Economics &
Finance
Lowered FOREX availability and
increased liquidity swell parallel market rate
The jump in the black market exchange rate - a law
forbids divulging the rate - is impacting prices on most products because traders
use it to calculate their replacement cost. On March 26th, President Nicolas
Maduro announced his regime was ready to "completely twist the arm of the parallel dollar", but the
strategy applied has not met the challenge. SICAD, was created to replace SITME
and carry out FOREX auctions, but amounts offered have been too small to impact
the enormous demand in a parallel FOREX market. More in Spanish: (El Universal,
08-30-2013; http://www.eluniversal.com/economia/130830/menor-oferta-de-divisas-y-mas-liquidez-elevan-al-dolar-paralelo)
Rise in oil prices to reduce
Venezuela's US dollar deficit
Tension in the Middle East and a looming air attack on
Syria by the United States and allies has brought the Brent crude oil price up to
a six-month high with a significant impact on the Venezuelan oil basket, which
usually trades around 5% below Brent's. If the Venezuela oil basket price
stands at U$D 110 per barrel, as recorded on Tuesday, there would be a 10%
increase over the first half of the year. In other words, Venezuela would
receive an additional U$D 126 million weekly. (El Universal, 08-29-2013; http://www.eluniversal.com/economia/130829/rise-in-oil-prices-to-reduce-venezuelas-us-dollar-deficit)
Táchira Governor denies restriction
in sales of basic commodities in western Venezuela
José Vielma Mora, governor of the state of Táchira in
western Venezuela, denies having implemented "any sort of food rationing in the state. Nobody is authorized to sell
food and request identification cards." Vielma Mora urged citizens to
report to the Institute for the Defense of Persons in the Access to Goods and
Services (INDEPABIS) "any stores
requesting identification cards to sell basic commodities o minimizing sales,"
Globovisión reported. (El Universal,
08-29-2013; http://www.eluniversal.com/economia/130829/governor-denies-restriction-in-sale-of-basic-commodities-in-west-venez)
“There has been no
improvement in supply during the first semester", says CONSECOMERCIO President
Mauricio Tancredi. He also says he does not foresee a clear outlook in the
short term and questioned the Central Bank’s (BCV) GDP figures. “When one has an economy with shortages. When
you don’t have employment growth, but a radical labor law and scant access to
foreign currency, we do not see how there can be a 4.2 growth in the commerce
sector,” he said. (Veneconomy, 08-27-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=36049&idc=3)
August scarcity level projected to
be highest to date
As more items enter the scarcity list, EL MUNDO daily visited seven
stores and found no pasta or rice at any of them. Scarcities are becoming more
severe in items such as powdered milk, pasteurized milk, vegetable oils, sugar,
corn flour and margarine. Lack of supply continues in personal care products
such as toilet paper, sanitary napkins, etc. More in Spanish: (El
Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/preven-que-escasez-de-agosto-sea-una-de-las-mas-al.aspx#ixzz2dRqiKATt;
El Nacional; http://www.el-nacional.com/)
Commodities
ENI, Venezuela form JV to develop
Perla field
Italy's ENI has agreed with Venezuela to create a new
joint venture with state oil company Petróleos de Venezuela (PDVSA) to develop
the Perla super-giant gas field. The Perla field is one of the largest gas
fields discovered in recent years. PDVSA and ENI will establish a joint
venture, with ENI holding a 40%, to exploit Perla's condensate reserves, which
are estimated at 170 million barrels. Tests concluded in 2010 by ENI, PDVSA, and
Spain's REPSOL confirmed that the Perla 3x reservoir is up to 15 trillion cubic
feet gas in place, making it the largest in the country. (RIGZONE, http://www.rigzone.com/news/oil_gas/a/128739/Eni_Venezuela_Form_JV_to_Develop_Perla_Field;
(AVN,
08-29-2013; http://www.avn.info.ve/contenido/pdvsa-eni-create-jv-exploit-condensate-reserves; El Universal, http://www.eluniversal.com/economia/130828/pdvsa-to-establish-joint-venture-for-production-of-gas-condensate;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=974646&CategoryId=10717)
PDVSA and India's Reliance agree to increase production
Petroleos de Venezuela (PDVSA) and Reliance, India's
largest oil company, agreed to expand their trade relations by shipping up to
400,000 barrels of oil to the Asian country. The announcement was made by
PDVSA's president Rafael Ramirez, during a press conference attended by the
board of both companies. "Of that
possibility, of that volume, we've been currently shipping 320,000 barrels per
day to India, which makes our country a very important supplier with 12% of
total consumption in India," he said. (AVN, 08-29-2013; http://www.avn.info.ve/contenido/venezuela039s-pdvsa-and-india039s-reliance-agree-increase-production)
Fines have been eliminated for residential electric service bills by a resolution repealing each and every part of a prior resolution which
established extra charges on higher electric consumption. (August 26 Gaceta Oficial).
