April 12, 2013

Economics & Finance

Experts believe Maduro will win, economy will collapse

A group of four analysts meeting in New York believed Nicolas Maduro will win Sunday's presidential election, but the economy will fall apart and jeopardize his regime's stability. Francisco Monaldi, a Professor at the Harvard University Kennedy School, says post-mortem approval of Hugo Chavez's rule stands at 75%.  Francisco Rodríguez, of Bank America Merrill Lynch, estimates currency devaluation at 41%, raging inflation, scarcity in food, medicines and FOREX, unemployment, electricity failures, with no increased production or help from oil prices. Kathryn Rooney Vera, of Bulltick Capital Management says "chavismo is much weaker"...in three years there will be a chance for an opposition win, but not now. The impending crisis is so bad that one would not want to win". More in Spanish: (El Universal, 04-12-2013; http://www.eluniversal.com/economia/130412/maduro-gana-despues-vienen-las-dificultades)

Pro government economists call policies "inadequate", term SICAD ill designed

A group of pro-government economists have prepared a report which calls economic policies devised by Planning and Finance Minister Jorge Giordani, and Central Bank President Nelson Merentes, "inadequate" as they bring on recession, inflation and scarcities. They say March inflation was 2.8% and there are clear signs of economic contraction. The group includes experts from the National Assembly, the Central Bank and the Miranda International Center. "There are widespread complaints from broad swaths of middle and lower classes, including important "revolutionary" thinkers and analysts about living conditions due to the high cost of basic products and scarcity in vital products."  They project this year's inflation between 30-33%. The group also criticized the newly launched Alternate Currency System SICAD as "insufficient, inflexible, ill designed and highly discretionary", adding that exchange controls have fueled capital flight rather than controlled it. More in Spanish:  (El Nacional, 04-12-2013; http://www.el-nacional.com/)

Argentine Foreign Minister denies his nation´s debt to Venezuela

Argentine Foreign Minister Héctor Timerman said a claim made by opposition candidate Henrique Capriles, that his country owes Venezuela U$D 13 billion, is "slander". More in Spanish: (El Universal, 04-12-2013; http://www.eluniversal.com/nacional-y-politica/130412/canciller-argentino-niega-deuda-de-su-pais-con-caracas)

Government spending grows 27% in the first quarter

During the first quarter of 2013, allocations to meet salaries, pensions and regular government operations soared 27%. The Ministry of Planning and Finance reports that the Treasury allocated some U$D 17.17 billion from January-March 2013, a leap from U$D 13.53 billion in the same quarter 2012 (El Universal, 04-10-2013; http://www.eluniversal.com/economia/130410/venezuelas-expenditure-swells-27-in-the-first-quarter)

Spiraling inflation leads to sharp increase in minimum wage

Addressing workers at a rally, acting President Nicolás Maduro announced a 38-45% increase in the minimum wage to be implemented in three stages. The first 20% is to be implemented in May, from U$D 325.55 to U$D 390.66. The next increase (10%) is to be adopted in September, bringing salaries up to U$D 429.73. A final adjustment would come in November, 5-10%, based on inflation. (El Universal, 04-10-2013; http://www.eluniversal.com/economia/130410/spiraling-inflation-leads-to-high-rise-in-minimum-wage-in-venezuela)

Commodities

PDVSA debt at the close of 2012: U$D 7.7 billion

State owned PDVSA's liabilities and accounts payable to suppliers soared 33% in 2012 over 2011, for a total U$D 16.47 billion. Liabilities increased in Exploration and Production (E&P), by some 80% to U$D 7.78, according to an internal report from PDVSA's Vice-President. (El Universal, 04-10-2013; http://www.eluniversal.com/economia/130410/venezuelas-pdvsa-ends-2012-with-a-debt-of-usd-77-billion-in-production)

Russia may sell its 19% share in ROSNEFT

Economy Minister Andrei Belousov announced that Russia is thinking of selling its 19% share in the ROSNEFT state oil company, as part of a plan to accelerate privatization.  ROSNEFT is a PDVSA partner. More in Spanish: (El Mundo, 04-12-2013; http://www.elmundo.com.ve/Noticias/Petroleo/Industria/Rusia-evalua-vender-19--de-su-participacion-en-Ros.aspx)

Logistics & Transport

Port activity will continue during Sunday elections, according to General Henry Montilla, Director of the Puerto Cabello Maritime Terminal, who says "all ships that need service will be serviced". More in Spanish: (Notitarde, 04-12-2013; http://www.notitarde.com/La-Costa/Atenderan-buques-durante-las-elecciones/2013/04/11/178663) 

