February 05th, 2013

Economics & Finance

Foreign Minister Jaua in China for more loans as shortages bite at home

Foreign Minister Elías Jaua Milano is in Beijing for meetings with his counterpart of the People's Republic of China, Yang Jiechi, as well as Senior Communist Party of China (CPC) leader Yu Zhengsheng, seeking further loans as shortages of goods caused by a lack of foreign currency as well as price controls continue to frustrate consumers in the oil rich Latin American nation. There have been no announcements of new loans after days of meetings, though both sides have noted that they will continue strengthening bilateral relations. (Latin American Herald Tribune, 02-03-2013; http://www.laht.com/article.asp?ArticleId=669461&CategoryId=10717)

Venezuela seeks U$D 4 billion China loan, U$D 2 billion Chevron credit

Venezuela's government and state oil company PDVSA are in urgent talks over a long-awaited U$D 6 billion in loans from China and U.S. energy giant Chevron that would help relieve the nation's strained finances, sources close to the discussions said. Oil Minister Rafael Ramirez said this week that PDVSA had no plans to issue any more dollar-denominated bonds, confounding widespread speculation that one was planned to address a chronic shortage of dollars for local businesses. (Reuters, 02-01-2013; http://www.reuters.com/article/2013/02/01/us-venezuela-chavez-funding-idUSBRE91011L201302019

Shoppers vie to buy scarce staples amid the worst shortages in nearly four years

Shortages have become the government's latest challenge, as it deals with political uncertainty. The central bank's Scarcity Index, a measure of the percentage of products missing from store shelves, jumped to 16.3% in December, the highest level since May 2008 due to price controls that were too low.  Some owners sell to preferred customers ready to spend anywhere from 30% to 90% above state-regulated levels. Many supermarkets remind shoppers they can purchase no more than two packages of cooking oil or corn flour, products whose prices are regulated. Long lines of customers buying rationed goods are a common sight. Angel García Banchs, head of local economic-research house ECONOMETRICA, said in an opinion column: "There's only one strategy left for the government, even though it's a failed one from my point of view: to design and execute a media campaign to blame the shortages on private national companies." (The Wall Street Journal; http://online.wsj.com/article/SB10001424127887323854904578261933682923580.html?mod=googlenews_wsj)

Maduro warns businesses against hoarding amid food shortages

The government has warned businesses against hoarding food amid problems with shortages, saying authorities are poised to take action. Shortages of some basic foods such as sugar and cornmeal have worsened recently while the government has been making available fewer dollars at the fixed exchange rate. Business leaders say the limited supply of dollars, along with decreased industrial and agricultural production, has caused shortages.  Vice President Nicolas Maduro said Friday the government would crack down on businesses caught hoarding food. (The Washington Post, 02-01-2013; http://www.washingtonpost.com/world/the_americas/venezuelas-vice-president-warns-businesses-against-hoarding-amid-food-shortages/2013/02/01/d95c35d0-6cc3-11e2-8f4f-2abd96162ba8_story.html)

Government spending rose 67% in January

Although outflows typically shrink in January, government payroll and management expenses rose 67% last month, from VEB 26 billion to VEB 43.6 billion, according to a SINTESIS FINANCIERA report which says "there is no sign of reduction". More in Spanish: (El Universal, 02-05-2013; http://www.eluniversal.com/economia/130205/gasto-del-gobierno-central-se-disparo-67-en-enero)

Venezuela's Big Mac world's most expensive

The Big Mac index prepared by "The Economist", shows Venezuela with the world's most expensive hamburger: U$D 9.08 at the official rate of VEB 4.30 to the U$D, making the Bolivar the most overvalued currency in thw world.  More in Spanish: (El Mundo, 02-05-2013; http://www.elmundo.com.ve/Noticias/Economia/Politicas-Publicas/En-Venezuela-se-come-el-Big-Mac-mas-caro-del-mundo.aspx)

