November 05, 2013

Economics & Finance

Government says it is preparing an "Economic Offensive Plan", again

President Nicolás Maduro now says an "Economic Offensive Plan" is being prepared and will be announced in some two weeks. Previously, Executive Vice-president Jorge Arreaza announced that the President would announce a set of economic steps, and called on the people to help Maduro enforce them. About a month ago, Rafael Ramírez, Vice President for Economic Affairs said serious economic decisions were on their way. (El Universal, 11-04-2013; http://www.eluniversal.com/economia/131104/venezuelan-executive-office-prepares-economic-offensive-plan)

Domestic and foreign debt payments will eat up a fifth of the 2014 budget, a larger share than that allocated to social expenditure, according to an analysis by "La Verdad" regional daily. Allocated capital and interest payments are 22% of the total amount of expenditure planned, which is VEB 552 billion. (Veneconomy, 11-04-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=36997&idc=2)

2014 Budget proposal only covers government expenses through May

According to Mercedes de Freites, Director of Transparency Venezuela, the Draft 2013 Budget Law estimates VEB 552.6 billion for expenditures, which is 63 less than real expenses in 2013, including extraordinary expenditures. "When we count additional credits, total expenditures for 2013 through October are VEB 635.7 billion", which means amounts budgeted in the Draft Law will only cover government expenses through May next year. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Presupuesto-cubrira-gastos-gobierno-mayo_0_294570821.html

Lower income tax revenue is projected in 2014

The 2014 Draft Budget Law shows tax income from individuals will drop 62%. Down to VEB 4.4 billion from this year's VEB 11.8 billion. This shows individual buying power is being hit by inflation. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131105/preven-menos-ingresos-por-islr-de-personas-naturales

Industry is paralyzed by labor strife

Food production remains threatened by labor strife and absenteeism that lower productivity and increase losses, while the Labor Ministry does not respond to their complaints. Unplanned stoppages generally due to conflict with unions have become the key obstacles to industries that are faced with the loss of raw material and miss production goals. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131105/industrias-de-manos-atadas-por-la-conflictividad-laboral )

Cabello says: "We will take over any company that stops "

Diosdado Cabello, President of the National Assembly, called on unions and the pro-government militia to be alert to any attempt by the opposition to alter the nation's economy. "We will take over any company that stops", he said. (Últimas Noticias, Video, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/video---cabello-empresa-que-se-pare-vamos-a-tomarl.aspx )

Squeeze yield from PDVSA: buy 2014, short 2022 debt-Credit Suisse

Investors looking to squeeze more yield out of debt issued by Petroleos de Venezuela (PDVSA), should look to buy bonds maturing in 2014 and short bonds maturing in 2022, Credit Suisse said on Monday. Venezuelan government debt yield spreads have widened precipitously over the last 3-1/2 years, although they have stabilized from their worst levels in the first quarter of 2013, according to JPMorgan data. (Reuters, 11-04-2013; http://www.reuters.com/article/2013/11/04/venezuela-debt-trade-idUSL2N0IP14E20131104)

Venezuela stock market up 24% for week -- up 454% for the year

Caracas shares are gapping up sharply and this week the Caracas Stock Index rose 503,005 to 2,611,562 for the week ending November 1. Everything that wasn’t nailed down went up as the market rallied 23.85% in one week. The Venezuela Stock Market is now up 453.96% for the year to date in bolivar terms, though only 278.11% in official rate dollar terms because of a February devaluation, but still making it the best performing stock market in the world. (Latin American Herald Tribune, 11-03-2013; http://www.laht.com/article.asp?ArticleId=1145054&CategoryId=10717)

Oil & Energy

Venezuela seizes US-owned oil rigs in dispute

Venezuela is quietly seizing control of two oil rigs owned by a unit of Houston-based Superior Energy Services after the company shut them down because the state oil monopoly was months behind on payments. The seizure started Thursday after a judge in the state of Anzoategui entered a Superior depot and ordered the company to hand over the rigs to an affiliate of state-owned PDVSA. PDVSA in a court document obtained by The Associated Press calls the expropriation essential to Venezuela’s development. Greg Rosenstein, head of corporate development, says “We were surprised by the takeover as we have had a cordial relationship with PDVSA ... We continue to work with PDVSA and the Venezuelan authorities and look to resolve this issue soon.” The so-called snubbing units have a combined value of about U$D 1 million and Superior’s total assets in Venezuela have a combined book value of about U$D 2 million, Rosenstein said. (Bloomberg, 11-04-2013; http://www.bloomberg.com/news/2013-11-04/superior-energy-equipment-seized-by-pdvsa-in-venezuela.html; Reuters, http://www.reuters.com/article/2013/11/04/oil-venezuela-superior-rigs-idUSL2N0IP1MB20131104; and The Washington Post: http://www.washingtonpost.com/world/the_americas/venezuela-seizes-us-owned-oil-rigs-in-dispute-over-unpaid-bills/2013/11/01/c98c8d86-434f-11e3-b028-de922d7a3f47_story.html)

