Economics &
Finance
IMF chief sees economic storm clouds
in Venezuela
Managing
Director of the IMF Christine Lagarde says Venezuela's economy appears stressed
and that the country likely will face "difficult
policy choices" soon. "I
don't think that the economy is doing well at the moment and we certainly
understand that they are using reserves in a very significant amount,"
the IMF managing director said in an interview. In this context, Venezuela
"will really have to face difficult
policy issues probably shortly," Lagarde said. She acknowledged that
the institution lacks precise data on the country, which for the past 10 years
has refused to submit to the Fund's annual economic evaluations for its member
nations. "It's very hard for me to
tell you what we see because we don't have the information that we normally
work with," Lagarde said. (FRANCE24; http://www.france24.com/en/20131111-imf-chief-sees-economic-storm-clouds-venezuela)
Maduro to set profit margin ceilings
for companies, control all international trade, domestic transportation
President Nicolás Maduro announced
he will set minimum and maximum profit margins for all companies in Venezuela.
He said the move would be made once the National Assembly passes his requested
special ruling powers, and warned there will be "zero tolerance" for speculators. "I have decided that, once the enabling law is passed, mandatory percentage
limits on profit margins will be implemented on all items. There will be
minimum and maximum profit margins for everything, in the first place.
Secondly, we will also use the enabling law to make adjustments intended to
toughen as much as possible the penalties for any businessperson who is sold US
dollars of the Republic through the established system (...) and uses the US
dollars of the Republic to speculate on the currency, to speculate on products
and rob and plunder the people," Maduro warned. He criticized the fact
that at present speculation is punished with fines and shutdown of stores.
"No! Those people have to be
arrested, detained, and prosecuted. We have to go after the wealth they stole
from the people," he says. He also reported that a National Foreign
Trade Center and a Foreign Trade Corporation of Venezuela are being established
in order "to change everything. From
this center and this corporation, we will launch a global and structural
reshuffle of CADIVI, the Ancillary Foreign Currency Administration System
(SICAD), BANCOEX, the Bank of ALBA and all the mechanisms we have. We are to
reorganize, streamline and make transparent all imports; promote exports other
than oil and truly balance the management and investment of foreign exchange."
Further, the National Logistics and Transport Corporation will be created. (El
Universal: http://www.eluniversal.com/economia/131111/nicolas-maduro-to-set-profit-margin-ceiling-for-companies; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuela-to-toughen-price-controls-set-profit-limits-in-bid-to-curb-galloping-inflation/2013/11/11/2a532bce-4acc-11e3-bf60-c1ca136ae14a_story.html;
Fox News, http://www.foxnews.com/world/2013/11/11/venezuela-to-toughen-price-controls-set-profit-limits-in-bid-to-curb-galloping/)
Analysts see higher scarcity risk in government attack on
inflation
Economists warn that the official decision to attack inflation and
speculation by taking over shops and applying "fair prices" will
result in scarcity. Economist José Guerra, a former Central Bank director and a
member of the opposition Democratic Unity Conference's economic team says
Maduro has taken a "highly dangerous"
electoral gamble which will bring "greater
scarcity which we will suffer even before the year ends." He adds that
the solution is for "the government
to publish lists of companies importing appliances with FOREX granted by
authorities at official rates, to see who is abusing and who is not."
Pro government professor Nicmer Evans claims the government is "only starting to organize the tremendous
disorder", but warns against generalizing and accusing al businessmen.
Victor Alvarez, formerly Minister for Industries under Hugo Chávez believes
Maduro could reform the Capital Markets Law and the Illegal Exchange Law.
Alvarez believes FOREX received from oil sales should be supplemented private
deposits abroad - which officials estimate at U$D 160 billion: "If only 10% returns, that is U$D 16 billion,
there will be an ample FOREX supply, more than enough to meet requirements and
pulverize the black market", he says. More in Spanish: (INFOLATAM)
Government blocks web pages purveying FOREX information,
threatens carriers
President Nicolás Maduro has blocked seven web
sites that supply information on parallel exchange rates. He charged the sites
blocked were created in the United States, and identified
dollarparalelovenezuela.com, preciodolar.info, dolarparalelo.org,
dolartoday.org, tucadivi.com, dolarparalelo.org y lechugaverde.biz as culprits.
