Economics &
Finance
Maduro to raise pressure on business
after local vote
President Nicolas Maduro pledged to deepen his "economic offensive" to force
businesses to cut prices after his ruling Socialist Party won the most votes in
weekend municipal elections. "This
week we are going to deepen the economic offensive to help the working class
and protect the middle class," Maduro told supporters in a rally after
the results were announced. "This
week it's going to be the housing and food sectors. We're going in with guns
blazing, keep an eye out." But extending the price cuts may worsen
product shortages and reduce the productivity of a private sector already
battered by years of nationalizations. Nor does the plurality in local polls
help him address the structural imbalances of a state-driven economy struggling
with slowing growth, the highest inflation in the Americas and embarrassing
shortages of goods such as toilet paper. Economists were left guessing Maduro's
next move. "This might strengthen
the radicals who pushed for the tightening of price controls that appears to
have provided Maduro with the needed electoral boost," Bank of America
analyst Francisco Rodriguez said. "On
the other hand, it gives the government sufficient room to devalue now that the
elections are behind." "This
is further evidence that President Nicolas Maduro and Chavismo have more
staying power than some observers believe," the Eurasia group
political consultancy said of Sunday's vote. "These mixed results are unlikely to fundamentally change political
dynamics, and policy will remain highly interventionist as challenging
macroeconomic dynamics keep the government on the defensive."
(Reuters, http://www.reuters.com/article/2013/12/09/us-venezuela-election-idUSBRE9B707720131209)
Fitch rates PDVSA’s proposed US$4.5 billion
issuance ‘B+/RR4’
Fitch Ratings expects to rate Petroleos de Venezuela,
S.A.’s (PDVSA) proposed senior unsecured debt issuance of up to US$4.5 billion
at ‘B+/RR4’. The company plans to use the proceeds to refinance upcoming
maturities and for general corporate purposes. PDVSA’s credit quality reflects
the company’s linkage to the government of Venezuela as a state-owned entity,
combined with increased government control over business strategies and
internal resources. This underscores the close link between the company’s
credit profile and that of the sovereign. PDVSA’s ratings also consider the
company’s strong balance sheet, sizeable proven hydrocarbon reserves, and
strategic interests in international downstream assets. (Latin American Herald
Tribune, 12-07-2013;
Labor reduction freeze extended to
2014
President Maduro has signed a new decree extending the
standing freeze on personnel reduction through December 31st, 2014. Public and private
personnel cannot be dismissed, nor can their working conditions
"worsen" More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/oficializan-inamovilidad-laboral-por-un-ano.aspx#ixzz2n4ATD0lU; El Mundo, http://www.elmundo.com.ve/noticias/economia/laboral/oficializan-inamovilidad-laboral-por-un-ano.aspx; El Nacional; http://www.el-nacional.com/)
Commission created to cut down on
red tape
The government has created a Presidential Commission, headed by
Executive Vice President Jorge Arreaza, to cut down on red tape here, aiming to
"improve the handling of import and
export procedures for industrial basic supplies for medium and small companies".
More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/crean-comision-presidencial-para-simplificar-trami.aspx#ixzz2n4ABZUN2; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/crean-comision-presidencial-para-simplificar-de-tr.aspx; El Universal, http://www.eluniversal.com/economia/131210/crean-comision-que-facilitara-tramites-al-area-productiva)
Oil
& Energy
Regime considers raising gasoline
prices
Executive Vice President Jorge Arreaza is saying the
government will discuss raising local gasoline prices with "the people" and business. Arreaza
has just said: "We must have great
debates in Venezuela, on fiscal matters, for example; on the price of gasoline,
to begin charging for gasoline, it is not sold, we give away more in tips".
He added that such moves could "definitely
balance Venezuela's economy". The price of gasoline has been frozen
for over 20 years and a decision to raise it in 1989 was one of the causes for
massive and looting. More in Spanish: (Globovision, http://globovision.com/articulo/gobierno-venezolano-estudiara-posible-alza-en-precio-de-gasolina-segun-arreaza
Russia's LUKOIL in talks with oil
majors on Venezuela stake
Russia's No. 2 oil producer, LUKOIL, has been in talks
with international majors about selling its stake in a consortium developing a
large oil project in Venezuela. The company said in October that it wanted
to sell its 20% stake in the Russian Junin-6 consortium developing heavy oil in
the Orinoco basin to focus on other projects. The group is led by Russian state
oil major ROSNEFT and also includes GAZPROM NEFT. (Reuters, 12-06-2013; http://www.reuters.com/article/2013/12/06/lukoil-venezuela-idUSL5N0JL0U320131206; El Universal, 12-09-2013; http://www.eluniversal.com/economia/131209/lukoil-deals-with-sale-of-stake-in-venezuela)
Venezuela oil price jumps
Venezuela's weekly oil basket stayed below the countries desired U$D 100
a barrel floor, but rose on unexpectedly depleted inventories in the United
States. 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 December 6
was U$D 96.42, up U$D1.93 from the previous week's U$D 94.69. (Latin American
Herald Tribune, 12-08-2013; http://www.laht.com/article.asp?ArticleId=1287860&CategoryId=10717)
Logistics
& Transport
Registration of port users launched
The Port Authority (BOLIPUERTOS) is launching an electronic registry of
all port users that service passenger and cargo vessels. The system will
improve the process of issuing temporary passes, permanent ID, and vehicle
passes into the port area. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=7745;
Notitarde; http://www.notitarde.com/La-Costa/Registro-de-Operadores-Portuarios-comenzo-el-lunes-2062573/2013/12/09/287916;
El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/86722/-bolipuertos-inici-registro-de-operadores-portuarios)
Politics
High voter turnout, government maintains
plurality, opposition triumphs in iconic cities
Pro-government candidates and opponents of President
Nicolás Maduro split Venezuela’s disputed mayoral elections Sunday, prolonging
a political stalemate in the face of mounting economic problems. Maduro's
government won the greatest share of votes in local elections. With votes in
from three-quarters of the nation's 337 mayoral races, the ruling party and
allies had combined 49.2% support. The opposition coalition and its partners' had
42.7% percent, and independents had 8.03%, the election board said. Opposition
leader Henrique Capriles said: "Remember
that Venezuela does not have a single owner. A divided country needs dialogue."
