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, October 11, 2013

Economics & Finance

Venezuela to auction dollars weekly to fight shortages
Venezuela will increase the sale of dollars by starting weekly auctions in a bid to arrest the decline of the Bolivar on the black market and boost imports amid shortages of everything from toilet paper to chicken. The government will sell U$D 900 million in the coming weeks through an auction system that charges buyers more than the official exchange rate, says President Nicolas Maduro. Restricted dollar supplies have crippled imports in a country that buys 70% of its goods from abroad. The shortages have pushed inflation in the past twelve months to almost 50% and caused the Bolivar to lose 60% of its value against the dollar in the black market this year. The dollars will “complement any need the economy may have” through the end of the year, Maduro said, adding that he is revising the entire system of foreign exchange controls. The government will auction at least U$D 100 million a week, Maduro said, clarifying his earlier remarks that the government would sell U$D 900 million a week. "U$S $100 million a week is nothing,” says Russ Dallen, of Caracas Capital Markets in Miami, referring to previous supplemental currency systems closed by the government that sold as much as U$D 100 million a day. Venezuela’s international reserves have dropped to U$D 22.1 billion, the lowest level in almost nine years, according to data compiled by Bloomberg. “I don’t think this will increase the offer of dollars,” says BARCLAYS Plc analyst Alejandro Grisanti. “Instead, they’ll stop delivering one way to assign through SICAD at a higher price than the official dollar.”  “The decision has a positive fiscal impact, but it will not dampen the demand for foreign currency, nor lower the price of the dollar on the black market,” says Asdrúbal Oliveros, director of Caracas-based consultancy ECOANALITICA. Maduro has requested special powers from the National Assembly, and may use the decree powers to enact new foreign exchange laws, according to National Assembly Finance Committee president Ricardo Sanguino. Vice President Jorge Arreaza says the official exchange system known as CADIVI needed to be restructured, and National Assembly President Diosdado Cabello said "capitalism" has damaged the country’s currency controls.  “This is clearly too little, too late and obviously meant as a campaign gambit for the December municipal elections,” Dallen said, referring to the expanded dollar auctions. Annual inflation in Venezuela quickened to 49.4% in September, the highest rate among the 112 economies tracked by BLOOMBERG. The central bank’s scarcity index rose to 21.2%, meaning that one of every five staple goods were out of stock last month. (Bloomberg,

Government likely to cut US dollars sale to private sector
According to financial sources, this time the government plans to reduce the sale of US dollars to private entrepreneurs, and will establish a new agency to manage the country's imports for this purpose. According to Planning Minister Jorge Giordani, only the imports the domestic economy actually needs will be made. Once such goods are imported, they will be sold to certain companies in bolivars. (El Universal, 10-10-2013;

Another exchange adjustment is coming soon, according to ECOANALÍTICA Director Asdrúbal Oliveros. He adds that the new exchange system could be in place in December, establishing two or more parities. He says this implies an additional devaluation which could keep the VEB 6.3 rate for priority imports and another around VEB 10-11 to the U$D for the remaining imports, remittances and travel. He believed the dual system seeks to favor PDVSA, which can "liquefy costs through a higher FOREX rate, auctions or bond sales". More in Spanish: (El Universal,; El Mundo,

Food prices are up more than 70% from last year, according to data released by the Central Bank. September food prices rose 5%, for an accumulated 50.9% increase year to date in 2013. More in Spanish: (Ultimas Noticias,; El Mundo,

ECLAC: Foreign investment in Venezuela grew 44% during the first semester 2013
According to the UN Economic Commission for Latin America and the Caribbean, foreign direct investment in Venezuela grew 44% during the first half of 2013, up to U$D 2.736 billion from U$D 1.897 billion the previous year. Venezuela experienced the 2nd highest economic growth, after Mexico, in the region. More in Spanish: (AVN;; El Universal,; Ultimas Noticias,


PDVSA reported a failure in gas supply to Zulia state, after a gas pipe in the Maicao Municipality in Colombia was blown up by Colombian guerrillas on Wednesday morning. The state oil company said a contingency plan has been activated. (Veneconomy, 10-10-2013;; El Universal,

PDVSA has leased two secondhand SUEZMAX tankers from Greek broker
State oil company PDVSA has leased two secondhand oil tankers owned by a Greek broker, maritime sources said on Wednesday, and it plans to rent another two SUEZMAXES for its aging fleet which urgently needs vessels for long distance routes to Asia. PDVSA and Venezuela's official news agency said the first tanker, the Rio Arauca, which arrived in Venezuelan waters on Friday, came directly from the dockyard. But the vessel's registration documents show it is owned by Horizon Tankers, a company based in Greece. (Reuters, 10-09-2013;

Authorities and SIDOR workers reach a deal
The president of the Guayana Corporation (CVG), Carlos Osorio, has announced that government and workers at Venezuela's largest steel producer SIDOR agreed a payment schedule to meet commitments for collective bargaining, and that operations have resumed there after a 22-day strike. "Today we arrive happily at the end of this situation. After several working meetings we agreed to pay the arrears to workers of SIDOR for vacations, working hours, among other things," said Osorio on state media. (AVN, 10-09-2013;

Officials say the TUYERO Industrial Socialist Complex has been created to strengthen the industrial capacity in the manufacturing of plastic containers for the Venezuelan people.” (Veneconomy, 10-10-2013;

Logistics & Transport

Authorities are readying steps to meet international air transportation shortage
Francisco Paz Fleitas, head of the National Civil Aeronautics Institute (INAC) says an official strategy is being readied to meet the scarcity of airline tickets to international destinations, as well as fare increases of up to 300%. The Institute asked air carriers to provide their cost structures in order to analyze the situation. (Veneconomy, 10-10-2013;

Authorizations ("guides") for transporting corn and rice from storing silos nationwide have been suspended through March 31, 2014, as per a decision by the Agriculture and Lands Ministry. (VENECONOMY, 10-10-2013;


Nicolás Maduro requests enabling law for one year
President Nicolás Maduro has asked lawmakers at the National Assembly to grant him special ruling powers under an enabling law for one year. Only six months after the presidential election of April 14, Maduro requested the Parliament to give him special powers to take steps on the economic model, imposed, he claimed, by the "parasitic bourgeoisie" that continues "living off oil revenues and imports." (El Universal, 10-09-2013;; Bloomberg,; Fox News,; More in Spanish: CNN,

Venezuela, Paraguay work to restore ties
Foreign Minister Elías Jaua and his Paraguayan counterpart Eladio Loizaga have met in Paraguay to discuss the resumption of Venezuela-Paraguay relations. (El Universal, 10-09-2013;;

Elections Board chief exhibited a purported copy of Maduro's birth certificate
During a press conference, Elections Board head Tibisay Lucena claimed Nicolás Maduro "met all requisites" in order to be a candidate in the April 14th elections and displayed documents that she claimed are copies of his certified birth certificate. She dismissed allegations that he was not born in Venezuela. More in Spanish: (El Universal,

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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