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, November 1, 2013

November 01, 2013

Economics & Finance

Vice President says Maduro will soon announce economic decisions
Venezuela´s Executive Vice-president Jorge Arreaza claims economic players deliberately inject liquidity into the economy to create pressure and use it as a tool in the so-called economic war by entrepreneurs against the nation. He said the players have already been singled out and that soon President Nicolás Maduro would disclose their names, adding that Maduro will soon announce a set of economic decisions. He called on the population to support the national government in enforcing them. (El Universal, 10-31-2013;

Central Bank moves to absorb liquidity
In an effort to absorb liquidity, the Central Bank ordered an increase in bank reserve levels held at the Central Bank, and has now set longer terms  - 270 and 360 days - for transactions between itself and the banking system so that financial institutions hold on to papers and Bolivars are held in for a longer time. More in Spanish: (El Mundo,; El Universal,

Venezuela to create new "tourist" exchange rate
Venezuela will create a new exchange rate for tourists to buy up to U$D 10,000 of the local bolivar currency per year in a measure intended to help reduce black market trading, the government said in its official gazette. The announcement by the Finance Ministry and Central Bank said new foreign exchange counters would be established at airports and ports where foreigners enter the nation. There was no indication, however, of what price the dollars would be sold at. (Reuters, 10-31-2013;; El Universal, 10-31-2013;; Bloomberg,

Treasury obtained U$D 22 billion from the last devaluation
Last February's devaluation brought Nicolás Maduro's administration additional funds to pay wages and salaries, pensions, social programs commonly known as "missions," and additional expenditures by public institutions. Official Treasury statistics it received some VEB 140 billion (U$D 22 billion) from the adjustment. The devaluation came after
Public expenditure smashed record highs ahead of the vote to elect both president and governors in December and the nation closed 2012 with a gap of 15.6% in GDP. (El Universal, 10-31-2013;

Oil & Energy

Gasoline prices increased to VEB 20 per liter at border gas stations
PDVSA authorities responded to a request by Táchira state governor José Vielma Mora and increased the price of fuel at five border gas stations from VEB 12 to VEB 20 in order to fight gasoline contraband to Colombia. (El Universal;

Paraguay seeks to renegotiate oil debt with Venezuela
Paraguay is seeking to reschedule oil company PETROPAR's debt with PDVSA. Pedro Halley, an advisor to PETROPAR President Fleming Frutos says the request was made by the Paraguayan Foreign Office and that if Venezuelan authorities accept the proposal, the parties will enter negotiations for a year to set new payment terms. Halley explained the idea is to reschedule the debt, extending it to 15 years. (El Universal, 10-30-2013;

PDVSA set up the negotiation team for the 2013-205 collective bargaining agreement draft presented to the Labor and Social Security Ministry last September 18 by the Unitary Federation of Oil, Gas, and Byproducts Workers (FUTPV, after its initials in Spanish). The new agreement has 82 clauses. (Veneconomy, 10-30-2013;


FOREX allocation delay endangers wheat imports, bread and pasta production
The wheat processing industry remains in critical condition. Despite meetings with government officials there has been no speeding up of FOREX allocation for wheat imports and companies currently report 120-150 day delays, and in one case a full year without receiving a single dollar. The situation has become an obstacle to importing raw material, 50% of which goes to making bread, 20% for pasta, and 30% for biscuits and other products. Processors fear a new devaluation will increase their indebtedness to foreign suppliers, a situation which had led to suspending wheat dispatches to Venezuela. Price regulations on bread and pasta have not yet been adjusted to the two previous devaluations. Pasta processors and wheat mills have been warning of low inventories since August, and production had been sustained by companies borrowing wheat from each other, but there is no longer any stock to sustain this practice. More in Spanish: (El Universal,

Stop the presses: Newsprint shortage halts circulation of pro-government paper
A pro-government newspaper from Hugo Chavez's home state is the latest Venezuelan broadsheet to halt its presses as a shortage of newsprint has the government scrambling to guarantee supplies. Barinas-based newspaper De Frente informed readers it had run out of newsprint and stopped printing for a few days. The paper later returned to newsstands, but its publisher says it only has enough inventories to print for another week. It's the fifth regional newspaper to stop printing since July as 50% inflation and restrictions on dollar purchases to stave off devaluation make it difficult to import paper and other basic supplies. Even better-financed national publications have had to reduce page count and number of copies sold. (Fox News, 10-31-2013;

Monaca plants at Puerto Cabello been seized by National Guardsmen and workers have not been allowed access to their working place. No reasons have been given for the intervention. Workers claim they have not been paid in the last 12 weeks. The plants have 258 workers in the fixed roll and 60 under contract (tercerizados). (Veneconomy, 10-30-2013;

Two spoonfuls of baby formula are being sold for Bs.10 in Puerto La Cruz and other locations in Anzoátegui state. This is one of the options offered by small grocery stores due to permanent shortages. Street vendors are offering a can of the same baby formula at Bs.150 (vs. regulated price of Bs.90). (Veneconomy, 10-30-2013;

