May 24, 2013

Economics & Finance

Central Bank liquid reserves down to U$D 2.2 billion

At the close of April the Central Bank's balance sheet shows liquid international reserves are down to U$D 2.2 billion. These are reserves available for servicing foreign debt and imports made under the FOREX Committee (CADIVI). At the start of this year liquid reserves stood at U$D 3 billion. More in Spanish: (El Universal, 05-24-2013; http://www.eluniversal.com/economia/130524/las-reservas-liquidas-del-bcv-ascienden-a-22-millardos-de-dolares)

Production shutting down

Some industries that produce plastic containers, wood, paper, cardboard and aluminum have had to shut down production lines due to lack of inputs to FOREX scarcity, according to José Manuel González, President of the Packaging Industry Chamber. More in Spanish: (El Nacional, 05-24-2013;; http://www.el-nacional.com/)

Maduro stresses support for companies that seek to increase production

President Nicolás Maduro has stressed that the government will support businessmen interested in increasing production of goods and services in the country: "We can perfectly well develop a policy to walk together in developing the productive force of the nation. Without developed productive forces there is no socialism or anything else". More in Spanish: (AVN, 05-24-2013;; http://www.avn.info.ve/contenido/maduro-recalca-apoyo-del-gobierno-empresas-interesadas-aumentar-producci%C3%B3n-bienes)

The government will invest over U$D 2.4 billion in Guayana industries, says Venezuelan Guayana Corporation (CVG) President General Carlos Osorio: "Here we are investing over U$D 2.4 billion in order to strengthen the entire CVG system, and we will soon have results." More in Spanish: (AVN, 05-24-2013;; http://www.avn.info.ve/contenido/gobierno-bolivariano-invierte-m%C3%A1s-2400-millones-d%C3%B3lares-industrias-cvg; El Universal, http://www.eluniversal.com/economia/130524/inspeccionan-industrias-en-guayana-en-gobierno-de-calle)

Domestic debt soars 97.5% in three years

Although the Venezuelan oil basket price has stayed above the U$D 100 ceiling, the nation's debt has continued growing. According to data from the Finance Ministry, the government has relied on bonds issued within the local market, thus increasing its obligations by 97.5% in the past three years. By the end of March 2010, domestic debt was U$D 24.6 billion and in March 2013 it stands at U$D 48.6 billion. This total includes bonds issued by the Ministry of Finance, as well as operations by parallel funds. Total direct official domestic debt was U$ 5.2, which did not exist three years ago. (El Universal, 05-23-2013; http://www.eluniversal.com/economia/130523/venezuelas-domestic-debt-soars-975-in-three-years)

Central bank: Economy requires U$D 3 billion per month

The government seems willing to bring order into the foreign exchange administration system after admitting publicly that "ghost firms" have been sold US dollars in recent years at a preferential exchange rate.
Central Bank President Edmée Betancourt has confirmed that the bank has resources available the private sector, but they have to streamline the procedures and stop selling US dollars to the wrong actors.
In a meeting with health sector entrepreneurs, Betancourt estimated that the productive apparatus needs U$D 3-3.5 billion monthly, which is U$D 36-42 billion annually for imports, not the U$D 59 billion reported by the Bank in 2012. (El Universal, 05-23-2013; http://www.eluniversal.com/economia/130523/central-bank-venezuelan-economy-requires-usd-3-billion-monthly)

Business sees dire economy in 2013

Venezuela is slipping into high inflation and economic stagnation this year due to a shortage of hard currency and a decade-long weakening of domestic industry, the head of the country's main business group Fedecamaras said. It's President, Jorge Botti, says Venezuela could see no growth and even shrink as much as 3% with inflation of more than 30% even though the price of oil - Venezuela's main export - is seen steady near $100 per barrel. He said this year's expected "stagflationary" scenario is the result of an economic model built on oil-financed government spending, the backbone of the self-styled socialist revolution. (Reuters, 05-23-2013; http://www.reuters.com/article/2013/05/23/us-latam-summit-venezuela-economy-idUSBRE94M0QD20130523)

Entrepreneurs, gov't seek to streamline US dollar sale procedures

Commerce Minister Alejandro Fleming met with health sector representatives to try to streamline procedures for acquiring US dollars. Fleming said that a comprehensive assessment must be undertaken jointly to determine which steps are necessary and which are not in order to simplify procedures. He added that US dollar sales are under way pending within the Foreign Exchange Administration Commission (CADIVI). (El Universal, 05-22-2013; http://www.eluniversal.com/economia/130522/entrepreneurs-govt-seek-to-streamline-us-dollar-sale-procedures)

Supplementary appropriation for hygiene products

The National Assembly has passed a supplementary appropriation for the Ministry of Trade in order to acquire "hygiene products" (toilet paper) (Veneconomy, 05-22-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34838&idc=2; Reuters, http://www.reuters.com/article/2013/05/22/venezuela-shortages-idUSL2N0E219I20130522)

Commodities

Putin confirms Russia's strategic alliance with Venezuela

In a letter to President Maduro, Russian President Vladimir Putin has confirmed his nation's strategic alliance with Venezuela. In recent days this alliance has taken shape in the energy sector. His letter came at the same time ROSNEFT President Igor Sechin visited Venezuela. Joint projects mentioned:

• ROSNEFT will grant CVP (Venezuelan Petroleum Corporation) credit up to U$D 1.5 billion in order to develop such joint ventures as PETROPERIJÁ, PETROMONAGAS, PETROZAMORA, PETROMIRANDA y PETROVICTORIA, with ROSNEFT taking the lead in the two latter ones. Oil Minister and PDVSA President Rafael Ramírez announced a joint venture which will rise to U$D 1.832 billion this year, and the total by 2019 will be U$D 28.489 billion.

