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.

Friday, October 31, 2014

October 31, 2014

International Trade

Incoming cargo at Puerto Cabello
  • Over 25,000 tons of soy flour from Bunge Latin América for Nutrición Técnica (Nutritec), Concentrados Valera C.A. y Savarian C.A.
  • 25,000 tons of wheat from Canada's Gavilon Grain for Fábrica de Pasta La Especial
  • 25,000 tons of raw cane sugar from Ed & F Man Brazil S.A. for C.A Azúcar, Moliendas Papelón y Central El Palmar S.A.
  • 6,000 tons of rice from Guyana Rice Development Board for the Corporación de Abastecimiento y Servicios Agrícolas (CASA), government agency.
  • 2,512 tons of milk and beef from Argentina's Frigorífico de Aves Soychu y Sancor Cooperativas Unidos for CASA.
  • 385 tons of shoes for ladies from Hanour Lane Shipping China for Lilly & Associates

Legislators criticize food imports, denounce "big business deals"
National Assembly representative José Manuel González has criticized large scale imports of agricultural products that hurt local farmers in the middle of their corn and rice harvesting. He says that "big business deals" are behind these imports, and adds that these cases have been repeatedly denounced in the Assembly but are "unfortunately tabled by the Comptroller Committee". Gonzales says imports may be necessary to cover domestic deficits, but should not come at harvest time and become unfair competition to local production. Representative Iván González joined the criticism, saying "irrational imports of these commodities fill up silos, and add another ingredient that stifles Venezuela's productive sector." More in Spanish: (Ultima Hora Digital;;

Venezuela negotiates settlement with Panama
Panama's Minister of Trade and Industries, Melitón Arrocha arrived here to discuss an agreement for Venezuela to settle the billion dollar debt it owes Panamanian companies. Venezuela owes over US$ 1 billion to Panamanian companies, including COPA Airlines, the pharmaceutical industry, and companies in the Colon Free Zone, according to Panamanian authorities. (El Universal,

Logistics & Transport

Venezuela's Shipping Association decries port operations delays
Eddy Meayke, President of Venezuela's Shipping Association, says "we are very worried by the dislocation of authorities, excess bureaucracy and controls that delay the performance of ships". He explains the delays cause added import expenses and possible frequency cancellations, and ads: "A ship takes 3-5 days in port, and here in Venezuela it can take 15 days, this makes the business unfeasible".  The Association estimates that the drop in volume by the private sector is 50% or more. More in Spanish: (El Mundo,

Protests paralyze Puerto Cabello docks
Stevedores working for the port authority, BOLIPUERTOS, paralyzed entry into the docks of Puerto Cabello, demanding the discussion of their collective bargaining agreements. Cargo vehicles were forced to part close to the port as demonstrators sought to meet with agency officials. More in Spanish: (El Universal;

Oil & Energy

Algeria bucks OPEC discounts as crude goes to Venezuela
Algeria raised its oil price for November to the highest in five months after adding fellow OPEC member Venezuela to the list of its mostly European customers. The North African country will sell its Saharan Blend crude at a premium of 70 cents a barrel to Dated Brent, the benchmark for more than half of the world’s oil, according to a price list obtained by Bloomberg. That’s the highest level since June and an increase from 20 cents in October. The first supertanker of Algerian crude arrived in Venezuela on Oct. 25, according to ship tracking data. (Bloomberg,

U.S. Virgin Islands announces sale of Venezuelan refinery
The U.S. Virgin Islands announced that Venezuelan state oil company PDVSA and Hess Corp have reached a tentative agreement to sell the now-idle HOVENSA refinery to Atlantic Basin Refining. Located on the south shore of Saint Croix, HOVENSA has the capacity to process 500,000 barrels per day, but PDVSA and Hess shut it down in 2012 amid weak demand. Atlantic Basin Refining is “a company formed specifically to acquire the shuttered refinery,” Virgin Islands Gov. John de Jongh Jr. said in a statement. “The company is headed by a group of individuals with experience in refining, energy finance, oil trading and environmental restoration.” (Latin American Herald Tribune,

