elecciones-municipales-se-realizar%C3%A1n-26-mayo-2013; El Universal, http://www.eluniversal.com/nacional-y-politica/121221/cne-difiere-hasta-el-26-de-mayo-las-elecciones-locales)

Call for recount made in Bolivar state

Andrés Velásquez, opposition candidate for Governor in Bolivar state has made a formal request for a recount to the local Elections Board, despite the fact that it has certified government candidate Francisco Rangel Gómez's reelection. Velásquez emphasized that invalid votes (18,212) are more than the difference between both candidates. More in Spanish: (El Universal, 12-21-2012; http://www.eluniversal.com/nacional-y-politica/121221/entregan-al-cne-de-bolivar-impugnacion-y-exigen-reconteo)



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.