PDVSA ships seized over U$D 70 million in unpaid bills

State oil company Petroleos de Venezuela (PDVSA) was forced to pay U$D 70 million into a London court after its ships were arrested over unpaid ship charters. CH Offshore, Ltd., a Singapore-based ship owner, chartered two ships to PDVSA beginning in 2008. The Amethyst and Turquoise were anchor handling and supply vessels and CH agreed to charter them to PDVSA in 2008 for U$D 50,000 a day each. In 2009, as the financial crisis began to bite and oil and charter rates collapsed, CH agreed to lower the daily rate to just over U$D 40,000 a day for each ship. CH renewed the yearly contract earlier this year but PDVSA had not paid a total of U$D 68,257,203.96, according to court filings in London and Miami. Court records reveal that PDVSA has yet to file a response in London, but CH released a statement saying that after it arrested the Venezuelan state oil company's ships, PDVSA agreed to pay U$D 70 million. "The Company had arrested vessels belonging to PDV Marina as security for its claim," said CH Offshore's Board Secretary Valerie Tan May Wei. "PDV Marina has made payment of US$70 million into court as security for the Company's claim including interest and costs. Accordingly, the Company has released PDV Marina's vessels." CH did not say how many PDVSA ships were arrested nor where the arrests took place. Simultaneously, CH filed suit in Florida to find any PDVSA assets in the United States, and garnished $93,108.52 at Wells Fargo Bank belonging to oil service company Astivenca Astilleros De Venezuela, with whom PDVSA has a close relationship and had subleased the ships. (LATIN AMERICAN HERALD TRIBUNE: http://www.laht.com/article.asp?CategoryId=10717&ArticleId=1089801)

Venezuelan oil drops to U$D 95.10

Venezuela's weekly oil basket continued falling below the country's desired U$D 100 a barrel floor as well-supplied stocks reduced demand for oil. This was Venezuela's 9th straight week of falling prices. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending November 1 was U$D 95.10, down U$D 0.66 from the previous week's U$D 95.76. (Latin American Herald Tribune, 11-02-2013; http://www.laht.com/article.asp?ArticleId=1141791&CategoryId=10717)

Guatemala rules out adhesion to PETROCARIBE

Guatemala´s Vice President Roxana Baldetti says that nation ruled out adhesion to PETROCARIBE, a Venezuelan initiative that allows countries in the region to buy Venezuelan oil under favorable terms and conditions. She said the decision was made after failing to reach the agreements Guatemalan President Otto Pérez was trying to negotiate. The Central American nation tried to negotiate interest rates below 2% on oil bills. (El Universal, 11-04-2013; http://www.eluniversal.com/economia/131104/guatemala-rules-out-adhesion-to-petrocaribe)

International Trade

Venezuela, Colombia develop infrastructure plans

The governments of Colombia and Venezuela are analyzing several cooperation projects in infrastructure and expansion of the electricity interconnection, following meetings between Venezuelan Foreign Minister Elías Jaua and his Colombian counterpart María Ángela Holguín. The diplomats went over agreements on transport and communication signed by the late Venezuelan president Hugo Chávez, and Colombia's Juan Manuel Santos. (El Universal, 11-04-2013; http://www.eluniversal.com/nacional-y-politica/131104/venezuela-colombia-develop-infrastructure-plans)

Mexico, Venezuela agree to begin trade talks in 2014

Mexican Foreign Secretary Jose Antonio Meade and Venezuelan counterpart Elias Jaua agreed here Monday to begin conversations leading to the signing of a trade accord, Mexico's government said. In a meeting in the Mexican capital, the two ministers agreed "to hold in 2014 the second meeting of the Permanent Binational Commission, as well as to update the legal framework guiding the relationship between the two countries," Mexico's foreign ministry said in a statement. Bilateral relations have been in a good period since Enrique Peña Nieto became Mexico's president last December. (FOX NEWS: http://latino.foxnews.com/latino/news/2013/11/04/mexico-venezuela-agree-to-begin-trade-talks-in-2014/

Wholesale prices on imported goods multiply fivefold

The continued devaluation of the Bolivar on the parallel market is pushing up prices on imported products and decreasing the buying power of families as the cost of appliances, textiles, auto parts, and alcoholic beverages rises. Central Bank data shows wholesale price increases for imported products are up 42.5%, which is five times more than 2012, when it was 7.2%. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131105/se-quintuplica-precio-al-mayor-de-los-productos-importados)

