May 28, 2013

Economics & Finance

Inflation downturn is expected

Finance Minister Nelson Merentes says inflation is expected to slow down in the coming quarters of this year:"We will deliver more products, more goods for consumers and surely, the Central Bank will have be a currency policy coordinated between the private sector and the Government so as to reduce this year's impact," Merentes said. In fact, he said: "I think we will finish better than the way we started the first quarter. I think there must be a downturn by the second quarter." (AVN, 05-27-2013; http://www.avn.info.ve/contenido/inflation-downturn-expected-upcoming-trimesters)

Bolivar devaluation continues to pressure U.S. companies

Venezuela’s currency devaluation dented first-quarter earnings per share (EPS) and net profits for U.S. companies with operations or doing business within this market and Fitch Ratings believes pressure on the bolivar fuerte (Bs.F.) and potential incremental charges could continue. In first-quarter 2013, Ford recorded a U$D 186 million re-measurement loss in Venezuela; the re-measurement impact at General Motors (GM) was U$D 162 million while the re-measurement impact at Goodyear was U$D 115 million. GM also noted that another devaluation of the Bs.F. to the dollar would result in a U$D 50 million charge based upon the company’s Bs.F.-denominated assets and liabilities as of March 31, 2013. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=785235&CategoryId=10717)

Commodities

Pdvsa lost U$D 7.79 billion in refining and supply in 2012

Oil refining brought negative financial results to state-run oil firm PDVSA in 2012. The oil company's management report shows that refining, trade and supply, both locally and abroad, suffered a total operating loss of U$D 7.79 billion. This implies an astronomical spike of 851% in losses compared to U$D 819 million in 2011. Segmented data reveals that losses in refining, trade and supply in Venezuela alone were U$D 8.44 billion, which explains billion dollar losses in PDVSA's global refining activities. (El Universal, http://www.eluniversal.com/economia/130525/pdvsa-loses-usd-779-billion-in-refining-and-supply-over-2012)

CHEVRON extends PDVSA a U$D 2 billion credit to raise production to 127,000 BPD in Zulia

PDVSA and CHEVRON have signed a U$D 2 billion credit line in order to raise production at their PETROBOSCAN joint venture in Zulia State. The new agreement seeks to raise production from 107,000 BPD to 127,000 BP. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/pdvsa-y-chevron-elevar%C3%A1n-producci%C3%B3n-127000-barriles-campo-zuliano; http://www.avn.info.ve/contenido/pdvsa-y-chevron-suscriben-este-lunes-acuerdo-para-aumentar-producci%C3%B3n-petrobosc%C3%A1n; El Universal, http://www.eluniversal.com/economia/130527/credito-de-chevron-a-pdvsa-se-desembolsara-por-tramos; http://www.eluniversal.com/economia/130528/petroboscan-preve-elevar-186-su-produccion; El Nacional; http://www.el-nacional.com/; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/pdvsa-recibe-2-mil-millones-en-credito-de-chevron.aspx; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa-apalanca-produccion-de-crudo-con-fondos-de-l.aspx; http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa-recibe--2-000-millones-de-credito-de-chevron.aspx)

Schlumberger extends PDVSA U$D1 billion credit line

PDVSA will receive a revolving credit line of at least U$D 1 billion from oil services giant Schlumberger, the oil minister said on Friday. The deal will provide some financial breathing room for PDVSA, which as of last year had built up U$D 16.5 billion in debts to service providers as it focused on social spending at the expense of paying off industry-related debts. "What we are signing today is an agreement for a revolving credit facility...that will allow us to receive more services from Schlumberger," said Oil Minister Rafael Ramirez after signing the agreement with Schlumberger Chief Executive Paal Kibsgaard. (Reuters, 05-24-2013; http://www.reuters.com/article/2013/05/24/venezuela-schlumberger-idUSL2N0E51MA20130524)

Consecrating wine running scarce at Catholic churches, according to Archbishop Roberto Luckert, President of Venezuela's Episcopal Conference, who reports that wine used in communion ceremonies is running out and their key supplier has reported that they may not make further deliveries due to lack of ingredients. Archbishop Luckert reports the Church has no alternate suppliers and cannot import wine used for religious purposes because there is no FOREX available. President Maduro has acknowledged an "acute scarcity" and promises additional massive imports and more expeditious FOREX allocation. More in Spanish: (INFOLATAM)

Caribbean should trade Venezuelan oil for homegrown sun

Still recovering from last year’s Hurricane Sandy and the 2008 financial crisis, many Caribbean countries now face another threat: the possible curtailment of PETROCARIBE, a Venezuelan program that has kept their economies afloat with deals on discounted oil. Consider the case of Jamaica, which this month had to go to the International Monetary Fund for a U$D 932 million loan after rescheduling U$D 9 billion worth of domestic debt. With exports of bauxite and sugar down, fewer tourist arrivals and Sandy’s lingering costs, its economy has been shrinking. Unemployment hovers at 14%. Last year, public-sector debt was up to 140% of gross domestic product. (Bloomberg, 05-26-2013; http://www.bloomberg.com/news/2013-05-26/caribbean-should-trade-venezuelan-oil-for-homegrown-sun.html)

