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 25, 2013

October 25, 2013

Economics & Finance

Maduro rules out lifting price and exchange controls
President Nicolás Maduro criticized Luis Vicente León, director of research firm DATANÁLISIS, for blaming price and exchange controls for the current domestic economic situation. "Do you want us to lift the (exchange) control and allow the sale of US dollars so you can swallow them, take them with you, and make the country go in bankrupt? Never ever!" Maduro remarked. (El Universal,

Government estimates 26-28% inflation rate in 2014
Finance Minister Nelson Merentes says the government’s “great challenge” is “to increase productivity” of staples consumed by Venezuelans. He estimated inflation rates in 2014 would be around 26-28% and pointed out inflation this year “is rather disturbed” and above the historic average of the last 13 years. (Veneconomy, 10-24-2013;; El Universal,

Opposition charges the government with doctoring budget numbers
The opposition United Democratic Conference (MUD) says the government's 2014 budget proposal is "as unreal" as the one this year. "The budget has been rendered meaningless and is no longer a valid reference in drawing up and applying public policy", they added. They say the GDP growth rate estimate of 4-6% "not only seems unreal, but also irresponsible". MUD also criticized the practice of "underestimating the price of oil", which is budgeted at U$D 60 per barrel while the real average year to date is U$D 102.53 per barrel, and forecasts that "fiscal imbalance" will lead to a devaluation of the Bolivar, which they expect to fall to VEB 10 to the U$D o "lower", and point to an inflation rate that is "underestimated" at 28% in the light of " anticipated devaluation, a drop in food production, and continued Central Bank monetary supply in order to finance the deficit". More in Spanish: (INFOLATAM)

Taxes will provide 57.4% of 2014 revenue
The proposed budget law for 2014 provides that the National Tax and Customs Administration Service (SENIAT) will provide 57.4% of the government´s. They expect to collect VEB 317 million in domestic taxes and customs. More in Spanish: (AVN;

CADIVI head José Khan says FOREX allocations for travelers will not be eliminated but adds that the institution will be re-structured to meet national priorities. In other words, dollars for travelers will be highly restricted. Khan assured they have guaranteed the enough FOREX for over 25,000 students abroad. (Veneconomy, 10-24-2013;; El Universal,

Oil & Energy

US trade deficit with Venezuela climbs as US oil imports drop
US crude oil imports in shrank 2.5% to USD 22.76 billion in August, as becomes the largest producer of hydrocarbons in the world, thanks to a technology upgrade for the development of bituminous sands. As a consequence, the US trade deficit with Venezuela soared 36% to U$D 1.46 billion, due to a reduction in crude oil imports from Venezuela. (El Universal, 10-24-2013;

Venezuela first in gas reserves within South America
Oil and Planning Minister Rafael Ramírez says Venezuela ranks first in South America on gas, with proven reserves of 196.4 trillion cubic feet (TCF) of gas. "We have 196.4 TCF and that places us comfortably, as the first South American country with gas reserves. Our country is also a gas giant and we will go through a process of incorporation of between 453 TCF of gas with our offshore gas opportunities," says Ramirez. (AVN, 10-23-2013;


Central Bank reports serious shortages for 16 staple foods
A Central Bank report on scarcity in Caracas shows there are severe shortages - above 41% - in 16 food products: corn oil (98.8%), powdered milk (84.3%), sugar (80.8%), precooked corn flour (73%), wheat flour (64.3%) and butter (58.4%). powdered and liquid skim milk, sunflower oil, mixed oils, peas, milk, beef, pasteurized white cheese and margarine are also in short supply.  More in Spanish: (El Universal,

Government uses up strategic food reserves to supply the market
President Nicolás Maduro says supply is being met by using up strategic food reserves that were imported at midyear. He said "it is important to complement national production in key items and recover strategic food reserves". More in Spanish: (El Universal,

