April 22, 2014

International Trade

Over than 11,000 tons of food arrived at Puerto Cabello

• 9.118 tons of whole milk powder, pasta, frozen chicken, margarine and frozen beef from Uruguay's Conaprole, Pastificcio Selmi, Bunge Alimentos, Minerva, BRF, Granja Tres Arroyos and Frigorífico de Aves Sochuy, for state company CASA
• 2.495 tons of frozen beef and chicken, whole milk powder, rolled oats, milk and cream concentrated milk from Matadero Nuevo Carnic, Nestlé Argentina, Setrading and Centrolac, for CASA, Nestlé Venezuela and, Pdval

Other Charges

• 3.000 tons of prefabricated building materials from Yakima Trading for PDVSA Industrial
• 1.366 tons of aluminum ingots from Spain for Pellizani
• 59 tons of sanitary napkins from P&G
• 55 tons of hygiene products from P&G

More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/99075/ms-de-11-mil-toneladas-de-alimentos-bsicos-arribaron-al-puerto; Notitarde; http://www.notitarde.com/La-Costa/Mas-de-3-mil-toneladas-de-leche-llegaron-al-puerto-2143546/2014/04/15/321348)

Venezuela bought over U$D 176 million in pharmaceutical products from Cuba in 2013, making the Caribbean island one of the main suppliers, according to the National Institute of Statistics (INE). This amount does not include purchases made via the Cooperation Comprehensive Agreement between the two nations. In its 2013 annual report, the Comptroller General’s Office detected several irregularities in these purchases after going over nine contracts between the Venezuelan Health Ministry and Cuban companies. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=38937&idc=3)

Comptroller identifies flaws in the Emergency Supplies program

The National Comptroller's office has found "weaknesses" in purchasing, supervision and controls within the Food Supply Emergency Plan conducted by PDVSA Agriculture, BARIVEN and PDVAL during 2007, 2008 and 2009. The Puerto Cabello Main Customs office was also at fault in losses of up to VEB 160 million. The investigation began in June 2010 when abandoned containers were found with 16,000 tons of spoiled food, and the Comptroller's office says "no documentation was provided by the responsible agencies" during the process. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/contraloria-detecto-faltas-en-el-plan-de-emergenci.aspx#ixzz2zW4ONlKt; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/contraloria-general-jalo-las-orejas-por-comida-pic.aspx#ixzz2zW0a3uhm)

Logistics & Transport

Port services cost adjusted back to prior VEB 6.30/U$D parity

The local Port Authority has backed down on a decision to adjust services it provides to Venezuela's new parity. After numerous complaints by the business community, the government agency has decided to estimate charges for port services at the previous VEB 6.30/U$D. In February it had decided on an upwards adjustments for storage, security, moving and all other services to importers and exporters. More in Spanish: (El Universal; http://www.eluniversal.com/economia/140421/bolipuertos-cobrara-sus-servicios-en-funcion-de-la-tasa-de-630)

Oil & Energy

PDVSA expands Caribbean storage, rents NuStar tanks

Petroleos de Venezuela (PDVSA), which urgently needs space in the Caribbean to store its oil, has emerged as the renter of tanks owned by NuStar Energy, a San Antonio, Texas-based pipeline and terminals company, on the island of Saint Eustatius, where the state-run company will blend crudes. "The company renting the tanks in Saint Eustatius is PDVSA. They will use the facility as a mixing hub to produce blends that can then be exported," one of the sources said. (Reuters, http://www.reuters.com/article2014/04/21/us-oil-venezuela-st-eustatius-idUSBREA3K0X320140421)

Commodities

Massive imports planned to bolster basic industries

The Ministry for Industries is planning to refloat basic industries in the Guayana region with massive imports and fiscal incentives aimed at improving productivity. Steel and aluminum production has dropped as payrolls have swelled. Steel production contracted 3% in 2012-13, while aluminum production plunged 28% due to labor strife and problems importing components and spare parts. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140422/suplen-deficiencias-en-empresas-de-guayana-con-importaciones)

Economy & Finance

Venezuelan government debt now up to USD 158 billion

Even as oil prices last year were over U$D 90, the Venezuelan government sped up indebtedness, up 9% in the same one-year term. In 2012, debt by the Venezuelan government and state-run oil holding Petróleos de Venezuela (PDVSA) closed at U$D 144.8 billion. In 2013, it climbed to U$D 158.5 billion. (El Universal, http://www.eluniversal.com/economia/140421/venezuelan-govt-debt-amounts-to-usd-158-billion)

