May 07, 2013

Economics & Finance

Government fine tunes exchange and price policies

Pressured by the short supply in basic staples within the domestic market, business half-operating businesses for lack of inputs, and a cooling economy, the government is striving to improve FOREX allocations and pondering changes in price controls. President Nicolás Maduro recently said that Finance Minister Nelson Merentes will announce a plan for apportioning US dollars in order to end with "caseload" of unmet applications at the Foreign Exchange Administration Board (CADIVI). (El Universal, 05-04-2013; http://www.eluniversal.com/economia/130504/venezuelan-government-refines-exchange-and-price-policy)

Scarcities will not soon end

According to estimations by the ECONOMÉTRICA research firm, imports have dropped during Q1 2013, and it believes the trend must be closely monitored as "a severe contraction would mark the beginning of an economic recession", adding that "it will be difficult to abate shortages in the near term". More in Spanish: (El Universal, 05-07-2013; http://www.eluniversal.com/economia/130507/estiman-que-la-escasez-no-se-reducira-en-el-corto-plazo)

Central Bank is unlikely to pay debts to private sector

FEDECÁMARAS First Vice President Jorge Roig applauded moves to accelerate FOREX allocations,but said "the bad news we have is that operational reserves are very low".  More in Spanish: (El Universal, 05-07-2013; http://www.eluniversal.com/economia/130507/dudan-que-bcv-pueda-liquidar-deuda-con-sector-privado)

Merentes unable to overcome high risk perception

Finance Minister Nelson Merentes is on a crusade to improve negative perceptions on Venezuela's economy, but his meetings with the business community have not led to better bond ratings for either the government or PDVSA. Neither have they clarified what economic course the government will set. Three weeks after the recent Presidential elections sovereign and PDVSA bonds remain 4 points below their pre-election prices. According to a report prepared for Bank of America by analyst Francisco Rodríguez, "many multinationals have registered great losses due to devaluation, and this makes headquarters reluctant to increase financing to their subsidiaries."  Rodríguez adds that "as recession deepens, Maduro's approval ratings will continue downward and this will lead some in the opposition to become more confrontational". More in Spanish: (El Nacional, 05-07-2013; http://www.el-nacional.com/)

Commodities

PDVSA's accounts receivable soared 32% in 2012

State oil company PDVSA's annual report for 2012 reveals that its receivables soared 32% in 2012, from U$D 31.57 billion in 2011 to U$D 41.70 billion in 2012. The results were strongly influenced by government debts to PDVSA, which are mainly due to oil and byproducts supplied to foreign governments. Official debts are 74.5% of PDVSA's total receivables. (El Universal, 05-06-2013; http://www.eluniversal.com/economia/130506/pdvsas-accounts-receivable-soar-32-in-2012)

Oil and fuel exports rose, crude output slips

Venezuela's oil and fuel exports rose slightly in 2012 over the previous year even as crude production and refinery output slipped, the oil minister said on Friday, as the nation relied on imports to meet part of local fuel demand. Exports rose 4% to reach 2.57 million barrels per day (bpd) while oil production slipped 3% to 3.03 million bpd from 3.13 million bpd, state oil company PDVSA said. The total amount of oil processed by Venezuelan refineries dropped 13%. Oil Minister Rafael Ramirez said PDVSA last year imported refined products to supply the domestic market. He said it also imported naphtha to blend with extra-heavy crude from the vast Orinoco belt and exported the resulting mix. (Reuters, 05-03-2013; http://www.reuters.com/article/2013/05/03/venezuela-oil-idUSL2N0DK18820130503; Veneconomy, 05-06-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34558&idc=4)

PDVSA's partners could be out if they fail to boost production

Private-owned oil companies operating in partnership with PDVSA in traditional areas must meet the oil output increase ordered by the Ministry of Petroleum and Mining. If they fail to do so, their partnerships may be dissolved. Oil minister and PDVSA president, Rafael Ramírez says some small join ventures that were operating agreements must now become part of a single company to make them financially viable. (El Universal, 05-06-2013; http://www.eluniversal.com/economia/130506/pdvsas-partners-could-be-out-if-failing-to-boost-production)

International Trade

PETROCARIBE economic zone created

An agreement to create an economic region for investment, trade and common development among PETROCARIBE member states was approved during a presidential summit of the group, in order to solidify the energy, economic and finance stability in the region. President Nicolas Maduro and 19 delegations, agreed to begin working to create the zone, which extends scope of an alliance that was limited to oil affairs and now aims at "investing, trading to carry out joint productive, tourism projects." (AVN, 05-05-2013; http://www.avn.info.ve/contenido/petrocaribe-economic-zone-passed; El Universal, http://www.eluniversal.com/economia/130506/firm-results-expected-from-petrocaribe-zone-in-june)

Honduras and Guatemala added to the PETROCARIBE program

Honduras and Guatemala have been included in the Petrocaribe program, under which his country provides oil and natural gas on preferential terms. President Nicolas Maduro made the announcement Sunday as he hosted a PETROCARIBE summit bringing together Latin American and Caribbean leaders in Venezuela’s capital. (The Washington Post, 05-05-2013; http://www.washingtonpost.com/business/venezuelas-maduro-says-honduras-and-guatemala-have-been-added-to-petrocaribe-program/2013/05/05/505c63e2-b5c8-11e2-b568-6917f6ac6d9d_story.html)

Guyana to resume rice exports to Venezuela under new PETROCARIBE deal

Guyana says it will resume rice shipments to Venezuela following the renewal of a U$D 130 million rice-for-oil deal between the two countries. Agriculture Minister Leslie Ramsammy said Saturday that Guyana could export as much as 210,000 metric tons (231,500 tons) of rice in the next two weeks. He said he expects to travel to the Caracas in about a week to hasten the renewed PETROCARIBE deal, which offers fuel at preferential terms. (The Washington Post, 05-04-2013; http://www.washingtonpost.com/business/guyana-to-resume-rice-exports-to-venezuela-under-new-petrocaribe-deal/2013/05/04/9d94f706-b4d7-11e2-9fb1-62de9581c946_story.html)