Ramírez announces massive food staples import plan for the next two months to fight against shortages and inflation in the country. PDVSA Chief, Oil and Mining Minister and Vice President for the Economic Area Rafael Ramírez did not give details as to the products to import or the cost of the operation. (Veneconomy, 10-24-2013;; El Universal,

Scarce supply of materials and FOREX stifles the development of housing projects
Gilbert Dao, President of Venezuela's Construction Chamber, says "scarce primary supplies in the construction, along with the lack of FOREX" renders construction of housing projects unfeasible. Dao says that according to Central Bank data construction price increases include: wall and floor covering, 141%; concrete, 108% and clay, 100%. He adds that prices have been frozen for housing since October 2012. More in Spanish: (Noticias Venezolanas,

International Trade

Venezuela's government is paying cash for Colombian food
A 600 million trade flow with Colombia has started anew after Venezuela used PDVSA bonds to pay off debts to Colombian exporters of powdered milk, cattle, beef, margarine, palm oil and eggs. Colombian Finance Minister Mauricio Cárdenas says "we let Colombian exporters decide the form of payment directly with the Venezuelan government. PDVSA bonds are one option, but we know that many exporters are selling and taking cash payments only" from CASA, the unit within the Nutrition Ministry in charge of supplying Venezuelan supermarkets. More in Spanish: (Ultimas Noticias,

Brazil to supply Venezuela with beef and seeds
Agriculture and Land Minister Yvan Gil says Brazil will supply Venezuela with beef and seeds. "Primarily yellow corn and soybeans (will come from Brazil). Similarly, Brazil will support us to meet that 40% deficit of beef," says Gil. More in Spanish: (AVN, 10-23-2013;

Logistics & Transport

DIANCA work resumes after over one month
Workers at the National Shipyards and Docks (DIANCA) went back to work after agreed with PDVSA over collective bargaining talks for 2013-2015. Talks will begin next week in Caracas. More in Spanish. (El Universal,

Airlines submit cost reports to Venezuelan authorities
Humberto Figuera, President of the Association of Venezuelan Airlines, says recent inspections at Venezuelan airports do not adequately address alleged wrongdoings in the sale of plane tickets. He says that claims that airlines are limiting the sale of economic plane tickets in order to offer only the most expensive ones to users are "urban legends". After meeting with Venezuelan authorities, airlines are submitting their cost reports to the Venezuelan Civil Aeronautic Institute (INAC). (El Universal, 10-24-2013;


Experts see changes ahead for Mexico, Brazil, Venezuela
Three major Latin American oil-producing nations face different near-term policy prospects, ranging from reforms in Mexico to possible retreat in Brazil to near-total uncertainty in Venezuela, experts said during a conference on Energy in the Americas. “As we’re looking ahead to what might happen in these countries, what we’re really talking about is where they are headed politically,” said Jeffrey Davidow, a former assistant US Secretary of State for Western Hemisphere Affairs who now is a senior counsel at The Cohen Group. The government of Venezuela “is counting its days” yet remains attractive to some foreign oil companies, Davidow said. David Voght, managing director of consulting firm IPD Latin America adds: “The society is polarized, the electorate is divided, and Maduro must deal with heavy inflation, his legitimacy, a bad leadership team, growing criminal activity, and a divided military,” he said. Yet some multinational oil companies that left during Chavez’s presidency are considering coming back because Venezuela’s 297 billion bbl of crude and PDVSA’s production is increasing, but only with foreign companies’ help, he said. “In the Orinoco belt, there are several large projects with outside companies...yet PDVSA is having to import about 100,000 b/d of gasoline and other light products to dilute the heavy crude for export. It’s still very subject to governmental whims. PDVSA probably won’t achieve its goals because there aren’t enough human resources in it. It is moving, however.” (Oil & Gas Journal,

Maduro has named a Vice Minister for Supreme Social Happiness
President Nicolás Maduro announced that his office will take over more social programs ("misiones") and for this reason created the post of Vice Minister for Supreme Social Happiness. He named a former pro government legislator, Rafael Ríos, as Vice Minister. The President's office will now run 15 different social programs. 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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