NESTLE negotiating repatriation of dividends
NESTLÉ Venezuela President Fausto Costa says the company is talking to authorities over ways of repatriating dividends obtained here, and "some way to show these results to stockholders". Costa made his remarks during a plant expansion ceremony at El Tocuyo, in Lara state. He says they have talked to authorities about increasing exports from Venezuela. More in Spanish: (El Universal,

International Trade

Margarita Free Port imports have dropped
Increasing difficulties in obtaining FOREX have led to a considerable drop in imports at Margarita's Free Port system as 2013 draws to a close. Teodoro Bellorín, President of the Nueva Esparta State Chamber of Commerce says that according to official data imports there through May were U$D 266 million, as opposed to U$D 398 million for the same period in 2012, and says the situation has been made worse by exclusing the Free Port from the most recent SICAD auction. Bellorin estimated tax free items sold at within the system will shrink by up t 60%. (El Universal;


Maduro challenges the opposition to call a midterm referendum
President Nicolás Maduro says that if the opposition wants to get rid of him it should collect signatures and call for a referendum at the middle of his six year term. He also said: "If a bourgeois government should come into the government some day it would not last 47 hours". (El Universal,

Opposition warns government may create incident to call off December 8th vote
Ramón Guillermo Aveledo, Executive Secretary for the opposition Democratic Unity Conference, says he has information that "the government is seriously considering provoking an extraordinary incident in order to suspend municipal elections on December 8th", and pointed to President Nicolas Maduro's insistence on the possibility. Aveledo says "the government fears December 8th because it feels it will lose polls point to that trend. It will have a lower popular vote. Opposition mayors will rule the majority of the nation's population; they will lose many mayoralties they now control". More in Spanish: (El Universal,

Pro-Maduro campaign incites violence against opposition leaders
Venezuela's president has been blaming the opposition, private enterprise, and alleged foreign intervention for scarcity, inflation and the high cost of living. Nicolás Maduro has called Henrique Capriles, María Corina Machado and Leopoldo López "the trilogy of evil" and they have become the center of all of Maduro's accusations at all recent events. Their faces are now depicted in sinister looking posters all over Caracas which read: "Recognize them: The trilogy of evil. They take away your light. They take away your food. They take away your peace. Enough violence." The words come from a Maduro speech at a recent rally, in which he shoped their photographs and also called them "enemies of the nation". Both Machado and López have called the campaign "pure fascism", and López compares it to Nazi campaigns in the 1930's. Opposition spokesmen warn this campaign endangers the lives of the three leaders. More in Spanish: (INFOLATAM)

Maduro claims Chavez's countenance appeared on a wall during subway excavation
President Nicolás Maduro has claimed the face of the late President Hugo Chavez appeared on one of the rocky walls of a tunnel being excavated in order to extend the Caracas Metro. He showed a photograph that purports to show Chavez, saying "who is in this face? a look, it is the look of the Fatherland that is everywhere"." He said a worker had shown him the photograph during a site inspection, and added: "my hair stands on end just retelling it". Caracas daily Tal Cual has recently editorialized: "We have never had a more rhetorical regime than this. True to the tradition, the successor has taken up the task and allocated funds to continue it. This seems to be his worst misfortune. His ADN lacks the verbal aptitude, the delirious imagination, the histrionic talent, or his predecessor´s arrogance". More in Spanish: (INFOLATAM)

Government seeks to tame 'Wild West' motorcycle chaos
Choking traffic, causing pileups and even ambushing drivers, Venezuela's hordes of motorcyclists are an increasingly high-profile problem for the government. Denounced in the media as a "plague," they provide essential, cheap transport but are often held responsible for anarchy on the roads and the terrifying number of homicides, kidnappings and armed robberies that beset the country. Many behave atrociously riding on sidewalks, knocking off mirrors as they weave in and out of traffic, and hurling abuse whenever challenged. Some are involved in much more serious offenses, including abductions and drive-by shootings. According to one study, as many as nine out of ten violent crimes in Caracas involve motorcycles. In recent months, funeral corteges of dozens of motorcycles have become regular flashpoints, with bikers creating gridlock in order to smash windows and rob drivers at gunpoint. Some see them as shock troops of the late Hugo Chavez, and for many of the "motorizados" Chavez is almost God-like. Bikers in socialist red T-shirts whip up support at Chavez rallies. "Motorizado" gangs have become notorious for attacks on an opposition TV station, and on opposition activists protesting at a square in Chacao. President Nicolás Maduro faces a huge test to crack down on the lawlessness often associated with the "motorizados" while still retaining their many working-class votes. "They're a problem," Interior Minister General Miguel Torres said, launching a strategy last month to control Venezuela's hundreds of thousands of bikers. "Not all of them, but there are lots who think they're in the old Wild West." A stuttering government effort to register motorcycles has recorded about 300,000 so far. Local business groups estimate there are about a million. (Reuters,

A total of 48 bench warrants for exchange-related malfeasance
Interior Minister General Miguel Rodríguez Torres says authorities have issued arrest warrants against 48 individuals allegedly involved irregular consignments of US dollars bought at the official exchange rate. He said the deals under investigations were made by members of the Lebanese community in Venezuela, particularly in Nueva Esparta state, and added that in the next few days the investigation would review consignments from Colombia and China. (El Universal, 10-31-2013;

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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