Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Friday, July 19, 2013

July 19, 2013

Economics & Finance

Fitch: Venezuela's foreign exchange policy faces challenges
Venezuela's foreign exchange (FX) policy adjustments in 2013 could reduce fiscal imbalances and limit the need of continued external debt issuance. However, the room to stabilize creditworthiness could be constrained by weaker external buffers, limited upside for oil revenues and non-debt capital inflows, a rapidly decelerating economy, and political changes, according to a new Fitch Ratings report. As a pillar of economic policy over the past 11 years, Venezuela's exchange rate regime continues to weigh on the country's creditworthiness. (Reuters, 07-18-2013;

Central Bank sells U$D 215 million at currency auction
The Central Bank says it sold U$D 215.3 million at an auction of its revamped currency exchange system that closed this week, and Finance Minister Nelson Merentes separately said auctions will be held every 15 days as the country seeks to boost the flow of dollars. Merentes said he expects Venezuela's high inflation rate to ease by August, adding that economic growth for the second quarter of this year would be higher than the 0.7% rate seen in the first quarter. In a statement, the Central Bank said U$D 180.5 million was allocated to local businesses and U$D 34.8 million to individuals. The sale was restricted to companies registered in two Venezuelan states and to firms in the automotive and health sectors. Officials say other sectors and states will be addressed in future auctions. Merentes offered an optimistic view on the economy, saying that inflation "is decelerating... We are going to see better results." he added. "Given this panorama, one cannot say we are facing stagflation." He declined to give an estimate for the annual inflation figure. (Reuters, 07-17-2013;

High end bidders left out of tender by Central Bank in an attempt to brake inflation
Financial sources say that in an effort to rein in inflation, the Central Bank ignored bidders willing to pay between 16 and 26 Bolivars for the U$D 215 million at the recent FOREX tender. Those who offered the most were not assigned dollars. A study by BARCLAY's shows that if the Bank had considered those willing to pay more it would have sold each dollar at 20 Bolivars, but chose not to validate such a high rate. More in Spanish: (El Universal, 07-19-2013;

Izarra expects tourism will bring in an extra U$D 2.5 billion
Tourism Minister Andrés Izarra believes an additional U$D 2.5 billion will come to Venezuela through tourists exchanging FOREX under regulations currently in the works. He says the exchange rate for tourists will follow the auction system recently undertaken by the Central Bank. More in Spanish: (El Mundo, 07-19-2013;

Government claims unemployment hits its lowest level in June, at 6.9%
According to the National Statistics Institute, June unemployment dropped beneath 7% for a historic low of 6.9%, down from 7.4% in June 2012 and 8.6% in June 2011. More in Spanish: (AVN, 07-19-2013;;; El Universal,; Ultimas Noticias,


Ramirez says Venezuela will export gas in 2014, gas tol replace liquid fuel at electric plants
Oil and Mining Minister Rafael Ramírez says Venezuela will be able to export gas in 2014, particularly to nations in the region such as Argentina and Brazil. He has also said PDVSA Gas is currently producing 7 billion cubic feet of gas, adding that gas supplied to electric plants will replace liquid fuel, particularly diesel. "We have replaced 40,000 BPD of diesel out of 160,000 BPD the electric sector currently consumes". Ramirez recalled that Venezuela's proven natural gas reserves are estimated at 196 billion cubic feet, with a potential above 300 billion cubic feet, which can certify the nation as the world's fifth largest gas reserve. More in Spanish: (AVN, 07-19-2013;; PDVSA,; Ultimas Noticias,; El Mundo,

Chacon claims electricity outages down 47%
Electric Energy Minister Jesse Chacon says electricity outages have been reduced by 47% nationwide and the goal is to bring them down to half by the second week in August. He said this progress was made possible by carrying out 90% of maintenance in relay stations, rehabilitating six underground cables in the capital region, among other initiatives; and added that consumption has been lowered by 430 MW out of a total goal of 1000 MW. More in Spanish: (AVN, 07-19-2013;; El Mundo,

Government criticized for funding electrification in other nations
Caracas city councilman Alejandro Vivas has blasted official plans to implement new electricity rates as Venezuela "has given away large amounts of money" to other countries in the region. He points out that since 2006, "the electric power crisis in the country has become worse," while U$D 200.3 million has been delivered to neighboring nations to finance "electrification plans and programs." Vivas said Cuba has been given U$D 20 million; Nicaragua, U$D 90 million for electrification of Managua and other cities; Uruguay, U$D 10.3 million; and Bolivia, U4$D 80 million. (El Universal, 07-17-2013;

Land Law is termed a "failure", has driven farmers out
Carlos Albornoz, Vice President of the FEDEAGRO Agrarian Federation says the Land Law has "failed" and merely "drove farmers out of the fields". Venezuela is currently meeting consumer demand through imports, such as 83% yellow corn and 40% whote corn, 50% beef, 70% dairy products, and 50% coffee. More in Spanish: (Ultima Hora Digital, 07-19-2013;

International Trade

Arreaza proposes Venezuela as China's entry point into MERCOSUR
Vice President Jorge Arreaza has begun an official four day visit to China by offering Venezuela as the Asian nation's "port of entry" into the MERCOSUR common market. Arreaza said: "We have the most important natural resources in the region despite being a country that is not so large, the largest oil reserves in the world, and one of the most important gas reserves". He has met which China's Vice President Li Yuanchao and with Hu Haibang, President of the China Development Bank. (El Universal, 07-19-2013;

Iran, Venezuela vow to boost economic cooperation
Meeting with Venezuelan Ambassador to Iran Amenhotep Zambrano, the head of the Iran-Venezuela Parliamentary Friendship Group, Abdolreza Mesri denounced the sanctions imposed by Western powers against Iran and Venezuela as "fruitless." "Mutual economic and commercial cooperation between the two countries can meet the interests of the two nations and improve their international position," he was quoted as saying. He also expressed the full preparedness of Iran's Majlis (parliament) and the members of the Iran-Venezuela Parliamentary Friendship Group to promote ties with the Venezuelan parliament. Zambrano, for his part, expressed Caracas' willingness to cement ties with Tehran in economic, industrial and commercial fields and hailed the two countries' scientific achievements. (XINHUA, 07-18-2013;


Santos-Maduro meeting seeks resuming dialog
As the Presidents of Colombia and Venezuela prepare to meet next Monday on the border town of Puerto Ayacucho, Venezuela's Amazonas state, Colombian President Juan Manuel Santos says: "There were some differences there which I believe came from some misunderstandings which can be easily explained". Santos says the two Presidents will "undertake a full a review of bilateral relations". Colombia´s Foreign Minister María Angela Holguín says the two leaders will discuss pending matters, including trade, border issues, security, energy, and fuel. More in Spanish: (El Universal, 07-18-2013;; and more in Spanish: INFOLATAM)

Capriles to meet with Chile's Piñera to seek support for compliance with UNASUR resolution
Opposition leader Henrique Capriles Radonski is scheduled to meet privately tomorrow with Chilean President Sebastián Piñera during his current visit to Chile and Peru seeking support for the enforcement of an UNASUR resolution which calls for a full vote recount in Venezuela's April 14th Presidential elections. Former Chilean President Michelle Bachelet, a leading candidate in her country's upcoming presidential elections said she will not meet with Capriles due to scheduling problems, but suggested he meet with one of her foreign policy advisors. Capriles said he came to remind all that the "commitment undertaken by Venezuela with UNASUR has not been honored". More in Spanish: (El Universal, 07-19-2013; and INFOLATAM)

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.

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