2.2 billion cubic feet of gas have been added to proven reserves
Venezuela's proven gas reserves are now 197 trillion 89.211 billion cubic feet, says the Ministry of Oil and Mining, after incorporating new reserves in Maracaibo, Maturín, Barcelona, Barinas and the Orinoco Oil Belt. More in Spanish: (Agencia Venezolana de Noticias;ás-22-millones-pies-cúbicos-gas-sus-reservas-probadas; El Universal,; El Mundo,

Economy & Finance

Venezuela quelling default talk spurs bond surge
Venezuela is rewarding bond investors with their biggest gains in five years as it quells default speculation. To Stone Harbor Investment Partners LP and Barclays Plc, the rally has just started. The nation’s US$4 billion of notes due 2027 have soared 9.5% since Oct. 27, the best two-day surge since January 2009, after the state oil producer made good on a bond payment, the government abandoned the sale of its U.S. refining unit and devaluation speculation increased. Venezuelan debt returned 8% in the last two days, compared with 0.7% for all emerging markets, according to JPMorgan Chase & Co. indexes. The rally is also due to on speculation the government is considering economic changes including a currency devaluation. The country’s benchmark notes due in 2027 rose 2.54 cents today to 65.68 cents on the dollar at 1:21 p.m. in New York. The extra yield, or spread, investors demand to buy the country’s bonds due in 2016 instead of U.S. Treasuries fell 2.24 percentage points to 18.61%, down from 29.44% two weeks ago. Deutsche Bank has recommended that their more conservative clients buy long term Venezuelan bonds, particularly PDVSA' s 2037, their longest term bond, which was priced at 45.57%, with a current 12.07% yield and a 5.5% semester coupon. It rise 3.44 points this week. (Bloomberg,;; El Universal,; and more in Spanish: (El Mundo,;

Economists project that inflation to close at 110% in 2015, low oil prices to force adjustment
As spending will Economist Pedro Palma, a former President of Venezuela's Academy of Economic Sciences, estimates the economy will contract by 4 points GDP this year due to dropping oil prices, he says economic distortions will cause inflation to hit 75% by the end of the year, and go above two digits next year. "We are projecting inflation around 110% in 2015 and an average price of US$ 75 for the oil barrel." Top economic analysts meeting in Caracas agree that a drop in income will force the government into an economic adjustment. Alejandro Grisanti, head of research and strategy for Latin America at Barclays Capital, says oil prices will drop further other the next three quarters and begin to recover in mid 2015. He says this will force the Venezuelan government to act, more so increase next year and past expropriations must be paid for. Asdrúbal Oliveros, of ECOANALÍTICS, says part of the adjustment will lead to changing exchange policy, and points out that the current average exchange rate is VEB 21.2/US$1 and is estimated at VEB 34.9/US$1 in 2015. He also says devaluation will also bring further FOREX restrictions for the private sector and will become insufficient. More in Spanish: (El Nacional;; and El Universal,

Venezuela among the countries with most obstacles to starting a business
According to the Doing Business report 2015, prepared by the World Bank, there has been an overall improvement in the business climate in Latin America and the Caribbean, as well as an increase in regulatory reforms and more solid institutions. "Sixteen of 32 economies in Latin America and the Caribbean implemented at least one regulatory reform making it easier to do business in the year from June 1, 2013, to June 1, 2014," the World Bank document entitled Doing Business 2015: Going Beyond Efficiency highlighted. As for the ease of doing business ranking, out of 189 economies, Venezuela ranked 182. "Venezuela made starting a business more difficult by increasing incorporation costs," the report noted. (El Universal,

FOREX allocations down to US$ 50 million/day
Recent foreign debt payment has made an impact on Venezuela's international reserves, and the scarcity of funds is mirrored in the allocation of foreign currency for imports. While authorities claim that allocation of FOREX is up to date, the SÍNTESIS FINANCIERA think tank has noted that the UD$ 1.5 foreign debt service shrank allocations.
Based on the estimates, settlements in foreign currency dropped from US$ 180 million a day in August-September, to a US$ 50 million daily average in October.
(El Universal,

