June 10, 2014

Logistics & Transport

45% of the domestic airline fleet at a standstill

Humberto Figuera, President of the Association of Venezuela Airlines (ALAV), Humberto Figuera says the plight of domestic carriers is equal to or more critical that of international airlines. He explains that 45% of the domestic fleet is grounded due to shortage of spare parts; and lack FOREX to pay for maintenance. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/figuera-45-de-la-flota-de-las-aerolineas-nacionale.aspx)

Airlines are slowly adjusting rates

 Some airlines that came to an agreement with authorities on repayment of its FOREX debt since 2012 have begun to apply adjusted rates and resume ticket sales as usual. Airlines such as INSEL y TIARA Airlines are selling tickets to Caribbean islands such as Aruba and Curacao, at around U$D 300 and U$D 330. INSEL reports fares to Miami at around U$D 540 are available for September, October and November. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/lineas-aereas-activan-nuevas-tarifas-de-boletos-po.aspx#ixzz34EGdCeea; El Universal, http://www.eluniversal.com/economia/140610/aerolineas-publicaran-en-julio-sus-tarifas-en-dolares; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/aerolineas-ya-comienzan-a-vender-pasajes.aspx)

Oil & Energy

Petroleum minister hopes OPEC to keep oil production ceiling

Venezuela's Minister of Petroleum and President of Petróleos de Venezuela (PDVSA), Rafael Ramírez, says he hopes the Organization of Petroleum Exporting Countries (OPEC) will keep its output ceiling unchanged at 30 million barrels per day during their current meeting in Vienna. (El Universal, http://www.eluniversal.com/economia/140609/petroleum-minister-hopes-opec-to-keep-oil-production-ceiling)

PDVSA delivered two diesel shipments to BP and GUNVOR

Venezuela diesel exports resumed this January after years of devoting their entire diesel production to the domestic market, while a growing demand from power plants has limited sales in recent months and forced PDVSA to boost imports. More In Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/pdvsa-entrego-dos-cargamentos-de-diesel-a-bp-y-gun.aspx)

Commodities

SIDOR has been shut down for 29 days since April, at lowest productivity in history

SIDOR is reaching the worst levels in productivity in its entire history due to labor strife. The industrial conglomerate has been paralyzed for 29 days since the end of April due to worker shutdowns over back pay due and a lack of spare parts and supplies. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140609/desde-abril-sidor-ha-estado-paralizada-por-29-dias)

Suppliers have cut off credit to Venezuela's chemical industry

Juan Pablo Olalquiaga, President of the Chemical and Petrochemical Industry Association, says that even if the government pays all it owes to the local chemical industry and they can repay their pending external debts, international suppliers are no longer willing to grant credit lines and will only dispatch supplies through up-front payments. "They say they have lost confidence in the Venezuelan market due to repayment delays", he says. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Economy & Finance

U$D 15.6 billion debt service will further pressure on reserves during 2014

The Government faces heavy debt service obligations during the remainder of 2014, which will generate more pressure on international reserves. Official data shows total internal and external debt service on capital repayment, plus interest on bonds and loans is U$D 15.6 billion. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140610/pagos-de-deuda-externa-presionaran-mas-las-reservas)

Central Bank sees 2-4% contraction in Q1 2014, recession looms

As industrial production, construction and agriculture keep dropping despite increased government spending and cheap lending, Central Bank numbers now project a 2-4% economic contraction for Q1 2014. Technically, there has been an ongoing recession after two consecutive quarters, and nothing now indicated a change in tendency for April and May, despite a 13% jump in government spending. Despite this, automotive production collapsed 76% in Q1, the chemical industry is 50% below last year, construction is contracting due to scarce cement and iron bars, and basic foods such as milk, sugar, cooking oil and wheat flour are scarce. Rather than weaken, inflation has accelerated over the past few months and is now projected at 60% for this year. More in Spanish: (El Universal: http://www.eluniversal.com/economia/140609/crecen-el-gasto-y-el-credito-pero-el-pais-se-dirige-a-la-recesion=)

Bank of America-Merrill Lynch reports local private consumption dropped 5.4% in 2013

A report from Bank of America-Merrill Lynch shows local private consumption dropped much more than reported by authorities. It shows a drop of 5.4% and a 2.7% contraction in family income during 2013. This information contradicts a 1.3% increase reported by Venezuela's Central Bank, and indicates "there is a distortion in prices". Based on projected poverty rates they can detect a 5.6% drop in production. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Venezuela studying new ways toward exchange adjustment