Daily FOREX supply via SITME dropped 57.55% in January, compared to the same period last year. The average amount available during January 2013 via the system was U$D 15.7 million while the daily average offer in January 2012 was U$D 37.1 million. (VENECONOMY, 02-04-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33618&idc=2)

Commodities

Steelmaker SIDETUR's UD$100 million bond issue in default

Deutsche Bank, trustee for a U$D 100 million bond issued by steelmaker SIDETUR, has issued a notice of default saying the company violated one of the provisions of the bond sale. Deutsche Bank said that SIDETUR, nationalized by President Hugo Chavez in 2010, failed to make necessary deposits to a debt servicing reserve fund required by the covenants of the financing deal. The company, which makes rebar, flat and angle steel products, did not respond to phone calls seeking comment. (Reuters, 02-01-2013; http://www.reuters.com/article/2013/02/02/venezuela-sidetur-idUSL1N0B1LDG20130202; Bloomberg, http://www.bloomberg.com/news/2013-02-01/sidetur-trustee-said-to-declare-steelmaker-in-default.html)

Energy minister predicts mining arc will be like Orinoco Oil Belt

With state oil holding Petróleos de Venezuela (PDVSA) now responsible for gold exploitation, Petroleum and Mining Minister and PDVSA President Rafael Ramirez is saying the mining arc will be similar to the Orinoco Oil Belt. "There will be a mining arc, which will be like the Belt. We will do with gold the same as we have done with oil". The state-owned oil company, through the Venezuelan Mining Corporation, will carry out operations and has already allocated three blocs, containing reserves for 85 million ounces. (El Universal, 02-02-2013; http://www.eluniversal.com/economia/130202/energy-minister-mining-arc-will-be-like-orinoco-oil-belt)

VP says Chavez signed order enlarging PDVSA project

Vice President Nicolás Maduro says President Hugo Chavez authorized a PDVSA project to enlarge a state oil company PDVSA project in Zulia. Oil Minister Rafael Ramirez said that Chavez had approved terms and conditions to annex areas to the PETROCABIMAS joint venture, including Tia Juana Tierra and exploratory areas in Cabimas East and Cabimas South. (Latin American Herald Tribune, 02-03-2013; http://www.laht.com/article.asp?ArticleId=669167&CategoryId=10717)

Expert predicts oil prices will go down

Ramón Castro Pimentel, an analyst and professor at Venezuela´s Central University says shale oil entering global markets will lower oil prices globally and cut short currently rising trends. More in Spanish: (El Mundo, 02-05-2013; http://www.elmundo.com.ve/Noticias/Petroleo/Industria/Nueva-oferta-de-crudo-para-este-ano-tumbara-altos-.aspx)

International Trade

Oil over 60% of Venezuelan exports to China

Venezuela's relation with China has become vital as never before. The Asian country is now Venezuela's top funding source, with Beijing granting loans to Caracas in exchange for oil. By the end of 2011, oil was 62.2% of Venezuela's exports to China, with oil byproducts at 28.5%, iron (8.1%), ferroalloys (1.6%), and common metal scraps (0.4%), according to a report compiled by the Economic Commission for Latin America and the Caribbean (ECLAC): "The People's Republic of China and Latin America and the Caribbean: Dialogue and cooperation vis-a-vis the new challenges of the global economy". In 2011, Venezuela-China trade was U$D 18 billion, 24 times higher than in 2003 (U$D 742 million). (El Universal, 02-04-2013; http://www.eluniversal.com/economia/130204/oil-represents-more-than-60-of-venezuelas-exports-to-china) 

Logistics & Transport

22 ships at bay in Puerto Cabello

This includes 2 vessels laden with rice from the US and 2 others bearing sugar from Brazil and Nicaragua. There are also 2 tankers, 9 bearing containers, 2 general cargo and 3 with ballast, awaiting instructions. More in Spanish: (Notitarde, 02-05-2013; http://www.notitarde.com/La-Costa/Embarcaciones-con-az%C3%BAcar-y--arroz-permanecen-en-la-bah%C3%ADa/2013/02/04/164080)

