June 18, 2013

Economics & Finance

Debt ratings lowered by doubts on economic plans

Standard & Poor's has lowered Venezuelan sovereign debt rating from B+ to B due to political turbulence that is blocking the reforms that would bolster a sagging economy.  The move by S&P is in line with a B2 note assigned by Moody's Investors Service and one step below B+ from Fitch Ratings. Both Moody's and Fitch share a negative outlook in their ratings, says Reuters. A release by S&P says "the lowered rating reflect the Government's decreasing room for maneuver in carrying out policies that stop the increasing drop in GDP, inflation, and weakening external liquidity". More in Spanish: (El Universal, 06-18-2013; http://www.eluniversal.com/economia/130618/dudas-sobre-plan-economico-afectan-calificacion-de-la-deuda; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/standard-and-poor-s-rebaja-nota-de-deuda-de-venezu.aspx)

Soaring inflation adds stress to the economy

President Nicolás Maduro claimed he would "tackle" inflation, yet a few days later the Central Bank reported a 6.1% spike in May's inflation. Cumulative year to date inflation rose to 19.4%, and has crushed any chance of meeting the 14% to 16% official target. Pedro Palma, former president of the National Academy of Economics, the economy is in a "prelude" for a drastic scenario and will require a "180-degree turnaround in economic policies." He warns: "what we have now is something similar the last months of Jaime Lusinchi's (1989) and Rafael Caldera's (1996) presidential terms". (El Universal, 06-15-2013; http://www.eluniversal.com/economia/130615/soaring-inflation-adds-even-more-stress-to-the-venezuelan-economic-mod)

Scarcities can take 3-6 months to overcome

FEDECÁMARAS President Jorge Botti believes scarcities will not be solved in two weeks, as claimed by Foreign Minister Elías Jaua. "It is impossible in two weeks, it can improve in three months, and be even better in 6 months", he said.  More in Spanish: (El Universal, 06-18-2013; http://www.eluniversal.com/economia/130618/estiman-que-escasez-puede-superarse-entre-3-y-6-meses)

Central Bank officer claims FOREX supply backlog has been relieved
Central Bank Director Armando León says FOREX allocations to small and mid size business have been met 100% and the remaining areas have been covered by 70%. He stressed that key areas such as food, staples, electric, and machinery have been covered by the Currency Board (CADIVI). More in Spanish: (El Mundo, 06-18-2013; http://www.elmundo.com.ve/noticias/economia/mercados/bcv-y-cadivi-logran-aliviar-la-tranca-de-dolares.aspx#ixzz2WZ2JBARm)

38 countries beat UN targets to halve proportion of hungry people by 2015

Thirty-eight countries have beaten a U.N.-imposed deadline of 2015 to cut in half the proportion of hungry people.

The U.N. Food and Agriculture Organization on Saturday recognized the 38 countries and urged those still working to meet the U.N. target to redouble efforts. The U.N. General Assembly in 2000 established a set of “Millennium Development Goals” for countries. The No. 1 target was to eradicate extreme poverty and hunger, including halving the proportion of hungry people by 2015. The 38 countries include: Algeria, Angola, Armenia, Azerbaijan, Bangladesh, Benin, Brazil, Cambodia, Cameroon, Chile, Cuba, Djibouti, Dominican Republic, Fiji, Georgia, Ghana, Guyana, Honduras, Indonesia, Jordan, Kuwait, Kyrgyzstan, Malawi, Maldives, Nicaragua, Niger, Nigeria, Panama, Peru, St. Vincent and the Grenadines, Samoa, Sao Tome and Principe, Thailand, Togo, Turkmenistan, Uruguay, Venezuela and Vietnam. (The Washington Post, 06-16-2013; http://www.washingtonpost.com/business/38-countries-beat-un-targets-to-halve-proportion-of-hungry-people-by-2015/2013/06/16/acc81bae-d697-11e2-ab72-3f0d51ec1628_story.html; Fox News, http://www.foxnews.com/world/2013/06/16/38-countries-beat-un-targets-to-halve-proportion-hungry-people-by-2015/)