The National Telecommunications Commission (CONATEL) said it is also
investigating official and private internet carriers for allowing illegal
exchange rates to be transmitted. CONATEL Director Pedro Maldonado said
carriers such as DIGITEL, MOVISTAR, INTER, CANTV, SUPERCABLE, NETUNO,
OMNIVISION and LEVEL 3 must remove such information or "have their license revoked". (INFOLATAM)
Increasing debt service aggravates
FOREX scarcity
The
increasing amount of foreign currency needed to service foreign debt is one of
the key elements preventing the Central Bank of Venezuela (BCV) from expanding
the FOREX budget for the Currency Board (CADIVI) and for some official
requests. According to Central Bank data, U$D 2.57 billion have been allocated
for debt service. (El Universal,
11-09-2013; http://www.eluniversal.com/economia/131109/rising-payment-of-debt-aggravates-scarcity-of-us-dollars)
The government has estimated the fiscal deficit in 2014 at 4.5% of Gross Domestic Product (GDP). Allocations for 2014 are estimated at VEB 552.6 billion (U$D 87.61 billion,) and debt at VEB 112 billion (U$D 17.77 billion). The estimates indicate that expected total income will be insufficient to meet the official expenditures, so that the estimated deficit for 2014 is larger than that projected for 2013 (3.9% of GDP). (El Universal, 11-09-2013; http://www.eluniversal.com/economia/131109/venezuelan-govt-estimates-fiscal-deficit-at-45-of-gdp-in-2014)
Oil
& Energy
Venezuela’s export barrel dropped over U$D 3/bbl. this week to average U$D 92.06/bbl.,
says the Ministry for Oil and Mining. The yearly average -to-date is U$D
101.66/bbl., down from U$D 103.42/bbl. posted in 2012. (Veneconomy, 11-08-2013;
http://www.veneconomy.com/site/index.asp?ids=44&idt=37097&idc=4)
Ramirez says oil projects still remain feasible at U$D 40
per barrel
Oil and Mining Minister Rafael
Ramírez says current oil projects are perfectly feasible at U$D 40 per
barrel. "There are barrels
being extracted within the Orinoco Oil Belt at a cost that is not above U$D 6
per barrel...it is shale oil and shale gas projects that are in trouble as they
require some U$D 80-90 per barrel to develop", he said in reference to
descending crude oil prices. (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/proyectos-petroleros-de-venezuela-son-viables-con-.aspx#ixzz2kQQlKxx5)
Spain's REPSOL’s net investment in Venezuela will be U$D 470 million this year to
develop the multiple projects in which it participates along with the
government, such as the Perla fields on the shore and PETROCARABOBO in the
Orinoco Oil Belt, says REPSOL’s technical manager Cosme Vargas. (Veneconomy,
11-08-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=37100&idc=2;
Bloomberg, http://www.bloomberg.com/news/2013-11-08/repsol-plans-to-invest-4-billion-in-venezuela-through-2022.html)
Internal report shows Paraguaná
refining center output slips
Output from Venezuela's 955,000 barrels per day (bpd) Paraguaná
Refining Center slipped to 64% capacity in November from 74% in June due to
outages and a lack of replacement parts, according to an internal report seen
by Reuters on Monday. The Paraguana Refining Center (CRP), which includes the
Amuay and Cardón refineries, had been recovering from a severe explosion a year
ago that killed more than 40 people and damaged several operational units.
