August 16, 2013

Economics & Finance

Maduro names third Central Bank president this year

President Nicolas Maduro appointed the third central bank president this year as his regime seeks to rein in the fastest inflation among the world’s major economies. Eudomar Tovar, a former central bank vice president and head of state currency board, was nominated by Maduro and approved by the National Assembly yesterday, the Information Ministry said in an e-mailed statement. “Tovar will give more coherence to economic decision-making because his vision is very close to that of Finance Minister Nelson Merentes,” Alejandro Grisanti, economist at Barclays Plc, said by phone from New York. (Bloomberg, 08-14-2013; http://www.bloomberg.com/news/2013-08-13/venezuela-names-third-central-bank-president-this-year.html)

BBVA believes Venezuela's economic outlook is the worst in the region

Studies by the BBVA Spanish banking group on the "Venezuela situation" and the "Latin America situation" show this nation has the worst economic outlook in the region. The banking group is projecting that Venezuela's economy will drop by 0.4% this year, and prices will rise by 43.9%, which will lead the nation into a cycle of stagflation which will be hard to overcome. "This poor economic situation is a huge challenge to authorities, and could even become an economic trap". BBVA holds shares in banks throughout the region, and is deeply familiar with it. More in Spanish: (El Universal, http://www.eluniversal.com/economia/130816/para-bbva-venezuela-tiene-las-peores-perspectivas-de-la-region)

Survey shows stagnating industrial activity

According to a survey by the National Council of Industries (CONINDUSTRIA) Industrial production dropped to slightly over 54% in the 2Q 2013. According to their poll, only non-metallic minerals activity grew. The seven remaining areas, including textiles, chemicals and foodstuffs plunged. Political uncertainty, foreign currency in short supply and scarcity of raw materials are the main hurdles for industrialists. "Stocks diminished in all sectors," says CONINDUSTRIA President Eduardo Garmendia. (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/survey-shows-stagnated-industrial-activity-in-venezuela)

Bank of America recommends investment in Caracas stock exchange

In his latest report on Venezuela's economy, Francisco Rodríguez, a Bank of America analyst, says foreign companies should consider investing a portion of the dividends they cannot repatriate in listed shares at Caracas stock exchange. "We think that the Venezuelan exchange system is unsustainable and we believe than sooner or later the government will have to accept a viable mechanism to repatriate dividends." (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/bank-of-america-recommends-investment-in-caracas-stock-exchange)

Commodities

PDVSA has had 15 events at refineries over the last 105 days

A minor fire that hit last Tuesday night a unit of Cardón refinery, located in Paraguaná, is the third major event in the refining circuit within three days and underlines deteriorated maintenance in plants at state-run oil holding Petróleos de Venezuela (PDVSA). The flames at Cardón struck the High Vacuum Unit 3 (AV-3) and caused "slight injuries" to two workers. Refinery workers said the event took place once the AV-3 tower had been fed. The flames appeared on top in the tower. The fire was easily put up by closing the "large residue" input. (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/pdvsa-has-experienced-15-events-in-refineries-in-the-past-105-days; Reuters, http://www.reuters.com/article/2013/08/14/venezuela-refinery-idUSL2N0GF0CA20130814)

Electricity emergency extended for 90 days

The state of emergency within Venezuela's electrical grid was extended by decree for 90 days starting July 21, 2013. The official statement says ""while an outstanding effort has been made by several parties within the national electrical grid to enlarge generation and diminish blackouts, some more work is needed to overcome the state of emergency, taking steps to improve the system reliability." (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/electricity-emergency-in-venezuela-extended-for-90-days)

Over a million tons of food distributed over four months

Manuel Barroso, President of the Corporation for Supplies and Agricultural Services (CASA) says they have sent over a million tons of food to distribution networks and stores over the past four months. He also said two processing plants are currently packaging milk to supply state-run institutions and private companies nationwide. (AVN, 08-14-2013; http://www.avn.info.ve/contenido/one-million-tons-food-distributed-four-months)

Politics

Maduro says he will overhaul government, requests special powers

President Nicolás Maduro has said he will organize a team to overhaul all of the ministries. "We are going to completely overhaul the national government's organization", and asked Cabinet members to point out inefficiencies and corruption. He also insisted on the need to seek special powers from the National Assembly in order to fight corruption. His aim is to reform laws so that "maximum penalties" are applied in such cases. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Maduro will travel to China

President Nicolás Maduro announced he will soon travel to China to meet with Chinese President Xi Jinping and "ratify our complete alliance on all areas of economic, social, cultural, political, technological and diplomatic cooperation". (AVN, 08-16-2013; http://www.avn.info.ve/contenido/maduro-planea-viajar-china-para-ratificar-alianza-estrat%C3%A9gica-e-hist%C3%B3rica)

Colombia-Venezuela Border Commission has been re-launched and will meet in Bogotá next September 2nd for the first time since 2009. The meeting will allow members to become acquainted with each other and evaluate the possibility of renewing talks on fixing maritime and submarine boundaries and other matters. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/130816/reactivan-la-comision-de-limites-colombo-venezolana)

Venezuela politics soiled by sordid claims, gay slurs

From allegations of gay and transvestite prostitution rings to homophobic slurs flying in the National Assembly, Venezuela's polarized politics has taken a distasteful turn. With tempers fraying as President Nicolas Maduro vows to crack down on corruption, pro-government lawmakers demanded this week that their opposition rivals be investigated for, among other things, money laundering and cocaine trafficking. (Reuters, 08-15-2013; http://www.reuters.com/article/2013/08/15/us-venezuela-sleaze-idUSBRE97E13O20130815; The Washington Post, http://www.washingtonpost.com/world/the_americas/governing-party-legislator-hurls-homophobia-laced-attack-against-venezuelas-opposition/2013/08/14/235a9948-0548-11e3-bfc5-406b928603b2_story.html)

Spanish gov't amenable to dialogue with Venezuela

The Spanish government is insisting on clearing the way for an agreement with the Venezuelan government and says it respects State's right to nationalize businesses, provided that international law is observed and the appropriate fair price is paid. (El Universal, 08-14-2013; http://www.eluniversal.com/nacional-y-politica/130814/spanish-govt-amenable-to-dialogue-with-venezuela)


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.