Candidates of the opposition alliance Unified Democratic Panel (MUD) scored
victories in iconic mayoralties nationwide, namely the capital cities of the
states of Barinas (the hometown of late Hugo Chávez), Carabobo, Lara, Mérida,
Monagas, Nueva Esparta, Táchira, Zulia and the Mayoralty of the Metropolitan
District of Caracas. Tibisay Lucena, President of the National Electoral
Council, announced that the ruling United Socialist Party of Venezuela (PSUV)
won 196 mayoralties, while the MUD obtained 53. Turnout in the municipal vote
hit 58.92%, based on 97.52% of the ballots."Out of 355 municipalities, there is an irreversible trend in 257,"
Lucena noted. Nationwide, the PSUV obtained 4,584,477 votes (44.16%); MUD,
4,252,082 ballots (40.96), the Communist Party of Venezuela, 167,049 votes
(1.6%) and other political parties got 1,376,056 ballots (13.26%); (The
Washington Post, 12-08-2013; http://www.washingtonpost.com/world/venezuelan-president-faces-first-electoral-test/2013/12/08/b870e8de-6038-11e3-8beb-3f9a9942850f_story.html;
Reuters, 12-09-2013; http://www.reuters.com/article/2013/12/09/venezuela-election-idUSL1N0JN0AA20131209;
Bloomberg, http://www.bloomberg.com/news/2013-12-09/maduro-claims-victory-after-mayor-races-show-venezuelans-divided.html;
Fox News, http://www.foxnews.com/world/2013/12/09/venezuelan-opposition-gains-ground-in-cities-but-no-real-blow-to-maduro-in/;
The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelan-president-faces-first-electoral-test/2013/12/08/ec695668-606e-11e3-a7b4-4a75ebc432ab_story.html;
Bloomberg, http://www.bloomberg.com/news/2013-12-09/maduro-claims-victory-after-mayor-races-show-venezuelans-divided.html;
El Universal, http://www.eluniversal.com/nacional-y-politica/131209/ruling-party-wins-196-mayoralties-opposition-triumphs-in-iconic-towns;
http://www.eluniversal.com/nacional-y-politica/131208/turnout-in-venezuelan-local-election-hits-5892;
BBC, http://www.bbc.co.uk/news/world-latin-america-25292322;
and more in Spanish: CNN, http://cnnespanol.cnn.com/2013/12/09/el-oficialismo-logra-mas-votos-pero-la-oposicion-gana-en-municipios-clave-de-venezuela/?iref=allsearch)
The Economist: A country divided
No one can really feel satisfied after Venezuela's municipal elections
on December 8th. Urban Venezuela is turning its back on the ‘socialist revolution’ of the late Hugo
Chávez and his successor, President Nicolás Maduro. But polls that the
opposition Democratic Unity (MUD) alliance had sought to turn into a plebiscite
against the eight-month-old Maduro government have, in the short term at least,
consolidated his grip on political power. A total of 335 municipalities and two
metropolitan districts were up for grabs in Sunday's poll. As expected, the MUD
made important advances in urban districts. It held on to the second city,
Maracaibo, and now controls at least seven of the 23 state capitals, including
four of the five biggest. The PSUV held strong in rural areas, however. Though
much more thinly populated, these account for the vast majority of
municipalities. The government also fended off a challenge to its most
important electoral asset, Libertador municipality, which covers the western
half of Caracas and includes the historic heart of the city. The opposition’s
biggest disappointment was that it fell well short of its goal of polling more
votes than the government nationwide. With over 97% of the votes counted, the
PSUV and its allies had obtained more than 49% and the MUD and its allies less
than 43%. Independents and dissidents accounted for the rest. A result like
this, amid the country’s worst economic crisis in 30 years, is testimony to the
efficiency of the government’s electoral machine, and to its lack of scruples
in employing all the resources of the state for partisan advantage. With the
government’s grip on radio and TV now almost complete, the opposition was
rendered virtually invisible in media terms. Opposition leader Henrique
Capriles will need to do some hard thinking about where to go from here as
there will be no more elections until the parliamentary vote in 2015. Maduro,
too, faces difficult questions. Some think that with the elections out of the
way he will be freer to seek a more pragmatic solution to the economic crisis,
including a rapprochement with the private sector. The alternative could be
severe social unrest and a further crackdown on dissent. (The Economist, http://www.economist.com/blogs/americasview/2013/12/venezuelas-local-elections)
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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