Maduro to visit Mercosur nations this week

Venezuelan president Nicolas Maduro informed that he will start a formal call through Argentina, Uruguay and Brazil, member states of the Common Market of the South (Mercosur) next Tuesday, May 7. (AVN, 05-06-2013; http://www.avn.info.ve/contenido/maduro-visit-mercosur-nations-week)

Logistics & Transport

Port activities down 20-30% due to delays in accessing foreign exchange and bureaucratic processes to import goods. This situation has led to shortages of some products. The decline is hitting over 700 companies working in the port. More in Spanish: (El Carabobeño, 05-06-2013; http://www.el-carabobeno.com/impreso/articulo/58997/actividades-portuarias-cayeron--entre-20-y-30-por-ciento)

Politics

Dialogue begins at the National Assembly

Pro government and opposition legislators have begun talks in order to try to reach an agreement which will allow the National Assembly to function. Roberto Enriquez, President of the COPEI party had earlier said they would seek to renew debates "with no limitation whatsoever on what the Constitution mandates, and put an end to insults and most particularly, aggressions" that took place in recent sessions. More in Spanish: (El Universal, 05-07-2013; http://www.eluniversal.com/nacional-y-politica/130507/oficialismo-y-oposicion-abren-dialogo-en-la-asamblea)

Capriles brings additional challenge on election

Miranda Governor Henrique Capriles is bringing a new challenge against the recent Presidential elections to the Venezuelan Supreme Court. The former presidential candidate says he will bring additional proof on each of the charges made against the election, and added he has brought action "in view of the refusal of the Elections Board to carry out a full audit". More in Spanish: (El Universal, 05-07-2013, http://www.eluniversal.com/nacional-y-politica/130507/nueva-impugnacion-de-las-elecciones-presentaran-hoy)

Colombia protests Maduro references to former President Alvaro Uribe

Colombian Foreign Minister María Ángela Holguín called in Venezuela's Ambassador to Bogotá, Iván Rincón, to protest references by Nicolás Maduro toward former Colombian President Álvaro Uribe, whom Maduro he termed a "murderer" and accused of plotting to kill him. Earlier, Colombian President Juan Manuel Santos had instructed the Foreign Minister to establish diplomatic contact to uphold the "dignity" of the former President. More in Spanish: (El Universal, 05-07-2013; http://www.eluniversal.com/nacional-y-politica/130507/colombia-expreso-a-venezuela-inconformidad-por-tema-uribe)

Maduro begins tour of MERCOSUR

President Nicolas Maduro says a tour he is taking to Uruguay, Argentina and Brazil aims at strengthening food supplies for Venezuela. He says he will seek to ensure a three month supply of staples, including food, personal care, home and consumer products. More in Spanish: (AVN, 05-07-2013; http://www.avn.info.ve/contenido/ampliar-reserva-alimentaria-ser%C3%A1-tema-esencial-gira-del-presidente-maduro; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maduro-saldra-de-gira-internacional-para-buscar-al.aspx; El Mundo, http://www.elmundo.com.ve/Noticias/Economia/Internacional/Maduro-buscara-alimentos-en-su-primera-gira-intern.aspx)

Nicaragua owes Venezuela U$D 2.188 billion according to a report by Nicaragua's Central Bank, which shows the amount reflected under ALBANISA, a consortium created to manage Venezuela's funding. This makes Venezue1la Nicaragua's main creditor, for almost half of the Central American nation's public foreign debt. More in Spanish: (El Mundo, 05-07-2013; http://www.elmundo.com.ve/Noticias/Economia/Internacional/Nicaragua-le-debe--2-188-millones-a-Venezuela.aspx)

No democracy in Venezuela, according to 130 countries

Representatives of 130 Foreign Offices of nations considered democratic met last week at the Summit of the Community of Democracies in Mongolia. Venezuela was one of a small group of 16 nations not invited for failing to meet the minimum requirements. Nations attending are required to have free elections, uphold human rights, ensure freedom of the press and freedom of association are ensured, and enforce the rule of law. (El Universal, 05-06-2013; http://www.eluniversal.com/nacional-y-politica/130506/no-democracy-in-venezuela-according-to-130-countries)

Venezuela rebuffs Obama, repeats case against U.S. 'spy'

Venezuela brushed off criticism from U.S. President Barack Obama and maintained its accusation that an American detainee in Caracas is a spy pretending to be a filmmaker. During his visit to Latin America, Obama said the allegations against Tim Tracy, 35, were "ridiculous." But Interior Minister Miguel Rodriguez Torres insisted that intelligence agents tracking Tracy since late 2012 had uncovered ample evidence he was plotting with militant anti-government factions to destabilize Venezuela with violence. "When you want to do intelligence work in another country, all those big powers who do this type of spying, they often use the facade of a filmmaker, documentary-maker, photographer or journalist," he told state TV. (Reuters, 05-06-2013; http://www.reuters.com/article/2013/05/06/venezuela-usa-idUSL2N0DM0D520130506; El Universal, 05-06-2013; http://www.eluniversal.com/nacional-y-politica/130506/venezuelan-public-authorities-repudiate-obamas-statements; The Washington Post, http://www.washingtonpost.com/world/the_americas/obama-idea-that-american-detained-by-venezuela-is-a-spy-is-ridiculous/2013/05/04/1b2ae9f0-b4fb-11e2-9fb1-62de9581c946_story.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.