Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Tuesday, May 20, 2014

May 20, 2014

International Trade

Imports reported at Puerto Cabello:
  • 21,650 tons of sodium sulphate in 3 bundles, from Spain, for Procter & Gamble, Alimentos Polar and Comercializadora El Gauche.
  • 2,070 tons of chicken, in 56 containers, from Brazil for Corporación de Abastecimientos y Servicios Agrícolas (CASA). 
  • 1,234 of metalic structures, in 465 vans for the government Consorcio de Estructuras Metálicas Modernas.
  • 1,079 tons of beef from Brazil for CASA
  • 900 tons of margarine, from Brazil for CASA
  • 211 tons of cream milk from Jamaica, for Nestlé
Twelve (12) vessels remain at bay in Puerto Cabello pending dock assignation, 7 of them carrying bulk cargo. More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/101665/-pollo,-carne-y-margarina-arribaron-al-puerto-carabobeo)

Wheat cargo expected to arrive
Nicolás Constantino, President of the Wheat Millers Associations (ASOTRIGO) reports wheat supply for the bread industry will improve in the next few days. He said the government authorized new imports 2 weeks ago in order to restore inventories. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/comienzan-a-llegar-barcos-con-trigo-para-la-indust.aspx#ixzz32FcQkTcw)

China has become Venezuela´s main supplier of vehicles, but imports dropping
During 2013, China sold Venezuela U$D 269 million in automotive products, around 36.5% of the total imports here. This was a 63.17% drop from 2012 when Venezuela bought a little over U$D 769 million from China. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39343&idc=3; El Universal, http://www.eluniversal.com/economia/140519/china-strengthens-as-venezuelas-main-car-supplier)

Panama, Venezuela to restore consular ties after spat
Panama and Venezuela "have proceeded to the exchange of (diplomatic) notes" to restore consular relations, suspended since March 5 together with diplomatic and trade ties in the wake of a political dispute, says the Panamanian Foreign Ministry. The reopening of consular facilities in both countries "will take place in the next few days." No further details were given. After relations were broken off, Panama presented "notes of protest" before the World Trade Organization for what it considers discriminatory measures by Venezuela, which include the suspension of millions of dollars in debt owed by Venezuelan importers to Panamanian exporters in the Colon Free Trade Zone. (Fox News, http://latino.foxnews.com/latino/politics/2014/05/19/panama-venezuela-to-restore-consular-ties-after-spat/)


Logistics & Transport

LUFTHANSA, IBERIA and AIR FRANCE halt Caracas ticket sales
LUFTHANSA suspended ticket sales to Caracas joining airlines that have taken similar actions over Venezuela’s currency controls. IBERIA - which holds 24% market share in Venezuela-Europe air transportation - reports "there are restrictions on the sales of tickets to and from Venezuela" AIR FRANCE says "there is no availability until further notice". Panama’s COPA said last week it will cut routes to Venezuela, saying it’s owned U$D 488 million by the government. Airlines had an equivalent of U$D 3.9 billion stuck in bolivars as of April, according to the International Air Transport Association. Those sales in the local currency can’t be repatriated because of a decade-long system of controls. The group said currency restrictions have prompted at least 11 carriers to cut capacity, sales or routes to Venezuela in the past year. Local international ticket sales have dropped 41% during Q1 2014. Caracas is now the most expensive destination in Latin America from and to any European country (over €1,000) because of the distortions. Tickets are between 20 and 40% more expensive; even more so than flying to Brazil during the World Cup, a travel agent told AFP. In addition, the IATA informed air carriers have cut their offers 15% to 75%. (Bloomberg, http://www.bloomberg.com/news/2014-05-17/lufthansa-halts-caracas-ticket-sales-joining-other-carriers-1-.html; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39344&idc=3; and more in Spanish: http://www.eluniversal.com/economia/140520/iberia-y-air-france-presentan-restriccion-en-venta-de-boletos; El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/cayo-41--venta-de-boletos-internacionales--en-el-p.aspx#ixzz329uMzKM9)


Oil & Energy

Maduro has announced the creation of PETROPALESTINE
During a meeting in Caracas with Palestinian President Mahmud Abbas, President Nicolás Maduro announced the creation of PETROPALESTINE, to "provide Venezuelan diesel to Palestine". More in Spanish: (AVN, http://www.avn.info.ve/contenido/presidente-maduro-anuncia-creaci%C3%B3n-petropalestina; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/gobierno-crea-petropalestina-para-surtir-de-diesel.aspx)