Central Bank withholds March inflation and scarcity data; yearly inflation now running close to 60%

23 days into April, Venezuela's Central Bank has not revealed March inflation and scarcity data which it is required to provide within the first 10 days of each month. Bank president Nelson Merentes has said the inflation rate is not positive and the Venezuelan economy is undergoing low growth. He blamed ongoing political antagonism for inflation. José Guerra, the Bank's former research director, says March inflation was 4.1% and the yearly rate is almost up to 60%. Merentes says a new "economic offensive" announced by President Maduro aims to increase productivity jointly with private and state companies since we are in a "low economic growth" stage. He says meetings are being held with the private sector and that ways will surely be found to solve current difficulties. (El Universal, http://www.eluniversal.com/economia/140421/central-banks-president-venezuela-is-facing-low-growth; and more in Spanish: La Verdad: http://www.laverdad.com/economia/50639-inflacion-de-marzo-es-un-misterio.html; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/merentes-estamos-en-una-fase-de-bajo-crecimiento-e.aspx#ixzz2zbtiR0vD; El Universal, http://www.eluniversal.com/economia/140422/bcv-dice-que-economia-esta-en-fase-de-bajo-crecimiento)

Bank of America predicts Venezuela will align exchange rates

According to Bank of America, next year Venezuela will replace its three legal foreign-exchange rates with a single valuation of VEB 45/U$D1, which would be a devaluation around 86%. “The government faces no major electoral constraint to a large devaluation of the currency,” says Francisco Rodriguez, senior Andean economist at the bank. “Most of the economic and political costs of such an adjustment were already paid". The government provides 80% of foreign currency to companies and citizens at the official rate of 6.3 per dollar, Economic Affairs Vice President Rafael Ramirez reiterated last month. The remaining 20% is sold through secondary systems, known as Sicad I and Sicad II, for VEB 10 and 49.3 per dollar. Companies and individuals who cannot access to the legal currency mechanisms pay much moe on the black market. (Bloomberg, http://www.bloomberg.com/news/2014-04-17/venezuela-will-align-exchange-rates-bofa-says.html)

Rigid economic model hits Venezuela's state-owned firms

Annual reports from state-owned corporations unveil failures, and show that the straitjacket imposed by the socialist model hurts the public sector as much as it does the private sector. Lack of foreign currency, restrictions on imports, low stocks, outdated technology, and prices falling behind are the hurdles reported not only by entrepreneurs, but also state-owned corporations in 2013. (El Universal, http://www.eluniversal.com/economia/140421/rigid-economic-model-hits-venezuelas-state-owned-firms)

Coke takes U$D 247 million loss from Venezuela devaluation

Coca Cola’s first quarter 2014 earnings fell 4.2% from last year, with an 8% drop in net income and the company reporting U$D 10.58 billion in revenue. Coca Cola attributed the lower results to global factors including a devaluation of Venezuela’s bolivar currency, lower volume in Europe, and the sale of bottling operations in Brazil. Still, the figure was above the U$D 10.55 billion analysts had been guided to expect. Coca-Cola said that it would take a charge of U$D 247 million from Venezuela’s continuing currency woes. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1946445&CategoryId=10717)

Brink's writes-off U$D 400 million due to Venezuela devaluation

"Since Brink's has been able to obtain U.S. dollars at the SICAD II rate (approximately 50), and is not eligible to apply for exchange at the official rate (6.3), and does not expect to be able to access the SICAD rate (11), it is adopting the SICAD II rate for reporting Venezuela results," the company said. Applying the SICAD II rate, Brink's says 2013 revenue of U$D 447 million from Venezuela would have been reduced to about U$D 56 million. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1943359&CategoryId=10717)

SPECIAL PRESENTATION ON VENEZUELA's ECONOMY - ATTACHED: Attached is a special presentation on Venezuela's economy by Russ Dallen, Editor in Chief of the Latin America Herald Tribune.