Infrastructure financing to come from Development Fund (FONDEN) and Chinese Fund
The government has decided that large scale project financing will no longer come from ordinary income each fiscal year, it will instead draw funding from the National Development Fund (FONDEN) and the Chinese Fund. More in Spanish: (El Mundo,

Treasury to get VEB 191 billion more
The Finance Ministry estimates it will receive some VEB 191.5 billion in additional income, 80% of which is from extraordinary oil income. More in Spanish: (El Universal,

US Court distributes US$265 Million in Venezuela PDVSA pension fund Ponzi
The US Federal Court in Connecticut has approved a receiver's plan to distribute assets to the victims of the fraud allegedly perpetrated by Connecticut-based hedge fund manager Francisco Illarramendi, and approved an initial distribution amount of US$264,580,160 from the assets recovered to date. In January 2011, the SEC charged Illarramendi and various entities owned or controlled by him, including investment adviser’s High view Point Partners, LLC, and Michael Kenwood Capital Management, LLC, with engaging in a multi-year Ponzi scheme. (Latin American Herald Tribune:

Politics and International Affairs

Maduro rejects criticism of 45% military pay hike 
President Nicolás Maduro has rejected criticism of his regime's decision to raise military pay by 45% starting November 1st. The military got a 30% pay raise last May, and another 60% raise last year. Opposition leader Henrique Capriles said: "He thinks that he will remain in power by keeping the military happy", and has also criticized the enormous share of power Maduro has given the military. Columnist María Teresa Romero points out: "It is suspect that he has announced the salary increase only days after removing Diosdado Cabello's close military ally (General Rodríguez Torres)..It is not surprising that Venezuelans speak insistently of "saber rattling" in the post Chavez era."  Maduro complained of "attacks by the extreme right", and said the opposition would "divide and destroy" the Armed Forces. The military have received close to 500% pay raises since 1999, and many Venezuelans are upset by privileges granted to the military - over other public servants - amid rampant inflation. Doctor Douglas Natera, head of Venezuela's Medical Federation, remarked: "a general can earn 4 times more than a hospital director". More in Spanish: (Infolatam)

Venezuela again bars Inter American Human Rights Commission from visiting
German Saltron, Venezuela's representative to the Inter American Human Rights Commission, again rebuffed a petition by the Commission to visit Venezuela - which it has refused since 2002 - by claiming the Commission "supported the 2002 coup", and accused 90% of international and local media of aggression. Commissioner Felipe González says this situation places Venezuela in an "exceptional" position within the region. More in Spanish: (El Universal,; El Nacional;

Venezuela recalls ambassador to Spain for consultations over Rajoy comment; López balks trial
Venezuela is calling back its ambassador to Spain for consultations in protest over Spanish Prime Minister Mariano Rajoy's call to free a Venezuelan opposition activist jailed for leading protests against President Nicolas Maduro. Conservative Rajoy met the wife of Venezuelan protest leader Leopoldo Lopez last week, tweeting a photo with an exhortation for him to be freed and protests allowed. In a short statement, the foreign ministry of Venezuela said they would conduct a broad revision of bilateral ties due to Rajoy's "interference." In the meantime, López announced he would not attend any more hearings until Judge Susana Barrientos decides on the UN’s Group for Arbitrary Detentions’ recommendation to release him immediately. (Reuters,; Veneconomy,; El Universal,; Latin American Herald Tribune,

Voting is the way to change, say 69% of Venezuelans
At least half Venezuelans are afraid that the government will not respect election results. Yet they still trust in voting as a tool for dispute settlement and resolution of problems in Venezuela. Based on the findings of the case study "Citizen's perception of the electoral system," coordinated by the Center for Political Studies at Andrés Bello Catholic University, 17.8% "fully disagrees" and 32% "disagrees" with the statement according to which the Venezuelan government will abide by any election results. (El Universal,

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.

