September 30, 2014

International Trade

 

22 ships are at bay in Puerto Cabello

22 ships remain at bay at Puerto Cabello awaiting dock assignment. Eight of them carry 198,000 tons of food, 5 of them consigned to state agency CASA: Two bear yellow rice, one white rice, one sugar and another rice. Other vessels are bringing fertilizers to state agency PEQUIVEN, and 237,000 tons of cement from Cuba for the PDVSA government oil company. More in Spanish: (El Universal; http://www.eluniversal.com/economia/140930/22-buques-fondeados-en-la-bahia-de-puerto-cabello)

 

Imports are a four year low, with a 21% drop, according to the National Statistics Institute. Their report says 58.8% of all imports were carried out by the private sector and the remainder by the government and its agencies. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/las-importaciones-se-colocan-en-el-nivel-mas-bajo-.aspx#ixzz3EnPbLGFD)

 

Venezuelan, Russian foreign ministers to strengthen economic, commercial relation

Venezuelan foreign minister Rafael Ramirez met last Saturday in New York with his Russian counterpart, Serguei Lavrov, to discuss agreements by the two nations on economic and commercial matters. They agreed that Ramírez would visit Moscow soon in the coming weeks. (AVN, http://www.avn.info.ve/contenido/venezuelan-russian-foreign-ministers-strengthen-economic-commercial-relation)

 

 

Logistics & Transport

 

Maduro asks Marco to "solve" airline ticket availability issue

President Nicolás Maduro charged Economic Affairs Vice President General Rodolfo Marco Torres with meeting with international carriers and solve the problem with airline ticket availability. "If only one remains, let only one remain ...whoever wants to work with our rules is welcome, but if there is only one left we will have to manage", he said. He accused carriers of taking part in alleged "economic warfare" in order to "isolate Venezuela". More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/maduro-pide--resolver--disponibilidad-de-boletos-a.aspx#ixzz3EnQ0U9jQ)

 

 

Oil & Energy

 

PDVSA will reactivate some 1,000 oil wells in the west of the country, says its President Eulogio Del Pino, with a project that seeks to boost PDVSA’s production stagnated around 3 million barrels per day (bpd). The undated pilot project aims to increase production between 60,000 and 70,000 bpd. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41218&idc=4)

 

Venezuela oil price falls again to new 3 years low

Venezuela's weekly oil basket fell to a 3 year low this week. 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 September 26 was US$ 86.65, down US$ 1.74 from the previous week's US$ 88.39. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2354105&CategoryId=10717)

 

 

Commodities

 

CLOROX concerned over safety after Venezuelan government’s takeover

The CLOROX Co said it has serious concerns over the safety of its plants, after the Venezuelan government took over its facilities just a week after the company’s announcement of discontinuing operations in the country. Following the news of the cleaning-products maker’s departure, the Venezuelan government announced a takeover of the company’s plants. CLOROX had been manufacturing cleaning liquids, bleach, and other disinfectants at these plants, and is now concerned over the safety of the workers and adjoining communities. The decision to discontinue operations in Venezuela came as a result of the economic crisis that the country is currently facing. The Oakland, California-based company reported that it had been selling two-thirds of its products at prices set by the state. This resulted in losses, as the prices couldn’t even cover the manufacturing costs of the products. (Bidnessetc, http://www.bidnessetc.com/26454-clorox-concerned-over-safety-after-venezuelan-governments-takeover/)

 

 

Economy & Finance

 

Bank of America sees Venezuela with ample funds available for debt service

A recent report by Bank of America repeats that Venezuela is fully capable of meeting upcoming debt service payments. It says cash holding are well above requirements and "provide ample space for maneuvers". It estimated the consolidated public sector has US$ 9.6 billion in consolidated public funds, including US$ 1.9 liquid reserves at the Central Bank, US$ 1.6 billion at FONDEN and US$ 5.1 in PDVSA accounts, among others. It also estimates US$ 30.4 billion in semi-liquid assets that can be quickly converted if authorities decide to. Last amount includes US$ 15.2 billion in gold. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140930/bank-of-america-ve-holgura-en-venezuela-para-honrar-deuda)

