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.

Tuesday, February 26, 2013

February 26, 2013

Economics & Finance

Deficit is estimated at VEB 71 billion, according to the report on financial impact attached to the Law on Special Contributions for Extraordinary Oil Prices. More in Spanish: (El Universal, 02-26-2013;

Giordani calls for increased agriculture production
Finance and Planning Minister Jorge Giordani says the government can fight inflation by raising national production, particularly foods, in order to meet demand arising from high liquidity. He says: "We can import, but we need to produce whatever we can, and this is the effort we must make if we are to abate inflation". More in Spanish: (Tal Cual, 02-26-2013;

Central Bank of Venezuela expands VEB 100-bill issue by 97%
Relentless price increases force consumers to use more a high value bills and use fewer bills and coins for VEB 2 and VEB 5. Consequently, official data shows that in 2012 the Central Bank printed more than 272 million VEB 100 bills –a 97% increase over the number of bills printed in 2011 and three times more than those issued in 2010. (El Universal, 02-25-2013;

Giordani claims outstanding social economic progress
"What we have achieved is an outstanding progress. It is evident in all indicators. The (UN) millennium goals, poverty reduction, Gini coefficience with the best incomes distribution in Latin America. And this has to be preserved," says Sunday Planning and Finance minister Jorge Giordani. (AVN, 02-25-2013;


Amuay Refinery recovery will take a year, fuel imports to continue
According to plant operators and experts recovering Amuay Refinery will take at least one year and it is operating at 52% capacity. Consulting engineer Nelson Hernández says: "11 tanks were damaged and must be built, and this will take at least 6 months if we were to start today. In addition, infrastructure must be prepared and cannot be expected to be ready by September. Everything indicates fuel imports will continue unless rationing is undertaken - such as is being done in electricity and possibly extending the use of chips to control gasoline sales". US Energy Department data shows that after the Amuay accident PDVSA exports to the US dropped around 40%, down to 38,000 barrels per day from 64,000 BPD, and Venezuela that imports an average 108,000 BPD. More in Spanish: (El Nacional, 02-26-2013;; El Universal,

Venezuela, China negotiating contract to boost steel production
Venezuelan aluminum producer CVG and Chinese company Minmetals Engineering are analyzing a contract aimed at to develop two projects to increase production at the SIDOR steel company in southern Bolivar state. SIDOR president Rafael Gil Barrios said the first project is to increase operational capacity and labor safety by recovering lines in the etching area at SIDOR's hot rolled flat product and steel sheet plant. The second plan calls for installing a new continuous casting machine to manufacture 550,000 tons of hot rolled steel billets, used to manufacture seamless pipes required by the oil industry, according to a SIDOR press release. (AVN, 02-25-2013;

State-run basic industries raise prices 46.5%
Whereas private companies are being pressured by Government to avoid increasing prices after devaluation, state-run industries are adjusting prices along the lines of the new FOREX rate. Such is the case of basic industries in Guayana, where prices have been increased by 46.5%. SIDOR adjusted prices upwards, and the price of products purchased prior to devaluation but not dispatched will be recalculated based on the new forex rate, VEB 6.30 per US dollar. (El Universal, 02-25-2013;

Investigation sought into aluminum trading in Guayana
Ricardo Menendez, Vice Minister for Economic Production asked the Interior and Justice Ministry to undertake an intensive investigation "to the ultimate consequences" of aluminum trading at the Guayana basic industries. In a press release he said: "The matter is crucial in order to rescue our basic industries". More in Spanish: (AVN, 02-26-2013;

International Trade

An estimated 27.4% official imports were bogus, says ECOANALITICA
Distortions are increasing ten years after FOREX restrictions were put in place in Venezuela. Official imports at the official exchange rate seemingly encourage overbilling and other types of cheating. Total imports in 2012 were U$D 56.3 billion, of which U$D 15.4 billion (27.4%) were fictitious according to estimates by ECOANALITICA consulting firm. Most of the overbilling was done by government entities. Overbilling means showing a sale price higher than the actual price, this obtaining currency allocation greater than those needed to acquire goods. (El Universal, 02-23-2013;

