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, April 30, 2013

April 30, 2013

Economics & Finance

Maduro facing an economy in distress
President Nicolás Maduro is facing an economy requiring urgent care and an economic scenario in critical condition. Soaring inflation and rising shortages are two of the most pressing problems. Maduro will also have to deal with a stagnating foreign currency-allocation system, considerable fiscal deficit and significant debt, regardless of sustained oil revenues. The energy crisis is another major issue that must be immediately addressed. Despite Maduro's charges of "sabotage" during the electoral campaign the truth is that power-generation deficiencies abound and lack of maintenance remains a harsh reality. (El Universal, 04-27-2013;

Central Bank to trade banking reserves for housing bonds
The Central Bank has approved a directive that allows for trading mandatory reserves within the banking system for certificates issued by the Simón Bolívar Reconstruction Fund for 2013, in order to finance official housing projects. Banks are required by law to 17 out of every 100 bolivars deposited, but they may now use these funds to acquire the special government papers. More in Spanish: (El Universal, 04-29-2013;

Giordani reported clinging to power
In his first official act President Nicolás Maduro separated the Finance and Planning Ministries, but his decree empowered the former joint Ministry to take up to 180 days to make the transfers effective. High official sources report that hard line ideologue Jorge Giordani is entrenched in his former post and office, applying the technicality to its full extent and setting off alarms within the team of incoming Finance Minister Nelson Merentes, who would have to wait 6 months in order to take full charge of a stagnating economy. More in Spanish: (El Comercio,


PETROBRAS says no more contacts with Pdvsa over refinery
Brazilian state-owned oil company PETROBRAS reported on Monday that no further contacts have been made with its Venezuelan counterpart Petróleos de Venezuela (PDVSA), since the extension expired on the original term of a partnership agreement to build a crude oil refinery in Brazil. A senior executive officer of the Brazilian oil company told Reuters that political instability in Venezuela might have driven its Venezuelan partner away from the talks on the construction of Abreu e Lima refinery, in Pernambuco, where Pdvsa was expected to have a 40% interest. (El Universal, 04-29-2013;

GRUMA vows to continue operating in Venezuela
According to GRUMA representatives, even though its facilities here are in the hands of government appointed receivers, the Mexican producer keeps on running the companies. They say "business remains as usual since expropriation". In its economic report for Q1 2013, GRUMA notes it was "stripped" of control over its subsidiaries Molinos Nacionales (MONACA) and Derivados de Maíz Seleccionado (DEMASECA). As a consequence it had to stop consolidating such assets together with those of the group in order to meet global accounting standards. (El Universal, 04-29-2013;; El Impulso, 04-27-2013;; CNN Expansión,

General Justo Noguera has been appointed new President of the Guayana Development Corporation, replacing Colonel Rafael Gil. He was previously chairman of the committee for control and follow up within basic industries and developed a positive relationship with labor representatives at SIDOR, ALCASA, VENALUM and CARBONORCA. More in Spanish: (El Mundo:

International Trade

Maduro pledges continued alliance with Cuba
Cuba and Venezuela signed cooperation accords on Saturday for 51 projects as President Nicolas Maduro, on his first trip to the island since his election, pledged to maintain the close alliance forged by his late predecessor, Hugo Chavez. Maduro said they would jointly spend U$D 2 billion this year on "social development," but it was not clear if he was discussing the 51 projects, few details of which were disclosed, or other works. His visit appeared aimed in part at allaying Cuban worries about post-Chavez relations with the nation that is Cuba's biggest ally and benefactor. Venezuelan oil and money help keep the communist-ruled island's troubled economy afloat and the governments have about 30 joint ventures, most of them in Venezuela. (Reuters, 04-28-2013;; AVN, 04-27-2013;; El Universal,; Latin American Herald Tribune,

Sixteen presidents to attend PETROCARIBE summit
A total sixteen heads of state and government will take part on the next Petrocaribe Summit, expected to be held on 4 May in Margarita island, says president Nicolas Maduro. (AVN, 04-29-2013;

Logistics & Transport

La Guaira port operations reported down 60% due to FOREX restrictions
Eduardo Quintana, Vice President of the Vargas State Chamber of Commerce estimates port operations at La Guaira have dropped 60% since "there is no easy and feasible way to acquire FOREX at the official 6.30 rate". He says customs agents and port operators are being hit by a paralyzed port system. He says government currency controls have smothered anything that might make private imports possible, and the only arrivals are for official activities; and reports companies are starting to cut down around 50% of their personnel. More in Spanish: (El Comercio;