Politics

Protesters fight police, burn Maduro puppets in Venezuela

Masked youths battled police, protesters burned and hung from lamp-posts effigies of President Nicolas Maduro and marchers demanded the "resurrection" of democracy on a volatile Easter Sunday in Venezuela. Though millions of Venezuelans have headed for Caribbean beaches and family gatherings over the Easter period, student demonstrators have sought to keep a nearly three-month protest movement going with religious-themed demonstrations. After a barefoot walk and a "Via Crucis" march in the style of Jesus' tortured walk towards crucifixion earlier in the week, hundreds of demonstrators began Sunday with a rally denominated "Resurrection of Democracy." (Reuters, http://www.reuters.com/article/2014/04/21/us-venezuela-protests-idUSBREA3J0IP20140421; http://www.reuters.com/article/2014/04/18/us-venezuela-protests-idUSBREA3G2I020140418; More in Spanish: CNN, http://cnnespanol.cnn.com/2014/04/20/opositores-marchan-por-la-resurreccion-de-la-democracia-en-venezuela/?iref=allsearch)

Tear gas and barricades as protests start anew in Lara, Táchira and Carabobo states

Authorities attempted to disperse renewed protests in Lara, Táchira and Carabobo states using tear gas bombs. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140422/jornada-de-gases-y-barricadas-en-lara-tachira-y-carabobo)

Pope calls for end to war and to violence in Venezuela

Pope Francis, in his Easter address before a huge crowd called for an end to conflicts in Syria, Ukraine and Africa. He also asked for an end to violence in Iraq, Venezuela, South Sudan and the Central Africa Republic. (Reuters, http://www.reuters.com/article/2014/04/20/us-pope-easter-idUSBREA3I0F920140420; More in Spanish: CNN; http://cnnespanol.cnn.com/2014/04/20/francisco-pide-fin-de-todas-las-guerras-y-reconciliacion-en-venezuela/?iref=allsearch; Fox News, http://www.foxnews.com/world/2014/04/20/pope-easter-message-urbi-et-orbi/; El Universal, http://www.eluniversal.com/nacional-y-politica/140421/pope-prays-for-reconciliation-in-venezuela)

Opposition calls for freeing  political prisoners before continuing talks with the government

The seven major political parties that take part in the Democratic Unity Conference (MUD) are discussing the formation of the working groups it may jointly set up with the government before they continue holding weekly meetings with officials. All opposition groups will consider this matter, along with the proposed Amnesty Law, naming new judicial and election authorities, and taking part in "peace keeping plans". Delsa Solorzano, of Un Nuevo Tiempo says they "want to work for freeing the political prisoners, whether by amnesty, pardons, or stays". Opposition legislator Edgar Zambrano has expressed optimism about the approval of an Amnesty Law to release prisoners, allow the return of those in exile, and stop persecution against political leaders. In his 44th request to President Nicolás Maduro for a hearing to address the issue, the opposition legislator claimed that a new Amnesty Law was likely to be drafted, and said it would be different from those previously presented. (El Universal, http://www.eluniversal.com/nacional-y-politica/140421/opposition-deputy-new-amnesty-law-is-possible-during-talks; and more in Spanish: El Nacional; http://www.el-nacional.com)

Machado appeals to Supreme Court for her parliamentary rights. Opposition leader María Corina Machado, who was stripped of her parliamentary rights by National Assembly President Diosdado Cabello for attempting to speak at the Permanent Council of the OAS as an alternate representative for Panama, has appealed to Venezuela's Supreme Court on the grounds that Cabello's decision is unconstitutional. The decision was subsequently supported by the Court itself, which ruled that her parliamentary mandate had been extinguished. Machado says the decision deprives her of due process and is not allowed within Venezuela's legal system. Her lawyers point to similar cases, such as that of pro-Government legislator Abdel-e-Zabayar, who went to fight for the Syrian regime and later returned to his parliamentary bench. More in Spanish: (Infolatam)

China supports Venezuela's "model" and dialogue for solving problems. China's Foreign Minister Chang Yi, currently in Caracas, has expressed his country's support for Venezuela's "21st century socialism" and called for "political dialogue" to resolve internal discrepancies. He said China "understands and supports" the system proposed by the late Hugo Chavez. China is one of Venezuela's key trade, energy and financial partners. It receives around half a million barrels of oil per day from Venezuela and maintains two important open funds with this nation for over U$D 35 billion for economic and social development. Chang Yi met with President Nicolás Maduro, who announced they have agreed to create new China-CELAC (Community of Latin American and Caribbean States) Fund. More in Spanish: (La Vanguardia, http://www.lavanguardia.com/politica/20140422/54406022425/china-respalda-modelo-de-venezuela-y-el-dialogo-para-resolver-los-problemas.html; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/maduro-recibe-a-canciller-chino-en-miraflores.aspx#ixzz2zbnxg7vZ)

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.