April 26, 2013

Economics & Finance

Treasury needs an additional U$D 53 billion, says ECOANALITICA

A recent report by the ECOANALITICA research firm shows that the government needs U$D 53 billion, in addition to oil and tax income, in order to meet its current obligations. The firm estimates the gap can be covered through further indebtedness and by using money available in parallel funds, such as the National Development Fund, which is managed by the national treasury, but it warns that buffer funds that are outside the formal budget dropped by 35.3% last year. More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/economia/130426/calculan-que-el-fisco-necesita-53-millardos-adicionales)

Only U$D 638 million available for imports so far this year, 50% drop in imports estimated

Companies in Venezuela are being hit by a severe scarcity of FOREX badly needed for importing raw materials, spare parts, and finished products essential to the domestic supply chain. So far this year only U$D 638 million have been provided to the private sector through the Foreign Currency Administration Commission (CADIVI), as well as the former Transaction System for Foreign Currency Denominated Securities (SITME), and its substitute Ancillary Foreign Currency Administration System (SICAD). The meager supply of FOREX has meant lower stocks and more shortages nationwide. The National Trade and Services Council (CONSECOMERCIO) estimates there has been a 50% drop in imports during Q1 2013, based on data from national ports. There are only 10,000 companies registered within the exchange control system, this is 1.2% of all companies operating nationwide. (El Universal, 04-25-2013; http://www.eluniversal.com/economia/130425/only-usd-638-million-sold-under-alternative-mechanisms-this-year; and more in Spanish: http://www.eluniversal.com/economia/130426/consecomercio-estima-caida-de-50-en-las-importaciones; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/consecomercio-falta-de-divisas-tiene-paralizado-al.aspx)

New central bank's head to face inflation and nose-diving reserves

Former Trade Minister Edmée Betancourt is slated to become the next president of the Central Bank of Venezuela (BCV) upon being nominated to the National Assembly by President Nicolás Maduro. The Bank has become an appendage of the President's Office which prints bills to finance state-owned companies, fosters the unlimited growth of currency to provide the sense of a booming economy, and transfers the nation's international reserves to the National Development Fund (FONDEN) -which is managed by the president.
Under these conditions, Betancourt's doesn't seem likely to encourage a reform aimed at reversing practices. As a result investment banks such as Barclays Capital have reported to their clients that Betancourt's nomination is not a good signal for the economy. (El Universal, 04-24-2013; http://www.eluniversal.com/economia/130424/new-central-banks-head-to-face-inflation-and-nose-diving-reserves)

S&P revises outlook on Venezuela’s PDVSA to negative

Standard & Poor’s Ratings Services revised its outlook on Petroleos de Venezuela S.A. (PDVSA) to negative from stable. At the same time, the agency affirmed its ‘B+’ foreign and local currency ratings on PDVSA.
In accordance with the agency’s criteria on government-related entities and assuming no changes in the current likelihood of extraordinary support from the government, the outlook revision on PDVSA reflects the fact that a potential downgrade of Venezuela would lead to a similar rating action on the company. This is due to the agency’s assessment that there is an almost certain likelihood that the government would provide timely and extraordinary support to PDVSA, in case of financial distress. (Latin American Herald Tribune, 04-23-2013; http://www.laht.com/article.asp?ArticleId=756553&CategoryId=10717)

... as well as on CORPOELEC

Standard & Poor’s Ratings Services revised its outlook on Corporacion Electrica Nacional S.A. (CORPOELEC) to negative from stable. At the same time, the agency affirmed its ‘B’ corporate credit rating on the company. The outlook revision follows the April 19 outlook revision on Venezuela (B+/Negative/B). (Latin American Herald Tribune, 04-23-2013; http://www.laht.com/article.asp?ArticleId=757627&CategoryId=10717)

Devaluation hits multinational companies quarterly profits, as at least seven major firms in different areas have listed Venezuela and its weakened currency as the cause for losses or reduced earnings. More in Spanish: (El Mundo, 04-26-2013; http://www.elmundo.com.ve/Noticias/Economia/Empresas/Devaluacion-afecta-ganancias-trimestrales-de-empre.aspx)

Maduro announces Special ALBA-MERCOSUR productive investment economic areas

At a meeting yesterday, President Nicolás Maduro announced the government would establish special economic areas in several parts of the country in order to foster domestic production and exports. More in Spanish: (VTV, 04-26-2013; http://www.vtv.gob.ve/articulos/2013/04/25/presidente-maduro-anuncia-zonas-especiales-de-inversion-productiva-alba-mercosur-472.html; AVN; http://www.avn.info.ve/contenido/maduro-debemos-avanzar-hacia-expansi%C3%B3n-fuerzas-productivas-del-pa%C3%ADs)