Commodities

ENI confirms gas production at Perla by late 2014

ENI's President Paolo Scarioni has confirmed that the first phase at Cardón IV, a joint venture by Spain's REPSOL, ENI and PDVSA, will begin producing some 300 million cubic feet by year end 2014. PDVSA had previously said first phase production would begin in 2013. More in Spanish: (El Universal; 06-18-2013; http://www.eluniversal.com/economia/130618/eni-confirma-produccion-del-yacimiento-gasifero-perla-para-2014; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/gas/esperan-que-proyecto-de-gas-perla-produzca-300-mil.aspx)

Minister says National Steel Complex exceeds production targets this year

According to Industry Minister Ricardo Menendez, the National Steel Complex in Lara state exceeded production targets this year. He said rebar production is not 90% of the amount targeted for this year, and lamination is 103%, "which means we have surpassed the goals that were designed in the plan." (AVN, 06-14-2013; http://www.avn.info.ve/contenido/national-steel-complex-exceeds-production-targets-year)

Argentina's YPF to join DELTANA gas project

Argentina's state-controlled energy company YPF will join Venezuela's offshore Deltana Platform natural gas project along with state oil company PDVSA and U.S. oil major Chevron Corp, Venezuela's oil minister said on Friday. The Deltana Platform is a project to extract and export natural gas from fields believed to hold some 7 trillion cubic feet. Venezuela has made little progress in efforts to monetize offshore natural gas, and currently imports gas from neighboring Colombia even though it has much larger reserves. Oil Minister Rafael Ramirez, who signed the agreement with YPF President Miguel Galuccio, did not provide details on what percentage stake the Argentine company would hold. (Reuters, 06-14-2013; http://www.reuters.com/article/2013/06/14/venezuela-ypf-idUSL2N0EQ1BA20130614)

India lowers oil imports from Iran, buys more from Venezuela
India has cut its crude oil imports from Iran by 40% and is replacing them with shipments from Venezuela, Iraq and Omán. India's crude oil imports from Iran dropped 12% in May from the same time frame last year, according to data compiled by REUTERS. More in Spanish: (El Mundo, 06-18-2013; http://www.elmundo.com.ve/noticias/petroleo/industria/india-recorta-importacion-de-crudo-irani-y-compra-.aspx#ixzz2WZ2vIPeC)

Venezuela has sixth largest shale oil reserves

The International Energy Agency says global shale oil reserves stand around 345 billion barrels, 78% of which are in 10 countries. The Agency says half of these reserves are in Russia, followed by the USA, China, Argentina and Libya. Venezuela comes in 6th with shale oil reserves around 13 billion barrels, most of it in the Western state of Zulia, on the Colombian border. More in Spanish: (El Nacional; 06-18-2013; http://www.el-nacional.com/)

KIMBERLY CLARK will invest VEB 234 million to increase personal care product production

KIMBERLY CLARK Venezuela has met with Trade Minister Alejandro Fleming to outline investment plans that aim to increase production of toilet paper, sanitary towels and disposable diapers. Plans include an investment of VEB 234 million in the next 6 to 24 months. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/empresa-productos-higiene-personal-invertir%C3%A1-bs-234-millones-para-aumentar-producci%C3%B3n; El Universal, http://www.eluniversal.com/economia/130618/ejecutivo-descarta-comprar-mas-bienes-de-aseo-personal; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/empresa-gringa-invertira-en-venezuela-para-reducir.aspx)

Logistics & Transport

Shipping companies require assurances from state companies

The Government has become a large-scale importer, bringing business to shipping companies along with a fair amount of risk. As cases multiply such as that of the infamous PDVAL imports, where the state-owned company held on to containers for several years, shipping companies demand some type of "assurance" prior to doing business with state-owned enterprises. "Every time a state company makes a booking, shipping companies demand some sort of assurance," said the director of one of world's largest cargo companies. (El Universal, 06-15-2013; http://www.eluniversal.com/economia/130615/shipping-companies-demand-assurance-from-venezuelan-state-companies)

