Economics & Finance
Central Bank admits GDP growth falls short of goals
Central Bank President Eudomar Tovar admitted the economy will not attain the 6% goal set as a goal for 2013, as the YTD rate holds around 1.4%. "Undoubtedly we are not going to grow 6% this year... but we will grow. Growth is possible if we strengthen construction, oil and manufacturing. Rest assured that the economy tends to grow", he said, adding that the country faces "ferocious economic warfare". He also defended the government's forcing stores to lower prices: "One must understand that there is a strong speculative trend in Venezuela which had to be cut short, it was in fact developing a bubble, an increase in prices which was creating distortions." More in Spanish: (INFOLATAM)
.... denies gold swap transactions
Central Bank President Eudomar Tovar also denied the institution is carrying out transactions with Wall Street banks, a day after a senior government source said it was evaluating a swap agreement involving its gold reserves. Opposition leaders and local media reported that Venezuela is seeking to boost availability of hard currency through transactions with Goldman Sachs (GS.N) and Bank of America (BAC.N). "With respect to the institutions you've mentioned, the central bank ... is not carrying out any operations with these institutions," Central Bank President Eudomar Tovar said at a press conference. "There are some considerations out there which have come out, but these are unofficial positions, if you will." Asked again by a reporter, he said: "There has been no activity done by the central bank with Goldman Sachs or any institution." (Reuters, 11-28-2013; http://www.reuters.com/article/2013/11/28/us-venezuela-economy-idUSBRE9AR0JG20131128; http://www.reuters.com/article/2013/11/27/venezuela-economy-idUSL2N0JC13G20131127; El Universal, http://www.eluniversal.com/economia/131128/central-bank-of-venezuela-denies-any-swap-with-gold-reserves; Bloomberg. http://www.bloomberg.com/news/2013-11-27/goldman-to-bofa-pitch-venezuela-deals-to-drum-up-dollars.html)
Minister Ramírez claims 2014 will bring "growth and prosperity"
Rafael Ramírez, who is Venezuela´s Vice President for Economic Affairs, Minister for Oil and Mining and President of state owned oil company PDVSA, is saying 2014 will bring "growth and prosperity" to the nation. More in Spanish: (PDVSA, http://www.pdvsa.com/; El Universal, http://www.eluniversal.com/economia/131129/ramirez-dice-que-evolucion-del-pib-es-satisfactoria)
FEDECAMARAS President Jorge Roig says 2014 will be "precarious and complicated"
In contrast, Jorge Roig, President of the country's main business organization, FEDECÁMARAS, says the economic situation is "serious" and that prospects for 2014 are "complicated". Roig calls current conditions "precarious" and that the current economic model shows "clear signs of failure" with the highest rate of inflation in the Hemisphere, a 24% scarcity index, disposable FOREX reserves that can meet only one week worth of imports despite, that ten years of price controls during which time the cost of food has increased 1953%. Roig points out that only 2% of businesses in Venezuela receive FOREX from the Currency Board (CADIVI) and the process for obtaining FOREX means delays of "up to 700 days". He says CADIVI owes the pharmaceutical industry U$D 1.8 billion, the automotive industry U$D 2 billion, U$D 385 million to distributors of medical equipment; U$D 2.356 billion to international airlines; U$D 515 to the chemical area; and another U$D 400 million to the printing industry. Roig also points out that state run companies run at 50% capacity, less than 2% of land taken over by the government is productive and 10 out of 16 sugar mills are operating at 40% capacity. "They have the dollars and the plants and are not capable of producing, they prefer to import products". He calls buying after forcing lowered consumer prices a "drunken spree" which will result in a "hangover" in the first quarter 2014. He says business is "cautious" about replacing inventories, and "several have said they will not reopen". More in Spanish: (El Universal: http://www.eluniversal.com/economia/131129/fedecamaras-cree-que-inicio-de-2014-sera-precario-y-complicado; El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/asignacion-de-divisas-a-empresas-privadas-ha-caido.aspx#ixzz2m1yQfSk2; http://www.elmundo.com.ve/noticias/economia/gremios/fedecamaras--retraso-de-liquidaciones-de-divisas-a.aspx; El Universal, http://www.eluniversal.com/economia/131129/fedecamaras-cree-que-inicio-de-2014-sera-precario-y-complicado)
Maduro vows stricter business inspections, threatens Roig for saying 2014 will be "precarious"
President Nicolas Maduro said a stricter wave of inspections for suspected price-gouging would begin on Saturday in an aggressive pre-election "economic offensive" aimed at taming the highest inflation in the Americas. He said price irregularities were found in nearly 99% of 1,705 businesses inspected so far this month. He says "capitalist parasites" are trying to wreck Venezuela's economy and force him from office. "The inspections are continuing daily and have let us see into the under-world of capitalism," Maduro said in his latest speech to the nation. He also said 100 retailers have been arrested but his chief prosecutor puts that at around 30. Maduro also announced a new decree to limit monthly rents for commercial properties. He accused the nation's main business organizations: FEDECÁMARAS, CONSECOMERCIO and VENAMCHAM of "ratifying their economic warfare on the nation" and warned FEDECÁMARAS President Jorge Roig: "Mr. Roig dont' say later that you are being persecuted politically. You have declared economic warfare on the nation. Be ready to meet legal consequences." During the same speech Maduro swore in authorities to lead the Foreign Trade Corporation and the National Foreign Trade Corporation, to be headed by the Commander of Venezuela's Air Force. (Reuters; and more in Spanish: Globovision, http://globovision.com/articulo/nicolas-maduro-anunciara-este-viernes-acciones-para-recrudecer-y-acelerar-la-batalla-economica)
Oil & Energy
PDVSA, Russia sign agreement to increase oil production