Tuesday, October 28, 2014

October 28, 2014

International Trade

Incoming cargo at Puerto Cabello
  • Over 65,000 tons of rice from TRC Trading Corp in the USA for state agency CASA
  • 65,000 of soy from Argentina, for CASA
  • 7650 head of cattle from Brazil for several importers.
34 ships remain at bay awaiting dock assignment. 17 of them bear bulk cargo: one carrying 33,000 tons of white corn; another, 11,000 of sugar in sacks, both for CASA. Another 7 vessels carry yellow corn animal feed, and two bearing wheat. More in Spanish: (Notitarde;

Logistics & Transport

Shipping companies report delays in port operations in Venezuela
Venezuela's shipping sector is worried about slow operations, particularly in Puerto Cabello port. According to data recently provided by the Venezuelan Shipping Association (ASONAVIERA) to the port authority (BOLIPUERTOS), the average per hour container movement at Puerto Cabello port is 12-14 containers, half the average of 25-30 containers in neighboring ports in Caribbean countries. ASONAVIERA is concerned the delay "significantly increases" shipping costs. In addition, it affects the frequency of shipping services in Venezuela. They are also concerned because it could hamper the potential arrival of general cargo for the Christmas season. According to ASONAVIERA "one of the main reasons for the delays is due to the customs process to clear direct unloading of commodities forwarded to the government, mainly food." (El Universal,

AEROPOSTAL to increase ticket fees in its eight domestic destinations as of November 1st. This is the second price hike by the State air carrier this year; the first was last July. (Veneconomy,

Authorities seek fair prices for air tickets
General Rodolfo Marco Torres, Vice-President for Economic Affairs and Finance Minister, says the government is working to set "fair prices" for air tickets. "There will be a (price) scale based on flight miles," he said. "We are reaching agreements with the companies (...) the price of air tickets will be reviewed," although "today, air tickets are cheaper than last year," he argued. (El Universal,

Freeze in the sale of air tickets during 2014
The steady, upward trend in sales of international air tickets in Venezuela in the past seven years came to an end in 2014. Inconveniences faced by Venezuelans to travel abroad have thwarted the possibility of travelling. Unavailable air tickets, high costs in local currency and the requirements by some international airlines that sell tickets in foreign currency make traveling overseas more and more difficult. Travel agencies have complained over a significant drop in income, as 80% of their sales comes from airline tickets. Foreign airlines operating in Venezuela have blocked the access to their websites. Data from the International Air Transport Association (IATA) points to the shrinking sale of international air tickets in Venezuela, down to U$D 178.5 million in 2014 from U$D 268.3 million in 2013, on a monthly average. (El Universal,

Oil & Energy

Venezuela scraps plans to sell U.S. refining arm CITGO petroleum
Venezuela shelved a planned sale of about US$ 10 billion in U.S. refineries as surging North American crude output pushes down energy prices and profit margins. The country ruled out selling its U.S.-based refining subsidiary CITGO Petroleum Corp., says Finance Minister Rodolfo Marco Torres. The nation will keep investing in CITGO, he said, echoing comments made by President Nicolas Maduro last month. CITGO Said in a July 29 filing that state-owned oil company Petroleos de Venezuela, S.A. was looking for a buyer, threatening to undermine bondholders and other creditors by removing a sovereign asset that could be seized in the U.S. in the event of a default. Former oil minister Rafael Ramirez said in August that CITGO was worth at least US$ 10 billion, while Barclays said last month that the company’s equity value is between US$ 7 billion and US$ 9 billion. (Bloomberg,; Reuters,; Veneconomy,

For how long will Venezuela import crude oil?
PDVSA has confirmed it will import light crudes as a diluents for its extra heavy oil production, a cost-saving move for the state-run company that also reveals delays and problems in its main output strategies. Two 2-million-barrel cargoes of Algerian Saharan Blend crude are scheduled to be received by PDVSA in the coming weeks and two additional cargoes of Russian Urals crude will arrive in November to Isla refinery, operated by the company in the Caribbean island of Curacao.  PDVSA said imports will be "occasional," especially during the stoppage of an upgrader that can convert up to 270,000 barrel per day (bpd) of extra heavy crude into lighter oil. (Reuters,; El Universal,

