Economics &
Finance
Analysts say Venezuela to devalue Bolivar by stealth
Venezuela will look to weaken the bolivar this year
without making an official devaluation of the currency, as it tries to boost
revenue and narrow the budget deficit, according to a survey of analysts. The
nation will step back from formally devaluing the bolivar for the sixth time in
nine years, said eight out of 11 analysts surveyed by Bloomberg. The government
could instead restart an internal swap market for dollar-denominated bonds
after October, said Efrain Velazquez, partner in economic consultancy Azpurua
Garcia-Palacios & Velazquez. In that market, companies would be allowed to
trade bonds for dollars at a weaker rate to finance imports, he said. Caracas-based
Ecoanalitica calculates an alternative market could trade at about 15 bolivars
per dollar, more than double the official rate of 6.3 per dollar. “Such a market would be an implicit
devaluation, as it would improve the fiscal accounts of the government and
state oil company,” said Jose Luis Saboin, an economist at ECOANALITICA.
(Bloomberg, 06-26-2013; http://www.bloomberg.com/news/2013-06-26/venezuela-to-devalue-bolivar-by-stealth-analyst-survey.html)
Finance ministry: Second sale of US
dollars through SICAD will take place in July
Authorities have announced both a reduction in the waiting
time for acquiring US dollars and a re-launch of the Ancillary Foreign Currency
Administration System (SICAD). According to Finance Minister Nelson Merentes says
the waiting time for acquiring US dollars was cut in June from 223 days to 103
days, approximately. Merentes said key economic areas will be a priority within
the revamped SICA system, which can be allocated by geographic and economic
areas. (El Universal, 06-27-2013; http://www.eluniversal.com/economia/130627/finance-ministry-second-sale-of-us-dollars-through-sicad-in-july;
and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/merentes-ratifica-que-en-julio-se-pondra-de-nuevo-.aspx#ixzz2XVUOGZIK)
U$D 10 billion needed to reactivate
Venezuela's economy
Outgoing FEDECÁMARAS President Jorge Botti says
announcements by Minister Merentes are "positive", but adds that the
economy needs FOREX to go back to normal. "We need to inject much more
FOREX into the economy to get it started." He estimated at at least U$D 10
billion will be needed to pay foreign creditors, restart imports, and increase
production. More in Spanish: (El Universal, 06-28-2013; http://www.eluniversal.com/economia/130628/se-requieren-10-millardos-para-reactivar-la-economia)
Venezuela's capital outflows in 14
years estimated at U$D 200 billion
During Hugo Chávez's 14 year tenure in office (1999-2012)
and despite almost 10 years of foreign exchange controls (2003-2012), capital
outflow from Venezuela amount to some U$D 200 billion, according to Economist
Humberto García Larralde. He says price controls have historically failed. Referring
to the foreign exchange control policy, he said, "It does not aim at avoiding the outflow of foreign currencies or
protecting international reserves, but at the discretionary use of such
reserves in the hands of the public sector." (El Universal, 06-27-2013; http://www.eluniversal.com/economia/130627/venezuelas-capital-outflow-in-14-years-estimated-at-usd-200-billion)
Central Bank of Venezuela to define
optimum level of liquid reserves
Finance Minister Nelson Merentes says the Central Bank
and the Finance Ministry are establishing the adequate level of liquid
international reserves used to pay for imports, debts, and other liabilities.
