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.

Tuesday, August 20, 2013

August 20, 2013

Economics & Finance

Public debt projected at U$D 219 billion
Increased public spending and stagnating income continue to generate imbalances in public accounts here, forcing the government into added indebtedness. This year it is issuing debt through government agencies, further increasing its obligations. ECOANALÍTICA - a think tank - estimates public sector debt (central government, state-run oil giant PDVSA, other agencies and the Chinese Fund) will close the year at U$D 219.1 billion, slightly less than in 2012, but approximately 70.4% of Gross Domestic Product (GDP). (El Universal, 08-19-2013;

Maduro's plan is insufficient to stabilize the economy
According to EL UNIVERSAL daily steps taken by President Nicolás Maduro are headed in the right direction, but their implementation is incomplete. Although there has been renewed dialogue with the private sector, a system to increase FOREX availability has been established, and regulated prices have been adjusted; all is hampered by barriers that weaken their effects. (El Universal, 08-19-2013;

Bonds to be issued in the third quarter this year
Finance Minister Nelson Merentes has announced the launching of the National Public Debt Bond Placement Program during the third quarter this year in order to finance the national housing program, pay pensions and social security and debt repayment. Long term, 10 year bonds will be issued at fixed and variable rates in order to collect some VEB 1.6 billion weekly. More in Spanish: (Agencia Venezolana de Noticias;; Ultimas Noticias,; El Universal,

MOODY’s concerned by power vacuum since Chavez's death

MOODY's Investors Service says Venezuela’s B1 local currency rating and B2 foreign currency bond rating take into account growing macroeconomic imbalances and economic distortions, the result of the government’s unorthodox and unpredictable policymaking. "These policies reflect the highly discretionary exercise of governmental authority that very weak institutions have enabled," says MOODY’s in a new report. MOODY’s negative outlook on ratings since January 2013 points to the increased political uncertainty and risks to the Venezuelan economy following the death of former President Hugo Chavez. Moody’s explains the political transition in Venezuela has come at a particular challenging time for the Venezuelan economy, which over the past year has experienced marked deterioration in a number of key economic indicators, notably in the public sector deficit, the balance of payments, and the rate of inflation. (Latin American Herald Tribune, 08-16-2013;


Uruguayan oil company mulls joint venture with Venezuelan peer
Uruguayan state oil company ANCAP is looking into the possibility of establishing a joint venture with Petroleos de Venezuela (PDVSA) to operate two fields in the Venezuelan territory. ANCAP director Juan Gomez said that they were close to deciding on the merger (60% for Venezuela and 40% for Uruguay), adding that the issue will be defined during the year. "It's about working together to operate two fields, Chopare Central and Oveja," said Gomez. (BERNAMA:

Venezuela and Ecuador plan El Pacifico Refinery construction
Ecuadorian Foreign Minister Ricardo Patiño has arrived in Caracas for talks with his Venezuelan counterpart Elías Jaua over the building of El Pacífico Refinery, the largest in the Southern Pacific. More in Spanish: (Agencia Venezolana de Noticias;;

Venezuela oil rises to U$D 105.30
Venezuela's weekly oil basket rose 50 cents to U$D 105.30 as summer driving season and tensions in the Middle East increased oil prices in international markets. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending August 16 rose to U$D 105.30 from the previous week's U$D 104.80. (Latin American Herald Tribune, 08-17-2013;

Venezuelan government to increase agricultural subsidies
Yvan Gil, Minister of Agriculture and Lands, has announced an increase in subsidies to producers of white and yellow corn, soy, sorghum, and sugar cane. He said a U$D 150 fund has been set up in order to procure equipment for state-run enterprise AGROPATRIA and the Venezuelan Agrarian Corporation (CVA). (El Universal, 08-19-2013;