Crude imports show PDVSA picks pragmatism over politics
It sounds embarrassing: Venezuela, an OPEC nation with the world's largest oil reserves, is for the first time in its history importing crude. Immediately, political opponents in the polarized country labeled the news another depressing symbol of the socialist government's "inept" oil management. Indeed, oil production is slipping and Venezuela has struggled to invest enough to reverse the trend. However, experts and traders who deal with Venezuela say the imports of Russian and Algerian crude are a more telling sign of the subtle changes underway at cash-squeezed state oil company PDVSA under its new boss Eulogio Del Pino. Commercial pragmatism may start to compete more with political considerations, especially as oil prices slide, they say. (Reuters,

Venezuela oil price tumbles to 4 year low
Venezuela's weekly oil basket fell to a new 4 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 October 24 was US$ 75.90, down US$ 1.75 from the previous week's US$ 77.65. WTI in New York averaged US$ 82.11 -- down US$ 1.47 -- for the week, while Brent crude traded in London averaged US$ 85.86 -- down US$ 0.89 from the previous week. (Latin American Herald Tribune,

PDVSA plans to invest US$ 20 billion to increase its domestic refining capability by 20%, from 1.3 million barrels per day (bpd), says Refining Director Jesús Luongo. He adds that the State oil company estimates it will increase domestic production capability by some 265,000 bpd despite a stagnant production. (Veneconomy,

Ten key facts about the oil market
Over the past six weeks, oil prices have consistently backtracked, shoving the Venezuelan crude-oil price down to USD 77.65 on October 18, averaging USD 94.58 this year while last year's average was USD 98.08.
Venezuela is a petrol-driven country, highly dependent of revenues from this activity to sustain its economy. In fact, oil exports account for nine out of ten dollars entering the nation's economy.
The following guide is aimed at helping understand the current situation of the oil market and its implications on the country.
(El Universal,

Economy & Finance

Venezuela to service US$ 7 billion in debt this month
Economic Affairs Vice President and Finance Minister General Rodolfo Marco Torres says "close to US$ 32 billion" have been paid out from the US$ 40 billion 2014 FOREX budget, after the nation pays US$ 3 billion on PDVSA bonds this week, following an initial US$ 1.5 billion payment. He adds that these amounts are manageable since Venezuela's GDP is "close to US$ 370 billion". Torres also said another US$ 40 billion are projected for the 2015 FOREX budget, and will "include resources for the private sector and debt service", estimating oil at US$ 60 per barrel. Total official spending for 2015 was estimated at some US$ 117.731 billion at VEB 6.30 to the US$. More in Spanish: (Infolatam,

World Bank panel suspends enforcement of Venezuela-Exxon ruling
The World Bank's international arbitration panel has temporarily suspended enforcement of an order that Venezuela pay Exxon Mobil Corp US$ 1.6 billion in compensation for oil projects nationalized in 2007. The International Center for Settlement of Investment Disputes (ICSID) said it had received a request from the Venezuelan government for a revision of the award, which was announced Oct. 9. (Reuters,; El Universal,

The Venezuelan Central Bank (BCV) has not published the Scarcity Index since the beginning of this year. Despite manifest shortages, Nicolás Maduro’s government does not consider it a priority as can be seen in the 2015 budget. Only 2.6% (Bs.2 million) was allocated for supplying goods and services in the domestic market out of the nine plans the Trade Ministry has set for a total of Bs.74.7 million. (Veneconomy,

Minimum wage in Venezuela down 20.7% from 2012
The surge in prices has crushed Venezuelans' buying power. More Venezuelan bolivars are required to buy the same amount of goods bought in the past. The increases in minimum wage approved in January (+ 10%) and May (+ 30%) were diluted by inflation, and currently the value of the minimum wage has dropped since March this year. From September 2013-September 2014, it dropped about 5%. Compared to 2012, the decline in buying power is 15.4%, according to the ECONOMÉTRICA research firm. The full minimum wage, which also includes the food bonus (25% of the tax unit) has also been negative. It is VEB 4,949.88 (US$ 785.69), and its buying power has dropped 20.7% over 24 months. (El Universal,