Politics

Cardinal says Pope should pressure Nicolas Maduro, and focus on democracy, coexistence

Cardinal Jorge Urosa, the Catholic Church's top spokesman in Venezuela, said he expected the pontiff to try to persuade Maduro during their meeting - held yesterday at the Vatican - to cease verbal attacks on political rivals and critics. He said Pope Francis should pressure President Nicolas Maduro to focus on promoting democracy and peaceful coexistence to ease tensions with the socialist government’s opponents. The cardinal said he hopes to see “increased serenity and impartiality in the president’s language” following the meeting. (The Washington Post, 06-16-2013; http://www.washingtonpost.com/world/the_americas/venezuelas-cardinal-says-pope-should-pressure-nicolas-maduro-focus-on-democracy-coexistence/2013/06/16/a7ce34b6-d6b1-11e2-ab72-3f0d51ec1628_story.html; Fox News, http://www.foxnews.com/world/2013/06/16/venezuela-cardinal-says-pope-should-pressure-nicolas-maduro-focus-on-democracy/; and El Universal, http://www.eluniversal.com/nacional-y-politica/130617/nicolas-maduro-meets-with-pope-francis-in-rome)

Venezuela court grants freedom for judge who angered Chavez; charges against her remain

Venezuelan authorities on Friday freed a judge who was arrested in 2009 after then-President Hugo Chavez objected to one of her rulings. Her case became a "cause celebre" for the opposition and international human rights groups. Dozens of supporters met Maria Lourdes Afiuni outside the apartment building where she has been under house arrest with cries of “freedom,” as she walked to the street without handcuffs or police escort for the first time in three-and-a-half years. Amid a few tears, she thanked the well-wishers for coming out, but declined to comment further since she’s still under a gag order not to discuss her case publicly. Instead the judge, her daughter and her lawyers went to a church to pray. (The Washington Post, 06-14-2013; http://www.washingtonpost.com/world/the_americas/venezuela-court-grants-freedom-for-judge-who-angered-chavez-charges-against-her-remain/2013/06/14/bf31de22-d54f-11e2-b3a2-3bf5eb37b9d0_story.html; El Universal, 06-14-2013; http://www.eluniversal.com/nacional-y-politica/130614/judge-afiuni-is-granted-conditional-release; Fox News, http://www.foxnews.com/world/2013/06/14/venezuela-court-grants-freedom-for-judge-who-angered-chavez-charges-against-her/)

Analyst Carlos Romero says: "The Maduro-Ramírez-Cabello troika is the one exercising the power"

Carlos Romero, a doctor in Political Sciences and professor at the Central University of Venezuela, presents a clear, yet moderate approach, and provides views that often contradict mainstream opinion. He disputes the view that there is an ongoing fight for power, saying: "Maduro and Cabello work hand in clove to sustain the power structure. "They and Rangel, Rodríguez, Jaua and others follow a common denominator". (El Universal, 06-15-2013; http://www.eluniversal.com/nacional-y-politica/130615/the-maduro-ramirez-cabello-troika-is-the-one-exercising-the-power)

Spain, Venezuela renew political dialogue

Spanish Foreign Minister Jose Manuel Garcia-Margallo and Venezuelan counterpart Elias Jaua had a meeting Friday in Madrid that proceeded “on very cordial terms,” the ministry said in a communiqué. The note said the meeting also served to re-launch a political dialogue. It was the first meeting between the ministers following the controversial results of April’s special presidential election in the Andean nation. Margallo and Jaua discussed the chief topics on the bilateral agenda, “agreeing to continue the political dialogue re-launched in this meeting,” the Spanish foreign ministry said. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=807984&CategoryId=10717)


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.