"We are working on the reserves. The reserves must be above a certain
amount," Merentes said. Over 70% of total reserves are held in gold, and
the rest in cash. Based on Central Bank data, reserves were U$D 25.7 billion by
May, U$D 1.7 billion of them in cash. Official figures also indicate that
assets have continued diminishing and by June 25 international reserves were U$D
24.9 billion. (El Universal,
06-27-2013; http://www.eluniversal.com/economia/130627/central-bank-of-venezuela-to-define-optimum-level-of-liquid-reserves)
Foreign exchange for tourists discussed
Tourism Minister Andrés Izarra is meeting officials from the Central
Bank and the Foreign Exchange Administration Commission (CADIVI) to “fine tune” the foreign exchange
processes for tourists visiting the country. (Veneconomy, 06-26-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=35245&idc=2)
Commodities
PDVSA cut to B from B+ by S&P -
"Outlook Negative"
Standard & Poor's Ratings Services lowered its
long-term corporate credit and senior unsecured debt ratings on Petroleos de
Venezuela S.A. (PDVSA) to 'B' from 'B+'. The outlook remains negative. "Prior to this rating action we assessed the
company's stand- alone credit profile (SACP) at 'b+'. "We will reassess
PDVSA's SACP during the next 60 days in light of the recent sovereign downgrade
but the outcome will not affect our 'B' rating on PDVSA due to the company's
GRE (Government Related Entity) status and the likelihood of negative
government intervention under a sovereign distress scenario," said
Standard & Poor's credit analyst Fabiola Ortiz. (Latin American Herald
Tribune, 06-25-2013; http://www.laht.com/article.asp?ArticleId=820587&CategoryId=10717)
Processing at Amuay back at 77% of
installed capacity
Amuay, Venezuela's largest refinery with a processing
capacity of 645,000 barrels daily, has finally recovered its usual operational
levels after an explosion 10 months ago that claimed 40 lives and caused severe
physical damages. Facilities are operating at 77% capacity, which is within
average for the past few years, according to a report from the Paraguaná
Refining Center (CRP). (El Universal,
06-27-2013;
Gas stations on Venezuela-Colombia
border remain out of service
Gas stations within the Special Border Fuel Supply System (Safec) in Táchira
state remain closed after fuel sales were suspended almost a month ago. Normal gas
stations in the state are crowded with drivers trying to fill tanks, but additional
fuel is not provided. (El Universal, 06-26-2013; http://www.eluniversal.com/economia/130626/gas-stations-on-venezuela-colombia-border-still-out-of-service)
International Trade
Venezuela surpasses Brazil in 2012
weapons purchases
An IHS Jane's study called "The Balance of Trade" reports weapons
imports soared 16% in South America in 2008-2012, climbing from U$D 3.42
billion to U$D 3.96 billion annually. The report says Venezuela bought some U$D 1.2 billion in 2012, surpassing Brazil, the country with the largest defense budget in the region. The study indicates the trend may continue even after the death of President Hugo Chávez. (El Universal, 06-26-2013; http://www.eluniversal.com/nacional-y-politica/130626/venezuela-surpasses-brazil-in-purchases-of-weapons-in-2012)
Politics
Elections Board bars opposition
presence at downloading of data from polling machines
There has been a new clash between Venezuela's opposition
and the Election Board because the institution has refused to let opposition
technicians in during the downloading of data stored in voting machines used
during the April 14th Presidential election. Data stored in voting machines and
their memory sticks is being transferred to a closed server within the Board,
and opposition technicians do not know who has access to this data. More in
Spanish: (El Universal, 06-28-2013; http://www.eluniversal.com/nacional-y-politica/130628/cne-se-niega-a-aceptar-observaciones-de-la-mesa)
Capriles says taping Machado's
conversation was a crime
Opposition leader Henrique Capriles Radonski says it is
"incredible" that
Information Minister Ernesto Villegas and Caracas Mayor Jorge Rodríguez have
presented a tape recording as "proof
of a conspiracy". He says the only crime is that a conversation
between two people at the home of historian German Carrera Damas was taped by
the government. Capriles says the audio shows "Maria Corina Machado speaking of her vision on the ongoing process".
Government supporters presented a tape of Assemblywoman Machado telling the
historian that Democratic Unity Conference Executive Secretary Ramón Guillermo
Aveledo had told the US State Department that the only way out of the current
political impasse in Venezuela was a crisis, "a coup d'etat or a self coup (by the government)". Capriles
says "Ramón Guillermo Aveledo would
never propose a way out that is not established within the Constitution, which
is absolutely democratic"; and called "a violent way out" the "worst scenario" for Venezuela. More in Spanish: (Infolatam)
Venezuela, U.S. begin talks on restoring relations
As a first step to rebuild bilateral relations, Venezuelan
Charge d'Affaires Calixto Ortega has met with US Assistant Secretary of State
for Latin America Roberta Jacobson. The meeting took place three weeks after
Foreign Minister Elias Jaua met with U.S. Secretary of State, John Kerry, in
Guatemala. State Department spokesman William Ostick confirmed that Washington
has a strong interest in continuing high level contacts to bring bilateral
relations back to normal. (AVN,
06-26-2013; http://www.avn.info.ve/contenido/venezuela-us-initiated-dialog-restore-relations;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=821415&CategoryId=10717;
and more in Spanish: El Nacional; http://www.el-nacional.com/)
Maduro reasserts Venezuela's commitment to Latin America
During a visit to Haiti, President Nicolás Maduro said Venezuela will
continue "playing its role as liberating and uniting engine of a continent
which will be great and will have people living in prosperity. "Our
people, all of them, shall start counterbalancing each other to overcome living
conditions, education, health, culture. They have to be prosperous nations
which live in real, participatory, leading and people's democracy," said
Maduro at the end of a meeting with his Haitian counterpart Michel Martelly. (AVN,
06-26-2013; http://www.avn.info.ve/contenido/maduro-reaffirms-venezuela039s-commitment-latin-america)
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.