Logistics & Transport

Government freight expenditures up 1532% in nine years

According to the Central Bank total imports during the first half of this year were U$D 27.519 billion and U$D 3.065 were spent on freight and insurance. A closer look shows that government spends more on freight than the private sector, even as its imports were lower. The government bought U$D 12.515 billion abroad, and paid U$D 1.720 billion in freight and insurance, that is 13.7% of the value of imports. The private sector's imports were U$D 15.004 billion, but it spent U$D 1.345 billion on freight and insurance. In 2003 official expenditures for freight and insurance were U$D 375 million, which means this expense, has grown 1532%. Shippers say the Venezuelan government has become their main client due to its import activity. Government expenditure for transportation is usually higher due to lack of planning, delays offloading, and delays in returning containers. (El Universal, 11-04-2013; http://www.eluniversal.com/economia/131104/venezuelas-freight-expenses-soar-1532-in-nine-years)

Activity at Venezuelan seaports down 17.6% in the first semester this year

Activity in Venezuelan seaports dropped 17.6% during the first half of the year, according to information disclosed by the Economic Commission for Latin America and the Caribbean (ECLAC). Venezuela's performance was among the poorest in the region, followed by Costa Rica, whose activity descended 22.6%.

(El Universal, 11-04-2013; http://www.eluniversal.com/economia/131104/activity-in-venezuelan-seaports-down-176-in-the-first-half)

Politics

Maduro seeks to free South America from Twitter

President Nicolas Maduro has urged the liberation of Latin America from Twitter, arguing that the US microblogging company compromised 6,600 accounts, including his own. "We must achieve independence, and we have to think about deep and radical ways we can free ourselves from these multinational corporations that have monopolized social networks," Maduro said Saturday. "Let's prepare ourselves to liberate ourselves from you," said the President addressing Twitter. Maduro called on MERCOSUR (the Common Market of the South), UNASUR (Union of South American Nations) and ALBA (Bolivarian Alliance for the Americas) to join the fight against the popular microblog. Maduro's Twitter account was allegedly attacked earlier this week. The country's Communications Minister, Delsy Rodriguez, said that almost 6,600 of Maduro's Twitter followers disappeared from the president's account within 10 minutes. Maduro has accused Twitter of attacking his account and those of some of his ministers as part of a right wing plot. "We've uncovered a massive attack by the Twitter company and the international right against the accounts of Bolivarian patriots and Venezuelan Chavistas, coming from various parts of the world," he said, accusing the company of removing several thousand of his followers. For months, Maduro has denounced alleged plots from abroad to sow trouble, overturn the government, assassinate members of the executive and aid opposition. (The Voice Of Russia; http://voiceofrussia.com/news/2013_11_03/Venezuela-s-Maduro-seeks-to-free-South-America-from-Twitter-4650/)

Government supporters criticize Catholic Church as Pope meets with Capriles

A group of pro government journalists headed by former Communications Minister Tania Díaz, a member of the National Assembly, have accused the Catholic Church of "playing politics" as Pope Francis will meet with opposition leader Henrique Capriles. Díaz said their charges would be sent to the Vatican. Capriles has said he will talk to the Pope about the role of the Church and the Pontiff himself in the dialogue - which he considers necessary - that must follow what he terms the fraud in the April 18th presidential elections. "Hopefully the Church, and the Pope as head of the Church, can help us to have a dialogue in Venezuela", says Capriles. Pope Francis met with President Nicolás Maduro for 20 minutes on June 17th, and Vatican Foreign Secretary Archbishop Dominique Mamberti met with three opposition legislators in June. More in Spanish: (INFOLATAM)

The US spied on Venezuela during Chávez's rule

According to an official memo compiled by former analyst of the US Central Intelligence Agency (CIA) Edward Snowden, provided to the NY Times by British newspaper The Guardian in 2007, Venezuela was on a watch list of six priority targets of espionage of the US National Security Agency (NSA), amidst concerns about the threatening influence of the government headed by late President Hugo Chávez on the interests of the United States in Latin America, according to documents disclosed by the New York Times. The NSA hacked the official and private e-mail accounts of 10 high-ranking officials of the Venezuelan Ministry of Planning and Finance, according to the Times. (El Universal, 11-04-2013; http://www.eluniversal.com/nacional-y-politica/131104/the-us-spied-on-venezuela-during-chavezs-govt)

Perception of progress declines among Venezuelans

Venezuelans and other Latin American citizens see "slim" progress in their countries, according to a survey conducted by non-profit NGO LATINOBARÓMETRO. In 2011, Venezuelans had a 37% positive perception of progress as a nation and society. This year, it declined three percentage points, to 34%. (El Universal, 11-04-2013; http://www.eluniversal.com/nacional-y-politica/131104/progress-perception-declines-among-venezuelans)

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.