(Veneconomy, 08-28-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=36068&idc=3; El Universal, 08-29-2013;
http://www.eluniversal.com/economia/130829/limits-to-household-energy-consumption-eliminated)
International Trade
Venezuelan chemical companies owe
suppliers U$D 400 million
The Venezuelan chemical sector "is going through a very difficult situation," says Juan Pablo
Olalquiaga, President of the Venezuelan Chemical Industry Association
(ASOQUIM). Olalquiaga says debts by local chemical enterprises to foreign
suppliers abroad hamper raw material exports. In addition, "there are product lines seriously hit,
whereas others will run out soon," he said. The president of ASOQUIM
reported that the total debt accrued by the 155 companies registered in the association
amounts to U$D 400 million. "Since we have not paid suppliers, they will not ship us anything,"
he stressed. (El Universal,
08-29-2013; http://www.eluniversal.com/economia/130829/venezuelan-chemical-companies-owe-usd-400-million-to-suppliers)
Venezuela seeks 'fair price' for metals exports, traders see problems
Venezuela is hiking prices for its metals and minerals exports
in an effort to obtain a "fair price"
from buyers, but traders warned the move could leave the nation without buyers
for its most important non-oil exports. President Nicolas Maduro said the
system would boost revenue for metals including iron, steel and aluminum, while
reducing costly commissions paid to intermediaries and traders. (Reuters,
08-27-2013; http://www.reuters.com/article/2013/08/27/venezuela-mining-idUSL2N0GP01F20130827)
Logistics
& Transport
Colombian, Venezuela examine
cross-border points
Colombia-Venezuelan authorities met in Colombia's Arauca Department to
establish cross-border points and determine the state of access roads. The cross-border points established are in the Southern and Andean
region of Venezuela: Arauquita (Colombia)- La Victoria (Apure state
-Venezuela), Arauca (Colombia)- El Amparo (Apure -Venezuela), Puerto Carreño
(Colombia) - Puerto Ayacucho, Paso El Burro (Venezuela), Casuarito (Colombia),
and Puerto Ayacucho (Venezuela). The parties agreed to submit a report on the state
of the road infrastructure, including geographical location, the state of
roads, and a road maintenance schedule, by September 12th. (El Universal, 08-29-2013; http://www.eluniversal.com/economia/130829/colombian-venezuela-examine-cross-border-points)
Politics
Maduro caught between economic
moderates and radicals
Planning Minister Jorge Giordani and Finance Minister
Nelson Merentes are involved in a tough struggle within the regime headed by
Nicolás Maduro, who seems inclined to favor the pragmatic group (Merentes), as
opposed to the orthodox left wing faction (Giordani). Opposition legislator
Julio Borges says: "In economic
affairs there are players with different approaches, such as Merentes and
Giordani, sabotaging each other." Maduro maintains a radical discourse
towards the US and the opposition led by Henrique Capriles, but through
Merentes has begun a pragmatic turnaround on economic affairs.. Merentes has
increased his power within the government and remains as Vice President for
Economic Affairs. He has become the man Maduro listens to the most, got rid of
Giordani ally Edmée Betancourt as President of the Central Bank and had her
replaced with his own man, Eudomar Tovar. Merentes now controls the Finance
Ministry, Central Bank and CADIVI (Currency Board), and has begun talks with
the private sector, increased FOREX availability, begun reviewing prices on
controlled products, and started to put public finances in order. His largest
problem is that this approach has not yet shown results: Venezuela will barely
reach half of the growth forecast for 2013, 3% instead of 6%. Giordani, often
called "The Monk", was
Chavez's economic mentor and ran Venezuela's economy for 12 years through
archaic Marxist policies, including exchange and price controls. He maintains a
strong influence in the National Assembly, where a majority of pro-Chavez
legislators favor a more radical approach involving more controls and higher
taxes. His remaining key supporters are Industry Minister Ricardo Menendez,
Labor Minister María Cristina Iglesias, Housing Minister Ricardo Molina, as
well as high level officials such as Eduardo Saman, who runs the Consumer
Protection Agency (INDEPABIS). Rumors abound that Giordani will be removed as
Planning Minister and appointed to an embassy abroad. Should this happen,
Maduro will definitely lean toward the moderate and pragmatic group. More in
Spanish: (INFOLATAM)
Guyana grants an oil concession in Venezuela's border
maritime area
Guyana, without awaiting delimitation
of maritime and submarine boundaries with Venezuela, has granted a new concession
which impinges not only on the disputed area but also on Delta Amacuro State.
The so-called Roraima bloc was granted in June 2012 to the ANDARKO
multinational oil company, but its location had been kept secret. However, in a
presentation made by Guyana's Environment Ministry at an energy conference in
San Diego, California - a copy of which was obtained by El Universal daily -
the location is shown to be in the Atlantic maritime area of Delta Amacuro
state, which is not under discussion and is currently patrolled by the
Venezuelan Navy. More in Spanish: (El Universal, 08-30-2013; http://www.eluniversal.com/nacional-y-politica/130830/guyana-dio-otra-concesion-en-fachada-venezolana)
Maduro writes Barack Obama recommending
a peaceful solution in the case of Syria
He calls for a "twitter" campaign to Obama asking for
no military intervention. More in Spanish: (El Universal, 08-30-2013; http://www.eluniversal.com/internacional/130830/maduro-enviara-carta-a-barack-obama-para-que-evite-el-conflicto)
16880 candidates to run in December
municipal elections
The National Elections Council (CNE) says there will be 16880 candidates
in the upcoming December 8th municipal elections. The number includes 1,978 candidates for
mayor, the remainder for city council members and other municipal offices. More
in Spanish: (El Universal, 08-30-2013; http://www.eluniversal.com/nacional-y-politica/130830/para-las-elecciones-del-8d-participaran-16880-aspirantes)
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.