Analysts polled by Reuters say authorities are discussing scenarios that create more fiscal resources, without further sacrificing popularity of President Nicolas Maduro, recently reported at 31%. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/reuters-venezuela-estudia-formulas-para-un-nuevo-a.aspx)

New Central Bank authorities reported to have ordered a review of inflation calculations as projections soar

An unofficial source reports the Central Bank - after several directors were replaced - has ordered its technical team to adjust the National Consumer Price Index before they decide to continue publishing them. The proposal is reported to have come from the National Statistics Institute, which requested a change in measurement methodology. Some economists are predicting 2014 could close with an 80% inflation rate, and say April inflation may have been 5.7%. Economist Antonio Paiva, the government considers the inflation rate “subversive so it hides it, delays it; they don’t deliver it.” (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39688&idc=2; and more in Spanish: El Nacional; http://www.el-nacional.com/)

Politics

Talks between the government and opposition remain paralyzed after 2 months and no results

Talk begun on April 10 between government representatives and leaders of the opposition Democratic Unity Conference (MUD), under the auspices of the South American Union (UNASUR) and the Papal Nuncio, remain frozen and with no results. On May 13, MUD Secretary General Ramón Guillermo Aveledo, announced they were suspending talks until the regime produces "concrete actions". They have not met since, although Ecuador´s Foreign Minister Ricardo Patiño has been talking to both sides this week in order to get them started again. (El Universal, http://www.eluniversal.com/nacional-y-politica/140610/el-dialogo-cumple-dos-meses-suspendido-y-sin-resultados; and more In Spanish: Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/patino-tratara-en-venezuela-dialogo-entre-gobierno.aspx)

Opposition groups seek early election, indicates a Constitutional assembly

Opposition leader María Corina Machado told a group of supporters and leaders of the Voluntad Popular party, which rallied to express solidarity with her after she was interrogated on "conspiracy" accusations by government representatives, that it is time to create a board unity platform to seek the resignation of Nicolás Maduro and renew a social covenant that includes all Venezuelans. She said the Constitution provides they way to do so, either through an amendment or a national constituent assembly.  She spoke before thousands of Venezuelans who oppose the socialist-led government, in a peaceful rally in the capital to protest the detention of an opposition leader and to call for an early presidential election. Anti-government activists massed to voice support for opposition leader Leopoldo Lopez, who has been held in a military prison since being arrested in February on charges of fomenting violence as a result of the initial protests. A judge ordered last week that Lopez proceed trial. (Fox News, http://www.foxnews.com/world/2014/06/08/anti-government-activists-in-venezuela-rally-to-give-support-to-jailed/; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/140609/sector-opositor-anuncia-que-buscara-adelanto-de-comicios)

Businessman reports "conspiracy" emails were forged by regime

Pedro Mario Burelli, a prominent Venezuelan businessman accused by the government of plotting to kill President Nicolás Maduro, reports emails presented by authorities as "proof" of a conspiracy are forged. Burelli, who has resided in Washington for the past 10 years, says the Venezuelan Embassy has circulated forged emails which is a crime under US law. He says: "all the emails shown are from Google accounts. We are following established procedures - through my legal counsel - to obtain technical information and confirmation that will show how all this was set up on the basis of forged emails". And adds "I am not conspiring to kill the President of Venezuela, illegitimate though he may be, nor for a coup d'etat...I will explain my contacts with the State Department whenever Mr. Maduro clarifies his relationship with the Cuban government". More in Spanish: (Infolatam)

Guyana pressures Venezuela into negotiation

Guyana is exerting pressure on Venezuela to discuss sea boundaries in order to go ahead with prospecting in the sea area claimed by this country. "We have delivered several reminders. For us, enough time has elapsed to begin (the talks) and it is time to push further into it," says Guyana's Minister of Foreign Affairs Carolyn Rodrigues-Birkett. Both Guyana's Minister of Environment Robert Persaud and Minister Rodrigues-Birkett understand that an agreement with Venezuela is needed for oil prospecting. (El Universal, http://www.eluniversal.com/nacional-y-politica/140609/guyana-pressurizes-venezuela-into-negotiation)

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.