 

Venezuela's currency hits record lows on black market

The plummeting Venezuelan currency breached a new, symbolic low of 100 bolívares per dollar on the black market Friday, according to market-tracking websites, in a sign of the worsening greenback shortage faced by President Nicolás Maduro's government. Economists say the bolívar is collapsing as Venezuelans clamor for dollars to protect themselves from an inflation rate topping 60%. But the government, which tightly restricts access to dollars, has cut the supply this year, prompting the value of the bolívar to plunge in unofficial street transactions. Officials this month banned companies with tax arrears from accessing the secondary currency market, pushing them to the informal dealers, according to Tamara Herrera, chief economist at Caracas-based consultancy Sintesis Financiera. The lack of dollars—evidenced by mounting debts with private companies such as airlines and importers that service the country—has sparked fears of a potential default, since the country has more than U$$ 6 billion in bond payments due over the next three months. The bolívar dropped to 100.7 per dollar Friday, according to a website that tracks Venezuela's parallel market, where individuals and businesses go when they are unable to buy hard currency through strict government regulations. That makes 100-bolívar note, the largest bill printed by Venezuela's central bank, the equivalent of $1. A greenback fetched around 40 bolívares on the street a year ago. Polls show President Maduro's popularity has dropped this year, with the country plagued by shortages of basic goods ranging from motor oil to pain medications as dollars for imports go scarce. And despite frequent promises to correct Venezuela's economic woes, analysts say the government has so far failed to deliver meaningful measures. "It doesn't look like the market has much confidence in the government's ability to get things under control," said Russ Dallen, partner at brokerage Caracas Capital Markets. Venezuela's central currency board, known by its abbreviated name Cencoex, offered nearly 30% fewer dollars to the local economy in the first half of this year at its most-subsidized exchange rate, compared with the same period in 2012. The government hasn't published data on its dollar sales for 2013. The central bank's international reserves meanwhile are down 29% to US$ 21 billion since the start of 2013. (The Wall Street Journal, http://online.wsj.com/articles/venezuelas-bolivar-currency-hits-record-low-on-black-market-1411782623; Bloomberg, http://www.bloomberg.com/news/2014-09-26/venezuela-s-biggest-bill-buys-buck-on-black-market-as-bonds-due.html)

 

Venezuela faces 27 disputes at ICSID

Venezuela's accounts payable will increase in the event of further rulings against the State in pending arbitration.

Last week, Canadian mining company Gold Reserve Inc. informed that the International Center for Settlement of Investment Disputes (ICSID) had determined Venezuela had to pay the Canadian firm US$ 740.3 million after expropriations in two gold mining projects in the oil producing country.

The award has not been disclosed yet nor has the government released any statement on the issue. Yet this could be just one of the many cases to be defined at the ICSID. (El Universal, http://www.eluniversal.com/economia/140929/venezuela-faces-27-disputes-at-icsid)

 

Politics

 

Venezuelans gather signatures against Maduro, Elections Board says process is not legal

Hard-line opponents of President Nicolas Maduro began collecting signatures Saturday seeking to force a constitutional assembly and remove the socialist leader before presidential elections in 2019. Analysts consider the petition campaign launched in Caracas by the Popular Will party led by jailed activist Leopoldo Lopez to be a long shot. Gathering and verifying signatures from 15% of registered voters, or nearly 3 million people, would be a logistical nightmare in any country. But in deeply polarized Venezuela, where loyalists dominate government institutions and the courts, opponents of Maduro fear the National Electoral Council would find a way to invalidate signatures and expose them to retaliation. The current initiative lacks the full support of the Democratic Unity alliance of more than 20 opposition parties, and the Venezuelan National Electoral Council (CNE) will not validate the signature collection process. It says the call, by popular initiative, without the intervention of the Electoral Power “lacks any legality.” (UT San Diego, http://www.utsandiego.com/news/2014/sep/27/venezuelans-gather-signatures-against-maduro/ and Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41228&idc=1)