Venezuela imports over U$D 1 billion in Brazilian beef
Fernando Portela, director of the Venezuela-Brazil Chamber of Commerce, says Venezuela currently imports more Brazilian foods like beef, chicken, roasted coffee and sugar. He says Venezuela and Brazil trade was U$D 6 billion in 2012. "Venezuela imported and exported U$D 5.1 billions, there is an imbalance there, a large asymmetry between the Brazilian export trades," he says, adding that the pattern of imports from Brazil has changed over the past 10 years. "Today Venezuela imports more food from Brazil. 35% are food products and commodities such as live cattle almost reached U$D 400 million." More in Spanish: (El Mundo, 02-25-2013;$1-000-millones-en-carnes.aspx)

Most Colombia trade went through SITME
Venezuela-Colombia trade is reported at U$D 175 million at the start of 2013, with U$D 44 million in exports to Colombia and U$D 131 million in imports from Colombia, according to Luis Alberto Russian, President of the Venezuela-Colombia Integration Chamber. He says these figures do not reflect the impact of devaluation, but adds that according to a recent poll of Chamber members 54% reported using the now abolished SITME parallel system. More in Spanish: (El Universal, 02-26-2013;

Logistics & Transport

Government approved acquisition of machinery and equipment to improve port operations
Elsa Gutierrez, Minister for Aquatic and Air Transport and President of the BOLIPUERTOS port authority has announced that the government approved the acquisition of 100 machines and spare parts needed to improve port activity. She said they would invest one million euros for parts and U$D 39.228 million 228 to purchase machinery and spare parts. Equipment is to be supplied by international companies, such as: Liebher Werk Nenzing, Cargotec and Cargo Solutions INC Equipment. More in Spanish: (Bolipuertos, 02-25-2013;


Despite homecoming, Chavez still out of sight
From a billboard bearing his face, to a giant inflatable doll and posters hawked on the street below, there is no shortage of images of Hugo Chavez at the Caracas military hospital where he has been since returning from Cuba. Yet there has been no sight of the 58-year-old Venezuelan president since he came home - during the night and without photos or fanfare - a week ago. His surprise return to Caracas raised supporters' hopes of a recovery after December surgery in Havana that was his fourth operation in 18 months. But other than the government saying Chavez's breathing problem has worsened, there have been no new details about the patient on the well-guarded ninth floor. (Reuters, 02-25-2013;

Chavez opponents hold demonstration demanding answers about president’s cancer
Hundreds of government opponents demonstrated Saturday to demand answers about President Hugo Chavez’s condition while he remains out of sight in a hospital, undergoing treatment more than 10 weeks after his latest cancer surgery. The protesters also condemned the government’s most recent economic measures, which have included a devaluation of Venezuela’s currency, the bolivar. Some held signs with a photo of Vice President Nicolas Maduro and a slogan saying the devaluation will mean “more inflation.” Opposition leaders, though, mainly criticized the secrecy surrounding Chavez’s diagnosis and treatment, saying many Venezuelans want the government to be more forthcoming about the president’s condition. (The Washington Post, 02-23-2013;; Fox News,

Maduro claims Chavez held 5-hour meeting with Cabinet
According to Vice President Nicolás Maduro, ailing President Hugo Chavez discussed economic policy and national security with his Cabinet for five hours yesterday at a military hospital in Caracas. Maduro went on public television to say Chavez and his team worked on measures to fight inflation and guarantee resources in bolivars and dollars for public spending, economic policy moves to be announced over the coming weeks. “The president was clear about the speculative attack on our currency and product hoarding and said that we have to increase actions to fight the economic war being waged by the bourgeois,” Maduro said. (Bloomberg, 02-23-2013;; El Universal;; Latin American Herald Tribune,

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. 

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