Government worried about heavy food outflows
Rafael Coronado, Nutrition Policy Vice Minister at the Nutrition Ministry says outbound border food contraband is hurting the supply of basic products domestically. "What fuels this is the difference in exchange rates between our currency and Colombia's, which creates a very large margin that generates improper negotiations that hurt supply - not only in border states but in all of Venezuela, when they take food out". More in Spanish: (Ultimas Noticias,; El Mundo,

International Trade

"New debt has been incurred with Colombian exporters" says Luis Alberto Russián, executive president of the Venezuelan-Colombian Economic Integration Chamber (CAVECOL). He adds that "issues have deepened because, instead of growing closer, we are drifting further apart". Russian says steps taken by Colombia to increase competitiveness, along with constant regulatory changes in Venezuela and "initiatives that fail to take into account economic efficiency," do not improve matters. (El Universal, 08-17-2013;

Venezuelan socialism aids US rice farmers
According to the US Department of Agriculture, during the first half of this year US rice exports to Venezuela were U$D 94 million, an increase of 62% from 2012. An article by Sara Schaefer published by The Wall Street Journal indicates that the policies of Hugo Chavez's socialist revolution have become "a source of income for capitalist systems he used to criticize". The article shows how for 14 years Chavez took the route of nationalizing large farms and controlling food prices which took Venezuela from being a rice exporter to being a rice importer. More in Spanish: (El Universal,

Logistics & Transport

Several parties are responsible for port delays
General José Gregorio Rojas, current General Manager of Puerto Cabello Port says "cosignatories, customs agents and carriers are also responsible for delaying ships at bay", and said an increase in bulk cargo is normal during the current season each year. He said port infrastructure has increased efficiency in loading and offloading operations, that there are now six precision scales operating, and improved information technology which lets carriers and cosignatories request vehicle passes, send loading orders and electronically monitor offloading. He said importers should plan purchasing in order to gain operational effectiveness: "without the support of carriers, cosignatories, and the owners of in bulk products we cannot have positive results in shipments." More in Spanish: (Bolipuertos,; El Carabobeño,; El Universal,

Nine REACHSTAKERS to increase La Guaira Port capability
Nine Swedish DRF 450 REACHSTAKER machines for container operations have arrived at La Guaira Port in order to improve cargo loading and offloading. This brings the number of RTG machines for Port operations to 26. More in Spanish: (Bolipuertos,


Showdown looms over decree powers plan
Venezuelan politicians traded insults over the weekend with a showdown looming in the National Assembly over President Nicolas Maduro's plans to ask for fast-track decree powers he says he needs to combat corruption. Maduro says he is ready to change "all the laws" if necessary to stamp out widespread graft that is denting his popularity with some core supporters. The opposition accuses Maduro of turning a blind eye to major corruption by his allies and of trying to use his campaign to distract voters from worries such as inflation, creaking public services and violent crime. Maduro's coalition is one vote short of the 3/5 votes required to grant special powers. (Reuters, 08-18-2013;

Public debate on corruption
President Nicolás Maduro says he will ask the National Assembly for an enabling law to combat corruption, and challenged the opposition to participate in a public debate to discuss the government’s nationwide anti-corruption campaign. The government has made over 100 corruption-related arrests in the last month, including several political and media figures associated with the opposition. Immediately, Julio Borges, the national coordinator of Primero Justicia, said the opposition would participate in a public debate on corruption, and called on the president to “tell us the time and location” for a discussion on national TV and radio.  According to Henrique Capriles, opposition leader and governor of Miranda State, recent anti-corruption efforts are a strategy to divert public attention from other pressing problems such as insecurity and inflation. Capriles’ offices are currently under investigation for corruption. (AMERICAS QUARTERLY:

Venezuela and Palestine draw closer
Foreign Minister Elías Jaua has met with his Palestinian counterpart Riyad Malki to discuss the situation in the Middle East, particularly the case of Egypt since the overthrow of Mohamed Mursi. More in Spanish: (Agencia Venezolana de Noticias;

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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