Politics and International Affairs

Maduro announces police 'purge'
President Nicolas Maduro has announced that he will conduct a thorough "purge" of the country's police force. He said police officers had taken part in the murder of governing party lawmaker Robert Serra this month. Maduro said he would name a presidential commission to "revolutionize the police" and "fix everything that's wrong" with it. He later said he would announce the members of a presidential commission aimed at transforming the police force, and that, as part of the investigation into Serra's murder, it had come to light that "small groups of officers" were in the pay of criminals. Venezuela has the second highest peacetime murder rate in the world after Honduras, according to United Nations figures. (BBC,

Maduro raises military pay by 45%, effective November 1st, as proposed by outgoing Defense Minister Admiral Carmen Meléndez, who will now become Minister of the Interior. More in Spanish: (AVN;; El Universal,

Four key political prisoners go on "permanent protest"
Opposition leader Leopoldo López has announced on his Twitter account that the he and three other key prisoners held in a military facility will go on "permanent protest" by banging their cell bars at the same time (8 PM) every day. He had previously warned the government, judges and prosecutors of the consequences they will face if they fail to comply with the request to free them made by the UN Human Rights High Commissioner. In his statement, López also denounces different human rights "violations", among them "isolation...degrading treatment and torture", to the point of put the life of San Diego Mayor Enzo Scarano at "risk, by violating his right to medical treatment for months". More in Spanish: (Infolatam,

López and former mayors Daniel Ceballos and Enzo Scarano could be transferred to other jails from the military prison of Ramo Verde after their announcement of a daily protest over the government’s lack of compliance with the UN’s recommendation to release them. Visits of their direct family members -the only visits they are allowed- has been suspended for the three of them. (Veneconomy,; El Universal,

Inter American Court on Human Rights will debate Venezuela’s political prisoners’ situation this week. On Tuesday, Venezuela will be the subject of four hearings, one of them on the general situation of human rights in the country requested by Nicolás Maduro’s regime. (Veneconomy,;

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.

Friday, October 24, 2014

October 24, 2014

International Trade


28 ships are at bay at Puerto Cabello, awaiting dock assignment. 18 are bearing bulk cargo, including 14 carrying food such as yellow corn, white corn, sugar, rice, wheat and soya, for a total 302,499 tons. Most are imported by state agency CASA, and one of them has been at bay for almost one month. There is concern in customs circles over the number of bulk carriers at bay because their offloading could take several days and could delay the arrival of general container cargo for the Christmas season. More in Spanish: (El Universal;


Venezuela to create state run storage facilities for legal sales to Colombia

President Nicolás Maduro announced the creation of a system of storage facilities for the legal sale and distribution of Venezuelan products to Colombia, at international prices agreed to by both governments. He added they would be set up in border regions. More in Spanish:  (Agencia Venezolana de Noticias;á-sistema-almacenes-para-venta-y-distribución-legal-productos-colombia; El Mundo,; El Universal,



Logistics & Transport


Government pays airlines only 15% of the amount offered

On September 26 the National Foreign Trade Center announced it would pay international airlines operating here US$ 125 million. After one month, only LUFTHANSA has received US$ 19 million for its February 2014 operations, the others have received nothing. Total government debt to airlines is around US$ 3.5 billion and has caused companies to drastically cut down on flights and seats serving the Venezuelan market. More in Spanish: (El Nacional;



Oil & Energy


PDVSA says it will invest US$20 billion to boost refining capacity

State oil company PDVSA plans to invest US$ 20 billion to expand its domestic refining capacity by 20%, a company official said on Wednesday, without providing a time frame for when the investments would take place. Refining chief Jesus Luongo said PDVSA would add 265,000 barrels per day (bpd) of refining capacity to the current 1.3 million bpd. The plans include doubling the capacity of the 146,000 bpd El Palito facility and boosting capacity of the 187,000 bpd Puerto la Cruz refinery by 20,000 to 25,000 bpd. (Reuters,; El Universal,


Bolivia to seek oil along with Venezuela's PDVSA in northern La Paz

PETROANDINA, a joint venture between Bolivian State-run oil company YPFB and State-run oil holding Petróleos de Venezuela (Pdvsa), is to continue oil exploration in northern La Paz department, Bolivia, says Carlos Villegas, President of the Bolivian corporation. "We will start drilling in Lliquimuni in the first half of December. We are hopeful about finding oil," Villegas explained. (El Universal,