Economy & Finance

Total pending government obligations to the private sector around U$D 41.8 billion
Government debt to the private sector for pending FOREX reimbursements and frozen dividend repatriation continues to rise. According to the ECOANALÍTICA think tank:
  • Pending import debt to the private sector rose to U$D 25.8 billion by the close of March, a 9.3% increase.
  • Approved - but not paid - dividend repatriations are up to U$D 4.2 billion.
  • Unpaid service debt to airlines, insurance companies and others are now above U$D 5.7 billion.
  • PDVSA's pending obligation to companies in mixed venture projects, which are up to U$D 6.1 billion.
  • This all adds up to U$D 41.8 billion.
Business leaders have told authorities this is their main problem and is linked directly to paralyze production as foreign suppliers refuse to provide goods and services to Venezuela. Government response has been ambiguous. Economic Affairs Vice President Rafael Ramírez set off alarms in January when he conditioned repayment, then the government appeared to correct its course and promised to pay off up to 30% of its debt in priority areas. That repayment has not taken place and is hurting inventories and productivity. The National Industry Federation (CONINDUSTRIA) reports industry is operating at 48.02% capacity, the lowest level since the 2003 general strike. ECOANALÍTICA Director Asdrúbal Oliveros points out that while the regime leaves obligations to the private sector unpaid, it is stockpiling fund deposits abroad, which were up to U$D 15.8 billion in March, up from U$D 9.3 billion in March 2013. More in Spanish: (El Universal, http://m.eluniversal.com/economia/140518/gobierno-adeuda-al-sector-privado-258-millardos)

Dropping support for Maduro halts economic adjustment
Foreign bank representatives meeting with economic authorities report the government is working at an adjustment plan which involves a unified currency, increased gasoline prices, adjusting controlled prices and consolidating FOREX funds in order to increase international reserves...but a 13.4% drop in President Maduro's popularity - down to 37% - with 8 out of 10 polled considering the nation's situation as negative - has put a damper on further economic adjustment plans. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140520/baja-en-el-respaldo-a-maduro-complica-al-plan-de-ajuste)

April inflation jumps to 5.7% percent
Venezuela's consumer prices rose 5.7% in April, jumping from 4.1% the month before as the nation struggles to control inflation. The Central Bank this year has routinely delayed the release of economic indicators as the government of President Nicolas Maduro faces growing criticism over slowing growth, spiraling prices and chronic product shortages.
Daily newspaper El Nacional reported said 12-month inflation at 61.5% in April and that the Central Bank's shortage index, a measure of the availability of staple products, was at least 30%. Inflation for a given month is supposed to be published within the first ten days of the following month. (Reuters, http://www.reuters.com/article/2014/05/17/us-venezuela-economy-idUSBREA4G05O20140517)

Finance Committee Chairman admits corruption in CADIVI, hints at unified currency
Ricardo Sanguino, pro government Chairman of the National Assembly's Finance Committee, has said "there was indeed corruption in CADIVI" and admitted that the regime was "very permissive" in controlling FOREX allocations. He also says the long term tendency is to unify all exchange rates. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/sanguino-si-hubo-corrupcion-en-cadivi.aspx#ixzz32Fbt44Gl)


Politics

UNASUR struggles to get paralyzed talks started again
In a brief statement after meeting with 3 UNASUR Foreign Ministers and the Papal Nuncio, Ramón Guillermo Aveledo, Secretary General of the Democratic Unity Coalition, said mediators will continue meeting with authorities in order to get the talks going again. Opposition leaders presented the delegation with a document setting forth "all details" which led them to put a freeze on the talks until the regime made "gestures" and complied with agreements which they say were made during meetings. A key sticking point is the liberation of political prisoners, which the government PSUV party leadership discards as "impunity". President Nicolás Maduro called on the opposition to rejoin the talks and says his government will not abandon negotiations, but added that if talks did not continue the nation would continue on its course. At the same time, Foreign Minister Elías Jaua said that all those who abandon talks "want war". A full meeting of UNASUR Foreign Ministers is scheduled to take place this week in Ecuador's Galapagos islands to evaluate the critical situation. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140520/discuten-liberacion-de-jovenes-para-reactivar-el-dialogo; http://www.eluniversal.com/nacional-y-politica/140519/jaua-afirma-que-quien-se-pare-de-la-mesa-de-dialogo-quiere-guerra; El Nacional; http://www.el-nacional.com/; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/unasur-abrio-puentes-en-el-dialogo-venezolano-otra.aspx; AVN; http://www.avn.info.ve/contenido/cancilleres-unasur-realizar%C3%A1n-reuni%C3%B3n-ordinaria-pr%C3%B3xima-semana-ecuador;  Infolatam)

Venezuela to protest in UN over alleged US interference in domestic politics
Venezuela has announced it will file a formal complaint to the UN and other international institutions over US interference in the country’s internal affairs that has aggravated the political crisis in the country. "We will be making formal complaints at the United Nations, since [the United States] is violating the UN Charter,” said Venezuela’s Foreign Minister Elias Jaua. He added that Venezuela will also file complaints to regional institutions - namely the Organization of American States, the Latin American and Caribbean grouping CELAC and the South American bloc UNASUR - and added that Caracas has prepared a "comprehensive file" with evidence against the US president, Secretary of State and other US officials, who allegedly interfered in Venezuela’s affairs. (Ria-Novosti, http://en.ria.ru/world/20140519/189934575/Venezuela-to-Protest-in-UN-Over-US-Interference-in-Domestic.html)



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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