Economist claims 40% of government imports are fake

Economist Asdrúbal Oliveros says that according to an ECOANALITICA report government companies overcharge for imports and receive FOREX for them, but do not actually bring in products. He says private companies also do this, but on a much smaller scale; and adds that 16% of all total "imports" are dollars assigned to fake purchases. Oliveros points out that total Central Bank disposable reserves are barely above U$D 2 billion but adds that devaluation is "not strictly necessary". More in Spanish: (El Nacional, 02-05-2013; http://www.el-nacional.com/)

Politics

Officials say Chávez recovering, signs documents and makes decisions

"The president (Hugo Chávez) affixed his signature to these accounts," says Congress Speaker Diosdado Cabello, adding that Chávez "continues moving forward slowly and steadily towards his recovery (...) The president has signed and given instructions regarding some decisions that must be adopted in the party (ruling United Socialist Party of Venezuela) and the Government". He adds that "the health of Commander (Hugo) Chavez is clearly recovering, complying with medical treatment." (El Universal, 02-04-2013;

http://www.eluniversal.com/economia/130204/venezuelan-officials-say-chavez-signed-documents-and-made-decisions; AVN, 02-03-2013; http://www.avn.info.ve/contenido/chavez-recovering-undergoes-medical-treatment; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=668165&CategoryId=10717; Fox News, http://www.foxnews.com/world/2013/02/03/venezuela-military-chief-says-president-hugo-chavez-experiencing-best-moment/)

Castro says Chavez improving after tough cancer fight

Former Cuban leader Fidel Castro said Venezuelan President Hugo Chavez is getting "much better" as he recovers from cancer surgery almost two months ago in Havana. (Reuters, 02-04-2013; http://www.reuters.com/article/2013/02/04/venezuela-chavez-castro-idUSL1N0B462L20130204; Fox News, http://www.foxnews.com/world/2013/02/04/fidel-castro-says-hugo-chavez-condition-improving-in-battle-against-pelvic/)

VP leads rally in commemoration of February 4, 1992

President Hugo Chávez's supporters rallied in Caracas to commemorate the 21st anniversary of a failed coup d'état in 1992. The event, which took place at the Historic Military Museum, west Caracas, was broadcast nationwide and attended by several senior officials, including the Vice-President Nicolás Maduro and Congress Speaker Diosdado Cabello. High-ranking members of the Armed Forces were also present. (El Universal, 02-04-2013; http://www.eluniversal.com/nacional-y-politica/130204/venezuelas-vp-leads-rally-in-commemoration-of-february-4-1992; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-government-supporters-mark-anniversary-of-1992-coup-attempt-with-chavez-absent/2013/02/04/33a23ad8-6eec-11e2-b35a-0ee56f0518d2_story.html; Fox News, http://www.foxnews.com/world/2013/02/04/venezuela-government-supporters-mark-anniversary-12-coup-attempt-with-chavez/)

Elections Board sets tentative timetable for presidential elections for March 31st

Inside sources report meetings led by IT Director Carlos Quintero have discussed a timetable for presidential elections, setting March 31st as a tentative date, obviously subject to the health of President Chavez, his return, and official decisions once he is back. More in Spanish: (El Nacional, 02-05-2013; http://www.el-nacional.com/)

COPEI spokesman reports 170 municipalities have more voters than people

COPEI Party VP Enrique Naime has claimed that there are more voters than people in 170 municipalities, comprising 90 election circuits. His report is based on a study by the Andrés Bello Catholic University, and once again calls transparency at the Elections Board into question. He specifically points out municipalities in Nueva Esparta, Delta Amacuro, Mérida, Táchira and Portuguesa states, and this is 34% of all 375 Venezuelan municipalities. More in Spanish: (Tal Cual, 02-05-2013; http://www.talcualdigital.com/index.html)


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.