 

Insulza: Opposition cannot dialogue if dissenting leaders are in prison

José Miguel Insulza, Secretary General of the Organization of American States (OAS), says dialogue is "pivotal" to solve the crisis in the country, as he referred to government-opposition talks on hold here. However, he added, "the opposition cannot seat at the table (to hold talks) when several of its leaders are in jail. Although they might not want to hold a dialogue, they are still part of the opposition". "Gestures," are required, he said. (El Universal, http://www.eluniversal.com/nacional-y-politica/140926/insulza-opposition-cannot-dialogue-if-dissenting-leaders-are-in-prison)

 

UN to assess Venezuela's effort against torture

What steps have been taken to eradicate torture? How many officers have been punished for such a crime? This and some other questions will need to be answered by the Venezuelan authorities next November 6-7 at the United Nations Committee against Torture (CAT), which will assess the actions taken to prevent such violation of human rights.

Authorities intend to point to the Special Law to Prevent and Impose Sanctions for Torture and Other Cruel, Inhuman, and Degrading Treatments passed by the National Assembly on July 2012. (El Universal, http://www.eluniversal.com/nacional-y-politica/140929/un-to-assess-venezuelas-effort-against-torture)

 

Bloomberg: Chavez friends get rich after his death as Venezuela slides into chaos

In an oil-rich country run by leaders who’ve promised to create a socialist economy that benefits the poor, millions of people struggle every day to find the basics. In this nation blessed with abundant natural resources, it’s the friends of Chavez and his ministers who have accumulated wealth. Some of the beneficiaries of doing business with the government live in mansions and luxury apartments, own horse farms in Florida, travel by private jet and play polo. Chavez -- and later Maduro -- made some of their friends rich with lucrative government contracts, says Henrique Capriles, the governor of the state of Miranda. “There’s nothing more capitalist than a socialist in power,” he says. One area where Chavez’s chosen few wield immense power is in the distribution of food. The state food system has been riddled with deficiencies, lax accounting, loss of documents and lack of auditing and oversight, the Comptroller General of the Republic found in an April report. Venezuela’s flawed food distribution system fails the public, while enriching people with political connections, says Neidy Rosal, a legislator in Carabobo state who has investigated mismanagement in the system for five years. The government has gradually been giving the military a bigger role in the food distribution system, legislator Rosal says. By showering contracts on former military officials and pro-government business executives, Chavez put a new face on the system of patronage here. “Chavez just changed the way the patronage worked, bringing new people into the system,” says Kim Morse, a professor of Venezuelan history at Washburn University in Topeka, Kansas. “The old upper class was replaced by the nouveau riche favored by Chavez.” “These are the scuffles among the insiders for a cut of the business,” Capriles says. “Today, one is useful to them. Tomorrow, he’s persecuted for not giving them the cut they wanted.” (Bloomberg, http://www.bloomberg.com/news/2014-08-12/venezuela-sees-chavez-friends-rich-after-his-death-amid-poverty.html)

 

New cars for the Army as Venezuelans line up for food

Venezuela’s national parade ground at the Fort Tiuna military base presents a scene that local civilians can only dream of -- stalls laden with goods and no waiting lines. The market with everything from subsidized meat to baby strollers, along with loans, new cars and apartments, are perks provided to the armed forces as the economy contracts, poverty rises and President Nicolas Maduro’s popularity sinks to a record low. The benefits help ensure the loyalty of the military, while siphoning reserves away from the poor who have seen wage growth fall behind inflation, according to analysts, citizen activists and academics. (Bloomberg, http://www.bloomberg.com/news/2014-09-29/venezuelan-army-enjoys-meat-to-cars-denied-most-citizens.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.