Politics

US Intelligence Chiefs predicts "Chavez line" will continue after election

James Clapper, Director of US National Intelligence said at a Congressional hearing that "very probably the Chavez tradition will continue" after Sunday´s presidential election. More in Spanish: (El Universal, 04-12-2013; http://www.eluniversal.com/nacional-y-politica/130412/inteligencia-de-eeuu-augura-que-seguira-la-linea-de-chavez)

Analysis: Capriles needs late surge to win Venezuela vote

After beating Venezuelan opposition leader Henrique Capriles in last year's presidential election, Hugo Chavez telephoned him and courteously quipped: "You made me get out and work hard!" Now in his second campaign for the OPEC nation's top job, the tireless Capriles has again pushed himself to the limit to ensure his new rival and election favorite, Chavez's protege Nicolas Maduro, does not have an easy path to victory. "I'm shedding my skin for Venezuela," Capriles, 40, roared this week at the final rallies of a passionate campaign where he has re-energized opposition backers still upset about his loss against the socialist Chavez last October. (Reuters, 04-10-2013; http://www.reuters.com/article/2013/04/10/us-venezuela-election-opposition-idUSBRE9390DT20130410)

In Venezuelan election, food security _ or lack thereof _ can turn votes

Venezuelans complain that what goes into their Sunday dinner plate comes from abroad: Steak, from Brazil; plantains, the Dominican Republic; rice, South Africa; Parmesan cheese, Uruguay; oats, Chile. Even coffee, in a country famed for it, often is Colombian. It’s a complaint heard often these days as Hugo Chavez’s hand-picked successor, Nicolas Maduro, seeks election against opposition candidate Henrique Capriles. Under the socialist government, shoppers cannot count on finding sugar, cornmeal for Venezuela’s beloved arepas and other goods when they go to market. (The Washington Post, http://www.washingtonpost.com/business/in-venezuelan-election-food-security-_-or-lack-thereof-_-can-turn-votes/2013/04/10/49026b98-a1b2-11e2-bd52-614156372695_story.html; Fox News, http://www.foxnews.com/world/2013/04/10/in-venezuelan-election-food-security-or-lack-thereof-can-turn-votes/)

Venezuela election to test Chavez's socialist legacy

The late Hugo Chavez's self-declared socialist revolution will be put to the test at a presidential election on Sunday that pits his chosen successor against a younger rival promising change in the nation he polarized. Most opinion polls give his protege, acting President Nicolas Maduro, a strong lead thanks to Chavez's endorsement and the surge of grief and sympathy over his death from cancer last month. (Reuters, 04-11-2013; http://www.reuters.com/article/2013/04/11/venezuela-election-idUSL2N0CX1IJ20130411)

Top military officers vow to respect and enforce election result

Venezuela's military high command and representatives of the National Electoral Council (CNE) met to refine details for the presidential election that will take place next April 14. Defense Minister Diego Molero said the Bolivarian National Armed Force would not tolerate any "disturbances" during the vote. "The Bolivarian Armed Force is the guardian of the Constitution, the laws, and all the guidelines outlined by the National Electoral Council. We will not allow disturbances of any kind, nor will we allow non-compliance with the laws during the development of the activities next April 14," the defense minister remarked. (El Universal, 04-10-2013; http://www.eluniversal.com/nacional-y-politica/130410/top-military-officers-vow-to-respect-and-enforce-election-result)

Nearly 5,000 reportedly people killed in Venezuela under Maduro

Experts from the opposition United Democratic Conference (MUD) announced that 4,700 people have been assassinated in Venezuela in over 100 days that Nicolás Maduro has been leading the country, and called government security plan Misión a Toda Vida Venezuela (Full Life for Venezuela) a failure. (El Universal, 04-10-2013; http://www.eluniversal.com/nacional-y-politica/130410/nearly-5000-reportedly-people-killed-in-venezuela-under-maduro)

OAS sending Bill Richardson as special envoy to Sunday's election

OAS Secretary General José Miguel Insulza has named former New Mexico Governor Bill Richardson as his representative during upcoming presidential elections in Venezuela. Insulza clarified this visit cannot be considered "observation". More in Spanish: (Tal Cual, 04-12-2013; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/130412/oea-designa-a-bill-richardson-como-enviado-especial)

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.