After reaching 74% of capacity in June it started to decline again at the
world's second-largest refining center. (Reuters, 11-11-2013; http://www.reuters.com/article/2013/11/11/us-oil-venezuela-refinery-idUSBRE9AA0V620131111)
Commodities
SAMSUNG has agreed to manufacture appliances in
Venezuela, says Industry Minister Ricardo Menendez, who adds that it will be a
joint venture in which the government will hold a majority share. More in
Spanish: (El Universal, http://www.eluniversal.com/economia/131112/gobierno-suscribe-acuerdo-con-la-empresa-samsung; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/gobierno-firma-convenio-con-samsung-para-fabricar-.aspx)
International
Trade
Uruguay's Mujica to ask Maduro to postpone MERCOSUR
meetingUruguay's President José Mujica says the upcoming December 17th MERCOSUR semester meeting may be postponed to January after he talked to Brazilian President Dilma Rousseff. Mujica is travelling to Venezuela to meet with President Nicolás Maduro for talks about the situation in MERCOSUR. Venezuela is currently "pro tem" chair of MERCOSUR, which is negotiating with the European Union after a decade-long gridlock. More in Spanish: (INFOLATAM)
Politics
Cabello says National Assembly should grant Maduro
Special Powers bill this week
National Assembly President Diosdado Cabello says the bill
granting President Maduro special powers should pass this week. A
pro-government majority will vote to remove voting rights from an opposition
legislator in what opponents call a maneuver to grant Maduro "superpowers". If Assembly member
María Mercedes Aranguren is stripped of voting rights, her pro-government
deputy Carlos Flores will give the government the 99th vote needed (out of 165)
to approve a law that will allow Maduro to rule by decree for a year. Cabello
says: "that legislator was elected
by 'chavista' votes and her deputy is a 'chavista'". Last week the
Supreme Court found there is merit to try Aranguren on 2008 charges and asked
the Assembly to remove her parliamentary immunity. Cabello says "we are going deprive her of parliamentary
immunity ...and we are also going to approve the enabling act".
Critic’s charge Maduro plans to use such powers against opponents in the
upcoming December 8 municipal elections, which are considered a sort of
plebiscite on his government. Political analyst Carmen Fernández says the move
"is a double edged weapon which
might have a contrary effect on pro-government candidates...The president has
hundreds of ways to fight corruption, he does not need special powers",
she adds. (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/cabello-debe-aprobar-ley-habilitante-esta-semana; and more in Spanish: INFOLATAM)
Military seizes electronics chains,
slashes prices
In his fight
against the “economic war” he says
the political opposition, in collusion with the United States, is waging
against Venezuela, President Nicolas Maduro ordered the military occupation of
electronics chains over the weekend and summoned the public to come shop at
government-enforced “fair” prices.
The orders sparked chaos at the stores’ outlets. The authorities arrested five
store managers and said they will be prosecuted for unjustifiably raising
prices. The government said five people are under arrest in the north-central
Venezuelan city of Valencia for looting a DAKA store. “This is for the good of the nation,” Maduro said on state
television. “Leave nothing on the
shelves, nothing in the warehouses … Let nothing remain in stock!”. Maduro
added that food, vehicle and hardware businesses would be targeted in similar
fair-price operations. General Hebert García Plaza, who heads the High
Commission for the People’s Defense of the Economy accused the DAKA chain of
unfair markups. Some critics suggested the entire operation was a form of
looting organized by the government, just in time for municipal elections in
December. Economist Jose Guerra, a former Central Bank official, was critical
of not just the events at DAKA but the bigger picture. “Food today, hunger tomorrow,” he wrote on Twitter. Opposition
leader, Henrique Capriles tweeted: “Everything
Maduro does leads to further destruction of the economy...Never in history have
we had someone as incompetent in Miraflores (Palace)". (GLOBAL POST; http://www.globalpost.com/dispatch/news/regions/americas/venezuela/131110/venezuelas-military-siezes-electronics-chain-slashes#1;
El Universal, 11-11-2013; http://www.eluniversal.com/economia/131111/venezuelan-authorities-try-to-control-disorders-at-appliance-stores;
Bloomberg, http://www.bloomberg.com/news/2013-11-11/army-storms-caracas-electronics-stores-shoppers-follow.html)
Foreign Minister Elías Jaua has ratified that Venezuela's claims on the Essequibo territory are legal and are within United Nations rules. Guyanese Foreign Minister Carolyn Rodrigues-Birkett had previously called the claim "illegal" and "spurious". Jaua declared: "The Guyanese Foreign Minister has a right to her opinion and to take a position, and all we can say is that our claim is so legal that it is being undertaken by the Secretary General of the UN himself, through a representative he has nominated along with the conflicting sides." More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/venezuela-reafirma-que-reclamaci%C3%B3n-sobre-esequibo-es-legal)
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.
No comments:
Post a Comment