Government seizes warehouses packed with medical goods, food; raises jail sentences, curtails street vendors

The government said on Thursday it had taken over warehouses around Venezuela crammed with medical goods and food that "bourgeois criminals" were hoarding for speculation and contraband. The socialist government says businessmen and wealthy opponents are trying to sabotage the economy to bring Maduro down, while also seeking to make profits from hoarding, price-gouging and smuggling across the border to Colombia. Maduro said "The bourgeois parasites are hurting the people's health", charging the goods had been bought with dollars obtained from the state's foreign exchange board and were due to be sold across the border in Colombia. Maduro also announced he would use decree powers to increase the maximum jail sentence for smugglers to 14 years, set new "fair price" controls for basic goods from Nov. 1, and curtail informal reselling of food and medical essentials on the street. (Reuters,


Coca Cola takes US$ 268 million charge on Venezuela currency

"During the nine months ended September 26, 2014, the Company recorded charges of US$ 268 million related to the devaluation of the Venezuelan bolivar, including a write-down of receivables related to concentrate sales to our bottling partner in Venezuela as well as our proportionate share of the charge incurred by this bottler, an equity method investee." (Latin American Herald Tribune,


Government subsidy for coffee in Venezuela

The government has authorized the "single, direct, and transitory" subsidy of the roasted coffee industry manufacturing ground and roasted coffee produced at home. (El Universal,



Economy & Finance


2015 budget projects 3% GDP deficit, assigns 20% to debt service

The 2015 budget law presented by the government to the National Assembly estimates a fiscal deficit of 3% GDP, while total government debt by 2014 is estimated at US$ 127.8 billion - not counting PDVSA obligations and Chinese loans. Debt service costs will double the amount to be spent in the Education and Labor ministries, quadruples that to be spent on higher education, health and defense. More in Spanish: (El Universal,;; and El Nacional;


Maduro seeks to avoid costly foreign borrowing, announces "banking revolution"

President Nicolas Maduro says the country will avoid more borrowing on international markets because of rising costs as a result of worsening credit risk perceptions. "We are not going to use or ask for credit, in those conditions the global capitalist banks want to impose," Maduro said. "We're not going to do it. We have other (financing) sources, fortunately." He said there is a "sort of financial, credit, international blockade" on the country, repeated earlier statements that Venezuela was prepared for volatility on global energy markets, and added that he would shortly announce a “banking revolution to democratize resources”. He offered no further details. (Reuters,; El Universal,; Veneconomy,


Maduro accuses foreign media of spreading Venezuela default fear

President Nicolas Maduro has denounced Thomson Reuters Corp. (TRI), saying its news agency is part of a foreign media campaign to spread fears that Venezuela will default on debt. “I denounce the Reuters news agency because of the damage it causes with its international cables,” Maduro said. “They run, they go to the experts, they sound alarms.”

Reuters, along with other news agencies, has reported this month that investors are concerned Venezuela won’t pay its sovereign debt obligations. (Bloomberg,


Government vows payment of US$3 billion bond, says it is ready for oil volatility

Finance Minister Rodolfo Marco says the nation is "fully prepared" to cope with price volatility on the global oil market and would honor a US$ 3 billion bond payment due next week. (Reuters,; El Universal,


Barclays: Economic adjustment unavoidable amid ebbing oil prices

Economic research firm Barclays says that under the current scenario, the slide in oil prices makes Venezuela think adjustments are unavoidable. Beyond a drop in oil revenues, the government will face more difficulties to access financial markets to finance its deficit. In its latest report, entitled "Venezuela: the perfect storm," Barclays outlines that every dollar oil price declines means a US$ 728 million-drop in the country's revenues. "This has raised the pressure on Venezuela's hard currency cash flow." (El Universal,