Government will create a national fund for FOREX savings

President Maduro also announced his government is moving toward creating a national fund for savings in foreign currency, under special conditions to attract investment and seek capital repatriation. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/ejecutivo-crear%C3%A1-fondo-nacional-ahorros-divisas; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maduro-plan-de-inyeccion-de-divisas-comenzara-el-2.aspx)

Commodities

Govt plans to bolster energy industrialization

Newly appointed Electricity Minister Jesse Chacon says the Government will bolster industrialization within the nation's electric sector aiming to manufacture tools and supplies to meet the domestic demand and even export to foreign markets. He added that the midterm goal is to "manufacture in Venezuela the supplies which will be used in the electrical sector and, beyond that, export them to ALBA (Bolivarian Alliance for the Peoples of Our America) and Mercosur (Common Market of the South)." (AVN, 04-25-2013; http://www.avn.info.ve/contenido/bolivarian-govt-bolster-energy-industrialization; El Universal, http://www.eluniversal.com/economia/130425/venezuelan-government-orders-intervention-of-electricity-utility)

... minister pledges to stabilize electric sector within 100 days, or resign

Chacón also undertook a plan to stabilize the national electric system within 100 days, and said he will resign if he cannot meet the goal.  The plan includes maintenance and strategies to lower demand for electricity. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/ministro-chac%C3%B3n-se-compromete-estabilizar-sector-el%C3%A9ctrico-100-d%C3%ADas; El Universal, http://www.eluniversal.com/economia/130426/deciden-intervenir-y-determinar-responsabilidades-en-corpoelec)

Logistics & Transport

Former workers threaten to paralyze port operations

Former workers at the now defunct National Ports Institute have threatened to block entrances to the nation's main port - Puerto Cabello - if they are not paid at least 20% of what they are currently owed, after they congregated at the entrance of the administration building for Bolivarian Ports (BOLIPUERTOS), unsuccessfully expecting to receive their checks. More in Spanish: (Notitarde, 04-26-2013; http://www.notitarde.com/La-Costa/Ex-trabajadores-del-extinto-INP-amenazan-con-parar-el-puerto/2013/04/25/181651; El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/57713/ex-trabajadores-del-inp-amenazaron--con-paralizar-el-puerto-si-no-les-pagan)

Politics

Elections Board steadfastly refuses to allow access to voting registers in audit

To this date the National Elections Board - with the sole exception of independent member Vicente Díaz - has refused requests by opposition election experts to review voting registers and check for duplicate fingerprints, a key part of the audit on 46% unaudited polling centers, as demanded by presidential candidate Henrique Capriles Radonski and the opposition Democratic Unity Conference. The pro-government majority within the Board insists that the system's reliability can be proven by simply matching numbers in poll minutes, voting tickets and the number of voters who signed the registers - but not review each voter. More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/nacional-y-politica/130426/cne-mantiene-decision-de-verificacion-sin-acceso-a-cuadernos)

Opposition says it will formally contest the election, seek new vote

Opposition leader Henrique Capriles Radonski has announced that he and the National Democratic Conference (MUD) will contest presidential elections held on April 14th. He says: "We will contest the elections and comply with all legal steps, because in the end this will be known worldwide and what would come out of all this is a new election". He also said they would not take part in a fake audit: "We will not take part if there is no checking of voting registers in order to verify fingerprints and signatures, because that would be taking part in a sham and we will not accept it." Capriles said they will take the case to the Supreme Court as part of the required procedures, and that "if Venezuelan justice does not provide an answer we will take this internationally. What has happened here will go all around the world". More in Spanish: (El Nacional, 04-26-2013; http://www.el-nacional.com/)

Maduro declares there was no fraud, claiming "this is the same system used to elect members of the National Assembly and Governors." More in Spanish: (El Nacional, 04-26-2013; http://www.el-nacional.com/)

Machado says "Some in UNASUR feel cheated by the Elections Board"

National Assembly member María Corina Machado says the opposition has been in touch "with all legislatures in Latin America, Europe, and the World Inter Parliamentary Union, and all have roundly condemned what is happening at the National Assembly and the betrayal of a commitment by Tibisay Lucena and the National Elections Board to fully audit April 14th presidential elections". She added that some UNASUR representatives "believe they were cheated" by the Board, and that what is at stake is whether the regional organization "will be an organization known to defend democracy, or a club of nations meant to cover up each other's serious violations of democracy". More in Spanish: (Tal Cual, 04-26-2013; http://www.talcualdigital.com/index.html)