International Trade

Reserves available for imports estimated to cover only 21 days supplies

The SÍNTESIS FINANCIERA report says liquid reserves at the close of April stood at U$D 2.6 billion, which is the amount needed for 21 days worth of imports. The report adds that "the state of liquid reserves is critical in speeding up CADIVI FOREX allocations, as promised by the Government". More in  Spanish: (EL Universal; http://www.eluniversal.com/economia/130528/calculan-que-reservas-equivalen-a-21-dias-de-importaciones )

29.1% less FOREX will be allocated for imports in 2013

Central Bank President Edmée Betancourt says between 3-3.5 billion U$D per month for imports are enough to sustain a stable 3% growth rate. This implies dollar supplies will decrease 29.1% from last year, when $ 59.3 billion were supplied. More in Spanish: (El Nacional; http://www.el-nacional.com/economia/entregaran-divisas-importaciones_0_197980423.html )

Colombia offers to support Venezuela in meeting shortages

President Maduro expects trade between Venezuela and Colombia will increase over the next few months. He says a group of Venezuelan ministers are in now in Bogotá to seek agreements in this area. More in Spanish: (El Universal; http://www.eluniversal.com/economia/130528/colombia-ofrecio-apoyo-a-venezuela-para-superar-escasez; Últimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/negocian-con-colombia-reimpulso-comercial-para-pal.aspx)

Logistics & Transport

VEB 330 million were invested in Guanta Port modernization

Major General Hebert Josué García Plaza says some VEB 300 million were invested in modernizing Guanta Port in Anzoátegui State. More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/61893/330-millones-de-bolvares-invertirn--en-modernizacin-del-puerto-de-guanta)

Lack of shipping controls increases tax evasion

Hugo Mijares, President of the National Association of Customs Agents says that in recent years there has been no shipside checking, with cargo manifests must be relayed to tax authorities before a ship docks. More in Spanish: (El Nacional; http://www.el-nacional.com/economia/Falta-control-navieras-propicia-impuestos_0_197980371.html)

Politics

President Maduro says Venezuela to create new workers militia to defend homeland

Maduro has ordered the creation of a new workers’ militia to defend the country’s “Bolivarian revolution” at a time when the government faces economic problems and political turmoil. President Nicolas Maduro gave few details about the militia, including how many members it would consist of, but said it would be part of the Bolivarian Militia created by late President Hugo Chavez, which consists of roughly 120,000 volunteers. Analysts have said only about one-fourth of that force is combat ready. (The Washington Post, 05-24-2013; http://www.washingtonpost.com/world/the_americas/president-maduro-says-venezuela-to-create-new-workers-militia-to-defend-homeland/2013/05/24/7d47a676-c493-11e2-9642-a56177f1cdf7_story.html)

Supreme Court rejects recusations in Presidential election challenge

The Elections Chamber of the Supreme Court here has rejected two recusations presented by former candidate Henrique Capriles and the Democratic Unity Conference, against two magistrates who must decide the case. More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/130528/tsj-rechaza-recusaciones-en-la-impugnacion-del-14a)

IAPA concerned about freedom of expression in Venezuela

The Inter American Press Association has been reviewing conditions on freedom of expression in Venezuela due to recent events at GLOBOVISION, the suspension on of ATEL's licenses, and meetings by President Nicolás Maduro with the heads of VENEVISION, TELEVEN and GLOBOVISION. More in Spanish: (El Nacional; http://www.el-nacional.com/politica/SIP-preocupada-libertad-expresion-Venezuela_0_197980441.html)

Capriles charges new GLOBOVISION owners with vetoing his speeches, calling them "plugged in", a term he uses to identify those who benefit from Government largesse. He also says the Maduro regime wants to control "all media". The new Board of GLOBOVISION met recently with President Maduro and pledged the station will henceforth be "very sensible" in conveying information. According to Capriles, their agreement includes vetoing his live broadcasts. More in Spanish: (INFOLATAM)

López: Attorney General should target mafias feeding on the country's blood

In response to a subpoena served by the Attorney General Office on Friday, former Chacao mayor Leopoldo López lamented the decision of Attorney General Luisa Ortega Díaz to press charges against him over his past administration. "Attorney General, I can see the check behind this new accusation. You should take care of the mafias and cartels that are bleeding the nation dry," López twitted. (El Universal, 05-24-2013; http://www.eluniversal.com/nacional-y-politica/130524/lopez-attorney-general-should-target-mafias-feeding-on-the-countrys-bl)

2 US Embassy Officials Injured in Venezuela

A Venezuelan police official says a military attaché at the U.S. Embassy has been injured in a shooting outside a night club. The State Department said two U.S. officials were injured in an "incident" early Tuesday but gave few details. The police official said that Roberto Ezequiel Rosas was shot in the right leg during an argument outside a night club in the Chacao district of Caracas. She said he was taken to a local hospital. His condition was not immediately clear. The official spoke Tuesday on condition of anonymity because she was not authorized to release the information publicly. In Washington, State Department spokesman William Ostick confirmed that "two members of the U.S. Embassy in Caracas were injured during an incident early this morning." "Medical staff inform us that their injuries do not appear to be life-threatening," Ostick said. Crime is a serious problem for Venezuela, which has one of the world's highest murder rates. (The Miami Herald, http://www.miamiherald.com/2013/05/28/3420663/us-embassy-employee-shot-in-venezuela.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.