• PETROVICTORIA to pump 120,000 BPD in 2016. PETROVICTORIA, a joint venture between state oil company PDVSA and Russia's ROSNEFT, will start production in 2016 and reach 120,000 barrels per day, PDVSA said on Thursday. The joint venture will produce ultra-heavy crude from the vast Orinoco Belt, a large deposit of oil in the Orinoco River basin of southeastern Venezuela. Oil Minister Rafael Ramirez and Rosneft President Igor Sechin signed documents for the official creation of Petrovictoria, which must be approved by Congress.

• ROSNEFT and PDVSA to jointly develop the Róbalo gas field on the Gulf of Venezuela. The agreement signed calls for ROSNEFT to evaluate available geologic and geophysic information on the field, which is part of the Rafael Urdaneta Gas Project.

• PETROMONAGAS will increase crude oil production to 160,000 BPD. The Russo-Venezuelan joint venture will develop plans to expand production, says Minister Rafael Ramírez. He made his statement during a visit to the Jose Industrial Complex near Barcelona, in the Eastern state of Anzoátegui, which he toured along with ROSNEFT President Igor Sechin. Ramírez also said Sechin came with a delegation of industrialists who produce drills, as well as Russian service companies.sp?ids=44&idt=34838&idc=2; Reuters, http://www.reuters.com/article/2013/05/22/venezuela-shortages-idUSL2N0E219I20130522)

Logistics & Transport

Aircraft fleet has shrunk 52.3%

In 2009 Venezuela had a fleet of 130 commercial aircraft, but Julio Arnaldes, President of the Tourism Council says it is now down to 68. He said that the rest of the planes are inoperative and not likely to return to the air. "Therefore, we see the country constantly crowded airports. Not necessarily because of increased ticket demand, but there are very few aircraft to serve the number of passengers," he said, added that sometimes the number of aircraft flying reaches 50 routine screening those who have to submit the equipment or by the lack of spare parts. More in Spanish: (El Nacional, 05-24-2013;; http://www.el-nacional.com/)

Politics

SÚMATE demands speedy decision in election challenge

SUMATE has urged the Elections Chamber of the Supreme Court to render a speedy answer to the challenges brought by the opposition, which seeks to nullify the April 14th Presidential elections. More in Spanish: (El Universal, 05-24-2013; http://www.eluniversal.com/nacional-y-politica/130524/sumate-demanda-celeridad-ante-las-impugnaciones)

Municipal elections likely to be held on November 24

Venezuela is likely to hold municipal elections next November 24. Although the directors of the National Electoral Council (CNE) have not agreed on a firm date yet, CNE executives have been instructed to reschedule the elections using different scenarios, including November 24. This is the fourth time in the past 12 months that the CNE sets a date to elect 335 mayors, 2,835 counselors, 69 municipal representatives for the indigenous people, two mayors for the metropolitan areas, and 20 township counselors. (El Universal, 05-22-2013; http://www.eluniversal.com/nacional-y-politica/130522/local-elections-likely-to-be-held-in-venezuela-on-november-24)

President and Navy review test missile restored by Venezuelan technology

President Nicolas Maduro and members of the military high command attended the test of one of 18 Otomat Mk2 missiles acquired in the 70s and restored by Venezuelan technicians, with Cuban support. Maduro said that this project is part of the recovery of the FANB defense capability. Local media report Maduro took the opportunity to meet with National Assembly Diosdado Cabello, Defense Minister Diego Molero and former Vice President José Vicente Rangel, to review the scandal surrounding tape recordings of former TV anchorman Mario Silva speaking to a Cuban G2 agent, in which he reports conflicts among all four of these men. (AVN, 05-23-2013; http://www.avn.info.ve/contenido/president-and-navy-test-missile-restored-venezuelan-technology; El Universal, http://www.eluniversal.com/nacional-y-politica/130522/maduro-cabello-attend-military-activities-on-orchila-island)

Maduro to attend inauguration of his Ecuadorian counterpart

President Nicolás Maduro will attend the swearing-in ceremony of reelected Ecuadorian President Rafael Correa. It is not known when Mr. Maduro will travel to Ecuador. (El Universal, 05-23-2013; http://www.eluniversal.com/nacional-y-politica/130522/maduro-to-attend-inauguration-of-his-ecuadorian-counterpart)

Murder rate in Venezuela increased 13% in 2013, according to Venezuelan Violence Observatory NGO Chief Roberto Briceño León. He explained public policies are evaluated for their results and not for their intentions, and “if after 20 safety plans, what we get is an evolution from 4,500 murders in 1998 to 21,000 in 20012, the plans have been a failure.” (Veneconomy, 05-22-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34839&idc=1)

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.