Venezuela to audit votes without the opposition, Court challenge to follow
Venezuela's electoral body has said the audit of votes cast in the presidential election will start on 6 May. But it will not carry out the full recount demanded by opposition candidate Henrique Capriles, who appears to have lost narrowly to President Nicolas Maduro on 14 April. Capriles called the audit a fake, accusing the electoral council (CNE) of following the government's orders. CNE president Tibisay Lucena said Capriles' demands were "unfeasible". The opposition leader reacted angrily to her announcement on national television: "Again they think Venezuelans are fools! Without [comparing] the vote tallies, the audit is a fake!". He also wrote that it was "impossible that Mrs. Lucena would say anything against the order she was given" by the governing party. On Sunday, Capriles repeated that he would use "all the available instances" to fight Maduro's victory. He had already vowed to challenge it in the Supreme Court seeking to annul the election and allow Venezuelans to go back to the polls. (BBC;

Electoral officer: the election audit should dispel doubts
The National Electoral Council's sole independent member Vicente Díaz believes the electoral race was "unfair and anti-democratic," and therefore the Venezuelans questioning the results should be given the opportunity to conduct an audit. "We, as National Electoral Council, failed to ensure balance in this election (...) It is not the directors (of CNE) who have to be certain about the results, but voters, the country," Díaz said. (El Universal, 04-29-2013;

Vote gap between Capriles and Maduro down to 1,49 %
The Elections Board has divulged votes by Venezuelans abroad, which have tallied 53,845 (93.13%) for Capriles and 3919  (6.77%) for Maduro, thus bringing the gap between the two candidates to 1.49%. 21 polling stations abroad remain yet to be counted. More in Spanish: (El Universal,

Government and opposition trade accusations but hold off on escalating conflict
A postelection crisis appears to be setting into a slow boil in Venezuela, with the government and opposition trading bitter accusations but holding back for the moment from moves that would escalate into direct conflict. The government is threatening to jail opposition leader Henrique Capriles on charges of masterminding postelection violence but has given no indication it has any immediate intention of acting against him. Capriles, meanwhile, is boycotting an audit of the vote and plans to challenge his narrow loss in court. He is almost certain to lose in the government-controlled court system, but hasn’t hinted that he will call his followers to the streets anytime soon. (The Washington Post, 04-26-2013;

A ‘hard hand’ in Venezuela
Any doubt that Nicolas Maduro is taking his cues from Cuba should have been dispelled by events over the weekend. As Maduro huddled with the Castro brothers in Havana and recommitted Venezuela to the heavy subsidies that keep the Cuban economy afloat, his functionaries back in Caracas made two announcements: first, that a promised audit of the questionable election that ratified him as the successor to Hugo Chavez would be perfunctory, excluding the materials that the opposition says would show evidence of fraud; and second, that a 35-year-old U.S. filmmaker arrested last week on ludicrous accusations of espionage had been criminally charged. Timothy Tracy, a Hollywood-based documentary maker who spent several months interviewing Chavez militants and opposition students before he was abruptly arrested at the airport last Wednesday. Maduro and the regime’s propaganda apparatus are nevertheless portraying him as a sinister secret agent who was financing “violent groups” to provoke “a civil war.” That claimed Interior and Justice Minister General Miguel Rodriguez “would lead to the intervention of a foreign power to bring order to the country.” The real danger in Venezuela is that Maduro will follow up with a full-scale crackdown on the opposition. Government spokesmen have taken to calling Henrique Capriles, who challenged Maduro in the presidential election and demanded an audit of the results, a “fascist murderer”; the prisons minister said she has a cell waiting for him. On Saturday, authorities arrested a retired general, Antonio Rivero, who is known for his denunciations of Cuban infiltration of the Venezuelan military. Maduro keeps promising he will soon apply “mano dura,” or a hard hand — a phrase that has been a favorite of Latin strongmen. He and his Cuban tutors will likely watch to see if there is any substantial response from the Obama administration or other South American governments to the seizing of Mr. Tracy. If there is not, don’t be surprised to see Venezuela’s jails filled by Mr. Capriles and other political prisoners. (The Washington Post;

Capriles: Miranda is the only Venezuelan state that has not received funds
Miranda state governor Henrique Capriles Radonski has charged his state is the only one in the country that has not received central government funding a mandated by the Constitution. "There is an order being enforced, which is not to provide the mandated allocation to Miranda state," the governor complained, and strongly demanded the national government to make the funds available - saying his political and personal position should not be turned against the people of Miranda. He called the move a crime and called Maduro a coward for his actions. (El Universal, 04-29-2014; and more in Spanish: El Universal,

Spain would mediate in Venezuela, if asked, says Spanish Foreign Minister José Manuel García Margallo. More in Spanish: (El Universal, 04-30-2013;

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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