State oil company PDVSA and Russian bank GAZPROMBANK, have signed a U$D 1 billion agreement to finance the increase of crude production of PETROZAMORA company, on the east coast of the Maracaibo Lake, in Zulia state. The agreement calls for development of oilfield services to boost production levels from mature fields of PETROZAMORA. (AVN, 11-28-2013; http://www.avn.info.ve/contenido/venezuela-russia-sign-agreement-increase-oil-production; El Universal, http://www.eluniversal.com/economia/131128/venezuela-russia-sign-agreement-to-boost-crude-oil-output)
PDVSA seeks U$D 1.2 billion from REPSOL
Rafael Ramírez, President of PDVSA says a U$D 1.2 billion financing agreement with Spain's REPSOL will be signed in the first half of December. The funds are to be invested in the PETROQUIRIQUIRE joint venture in the Orinoco Oil Belt. He said additional deals have been struck with China's CNPC for U$D 4.5 billion; US CHEVRON for U$D 2 billion and Italy's ENI for U$D 1.76 billion. (El Universal, 11-28-2013; http://www.eluniversal.com/economia/131128/pdvsa-seeks-funding-for-usd-12-from-repsol)
Venezuela says OPEC should maintain production limits
Oil Minister Rafael Ramírez says OPEC should maintain its current production levels at next week's meeting, and that any easing of sanctions on Iran will let the group reorganizes itself. "Inventories are growing and are above all averages. There's too much oil, over 2 million barrels that need to be collected," he says. (Reuters, 11-28-2013; http://www.reuters.com/article/2013/11/28/venezuela-opec-idUSL2N0JD0V920131128; Bloomberg, http://www.bloomberg.com/news/2013-11-27/venezuela-sees-reasonable-oil-sales-to-u-s-more-to-asia-1-.html)
Venezuela received over 200 tons of household appliances
Over 200 tons of household appliances such as kitchens, ovens, and TV sets have been imported China as part of the stock replenishment recently announced by the Executive Office, daily newspaper NOTITARDE reported. In addition to household appliances, some 180 tons of food have been imported from Brazil, and both two tons of milk and 337 tones of toilet paper from the United States. Similarly, state-run companies Pequiven and Pdvsa have received nearly 152 tons of pipes to develop some of their projects. (El Universal, 11-28-2013; http://www.eluniversal.com/economia/131128/venezuela-receives-over-200-tons-of-household-appliances)
300 buses arrive from China
Land Transport Minister Haiman El Troudi says they were imported as a part of the Special China-Venezuela Fund agreement, and added another 800 buses will arrive in December. More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/85372/unos-300-autobuses-provenientes-de-china-arribaron-a-puerto-cabello)
Violence enters election campaign
An opposition city council candidate was gunned down in the western state of Zulia. Jose Chirinos, who was seeking a seat on the council in Baralt, Zulia, was shot Tuesday night by two assailants on a motorcycle as he left a radio station after an interview, the MUD opposition alliance said. A radio host and a young woman were wounded in the attack, but are listed in stable condition at a nearby hospital, says the Democratic Unity Conference (MUD). (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1233493&CategoryId=10717)
Elections Council Director charges government unfair advantage practices are escalating
Vicente Díaz, the lone independent director on Venezuela's National Elections Council (CNE), has complained over the escalating unfair advantage being carried out by the government in the electoral campaign. The official says Venezuelans are fully aware of the imbalance official mass media networks, an added that the behavior of some public officials is not consistent with the laws banning such conduct. (El Universal, 11-28-2013; http://www.eluniversal.com/nacional-y-politica/131128/director-of-electoral-council-warns-about-escalation-of-govt-advantage)
Venezuela elections: Empty shelves and a skyscraper squat
Venezuelans go to the polls in local and regional elections on 8 December that are being widely seen as a referendum on the six-month presidency of Nicolas Maduro. Opponents accuse him of leading the country to economic ruin, but he insists his reforms are essential and popular. It is quite common these days to see queues outside shops where there has been a fresh delivery of milk or toilet paper - basic goods that many Venezuelans no longer take for granted. The left-wing populist government tries to offset the notion of a crisis by running heavily discounted food and produce markets - counteracting, it says, the actions of profit-hungry private companies. Two weeks ago, President Maduro ordered a chain of electronic stores called Daka to slash their prices, accusing it of defrauding ordinary people. The ensuing rush for cut-price TVs made some happy and the government warned it would extend the policy to other sectors. But at Daka the shelves are now empty and it is difficult to see what such policies do for business confidence. Critics say Venezuela is now becoming ungovernable. One stark example is the Tower of David. This oil-rich country once had plans to build Wall Street in the heart of Caracas. But in 2007, homeless squatters invaded an unfinished financial centre and more than 1,000 families now live in the Tower of David. The residents of "Torre David" live beyond Venezuelan society and beyond the reach of the law. (In the past the community was said to be a haven for drugs dealers and former criminals.) With official inflation figures running at around 50% (unofficially it is probably much higher) the opposition accuses President Maduro of leading Venezuela to the abyss and of fomenting a Zimbabwean-style class war in South America. Corruption is endemic here and almost everyone admits to having paid a bribe to a policeman or public official at some point. Henrique Capriles, the main figure in the opposition movement, says: "Venezuela is heading in the wrong direction and I think we will pay a huge price for that". (BBC Special Report: http://www.bbc.co.uk/news/world-latin-america-25141809)
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.