Fernández and Rousseff meet, discuss Venezuela

Argentine President Cristina Kirchner and Brazilian President Dilma Rousseff met yesterday in Buenos Aires and among other issues discussed the UNASUR declaration on the situation in Venezuela, which the termed "democratic". The UNASUR statement supported the decision to expand the election audit to the total number of voting centers. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/presidentas-fern%C3%A1ndez-y-rousseff-destacan-calidad-declaraci%C3%B3n-unasur-sobre-venezuela)

Around 93% of Venezuelans abroad voted for Capriles, further closing vote gap

A preliminary count of the votes cast abroad in the Venezuelan presidential election of April 14 show that opposition candidate Henrique Capriles Radonski won 93% of the ballots. However, these are unofficial results from a manual count conducted by the opposition campaign team, based on the manual tally sheets from the polling stations located in consulates and embassies. These preliminary results are available for consultation on the website comandoexteriorvenezuela.com. (El Universal, 04-24-2013; http://www.eluniversal.com/nacional-y-politica/130424/some-93-of-venezuelans-abroad-vote-capriles)

Opposition, government wrestle on web, airwaves over clinic firebombing claims

Hours after barely winning Venezuela’s presidential election, the ruling party started to flood state media with accusations that opposition provocateurs were firebombing Cuban-run neighborhood health clinics across the country in revenge. More than a week later, a national dispute is raging as the opposition wages a remarkably successful media counteroffensive showing the claims to be seriously exaggerated and in some cases entirely false. With meticulously dated amateur photos of undamaged clinics, opposition supporters have vividly illustrated how cellphone cameras, Twitter and Facebook can help even the playing field against a government that came to dominate broadcast media during the late Hugo Chavez’s 14-year presidency. (The Washington Post, 04-24-2013; http://www.washingtonpost.com/world/the_americas/opposition-government-wrestle-on-internet-airwaves-over-clinic-firebombing-claims/2013/04/24/51ef7e34-ad11-11e2-a8e6-b6e4cc7c49d1_story.html; Fox News, http://www.foxnews.com/world/2013/04/24/opposition-government-wrestle-on-internet-airwaves-over-clinic-firebombing/)

Cabello now says he will not pay National Assembly legislators who do not recognize Maduro

National Assembly President Diosdado Cabello, who has refused opposition members the right to speak at the National Assembly unless they first recognize Nicolás Maduro as President, now says he will not pay dissident Assembly members: "This is logical and coherent. How am I to pay a ghost? If they do not work they will not be paid, and they are not working because they do not recognize Maduro". More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/nacional-y-politica/130426/cabello-no-cobraran-diputados-que-no-reconozcan-a-maduro)

Parliament launches probe into Capriles

The government-controlled parliament set up an inquiry into violence over the disputed election that authorities blame on opposition leader Henrique Capriles. Nine people died and dozens were injured after opposition protests against Nicolas Maduro's narrow April 14 presidential poll win turned violent around the nation. The government said the unrest was evidence the opposition was planning a coup. Capriles' camp rejects that, saying officials exaggerated the violence and included deaths from common crimes to bolster the toll and discredit the opposition. (Reuters, 04-25-2013; http://www.reuters.com/article/2013/04/25/us-venezuela-opposition-idUSBRE93N0Z320130425)

Deputy Calixto Ortega, appointed chargé d’affaires to the United States, says he will do everything possible to keep improving relations “with the precise instructions our President and the Venezuelan Foreign Affairs Ministry". (Veneconomy, 04-24-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34434&idc=1; El Universal, 04-24-2013; http://www.eluniversal.com/nacional-y-politica/130424/venezuela-appoints-calixto-ortega-as-charge-daffaires-to-the-us)

American filmmaker detained in Venezuela post-vote crackdown

A 35-year-old filmmaker from California has been arrested by authorities who are accusing him of fomenting postelection violence on behalf of the U.S. government. President Nicolas Maduro says he personally ordered Timothy Tracy's arrest on suspicion of "creating violence in the cities of this country." The interior minister said Tracy was working for U.S. intelligence, paying right-wing youth groups to hold violent demonstrations in order to destabilize the country after Maduro's narrow election win last week. Friends and family of Tracy say he has been in Venezuela since last year making a documentary about. The Georgetown University English graduate produced the recent Discovery Channel program "Under Siege," about terrorism and smuggling across the U.S./Canada border. He is the first American in recent memory to be detained in Venezuela on politically related charges. (Fox News, 04-25-2013; http://www.foxnews.com/world/2013/04/25/us-man-detained-in-venezuela-post-vote-crackdown-family-says-innocent-filmmaker/#ixzz2Ra0WOOjX) 

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.