Foreign investment down 54% in Venezuela during the first half of 2014

A report by the UN's Economic Commission for Latin America and the Caribbean (ECLAC) shows foreign investment into Venezuela dropped 54% during the first half of 2014, for a total US$ 1.761 billion. At the same time, Venezuelan direct investment abroad rose by 29%.  More in Spanish: (Notitarde,; El Mundo,; El Universal,; Ultimas Noticias,; El Nacional;


Venezuela pays for expropriation mistakes

Venezuela today is paying for the irresponsible and insatiable wave of expropriations which, on the one hand, has taken national production to critical levels and led the country to rely on imports for its livelihood; and on the other, has discouraged investment capital while making the State go to arbitration courts so it can respond to complaints from international companies whose rights have been violated. (Latin American Herald Tribune,



Politics and International Affairs


Maduro faces rough months ahead

Significant financial trouble, such as defaults on foreign debt or significant social spending cuts, is not yet imminent, but a long period of depressed oil prices will make such problems more likely. President Nicolas Maduro's administration will continue trying to stem inflation and shortages, but a likely cut in spending could affect the ruling party's popularity. If low oil prices last more than a few months, Venezuela will try to shore up its precarious foreign currency reserves. It can sell part of its gold reserve to raise more cash, but this would likely be a desperate move. Venezuela also will continue relying on the National Development Fund and Chinese loans, though declining oil production puts these under an increasing threat. Over the next year, Venezuela will take some tentative steps toward straightening its financial situation. PDVSA will begin offering a restructuring plan to bondholders holding debt that will mature in 2016 and 2017. If PDVSA does not restructure, it will have to pay US$ 18.5 billion in debt payments and interest from 2015 to 2017. If Caracas cannot successfully carry out the debt swap, then the possibility of difficult domestic decisions concerning spending will become more likely. According to an unconfirmed report, the government is trying to mitigate the fallout from its declining popularity by rescheduling legislative elections originally slated for November 2015 to April or July of that year. (Stratfor,


A power struggle may be emerging in Venezuela

On Oct. 7 Jose Odreman, the leader of the "March 5" colectivo, was killed by the Criminal Investigative Police (CICPC), along with four other colectivo members following a raid on their headquarters in Caracas. The events suggest possible fractures within the official and unofficial security forces that President Maduro will have to rely on to secure the stability of his government in the coming months and years. Colectivos have been used to intimidate dissenters and operate beyond the boundaries of the conventional state apparatus. Regardless of the proximate cause of the conflict between CICPC and the colectivo, disunity among the state's security forces comes at a dangerous time for Maduro. If the Odreman killing leads to a significant portion of the colectivos becoming unavailable to the central government to deploy against protesters, Maduro will lose a useful tool for mitigating social unrest. (Stratfor,


The Electoral Nomination Committee was sworn in at the National Assembly. It is made up of 21 people (13 from the government and eight from the opposition) must now appoint a chairman and a deputy chairman and draft internal rules within a six-day deadline. They will then make the call for candidates to the three CNE positions available. (Veneconomy,; El Universal,


Major general terms entry of officials into Colombia a "misunderstanding"

Major General Efraín Velasco, defense chief for Venezuela's Andean Region says the recent entry of six Venezuelan military officers into the Colombian territory during an operation conducted within the framework of Venezuela's war on smuggling was a due to a "misunderstanding".  The event resulted in a note of protest sent by Colombia to its neighboring country. (El Universal,


Venezuela calls the UN request to release López "unreasonable"

The Venezuelan mission at the United Nations in Geneva has sent a notice to the Office of United Nations Commissioner for Human Rights (UNCHR) labeling as "unreasonable" the latter's petition to release Venezuelan opposition leader Leopoldo López. In the letter, the Venezuelan government claims that UN Commissioner for Human Rights, Zeid Ra'ad Al Hussein, "has overdone his incumbency; has showed total ignorance of the limits of his scope, and has been unreasonable, to the extent of urging Venezuelan authorities to release López and (ex mayor Daniel) Ceballos forthwith". (El Universal,


Spain's Rajoy expresses concern over dissenter Leopoldo López, and is quickly rebuffed

Spanish President Mariano Rajoy also expressed his concerns over the detention of Leopoldo López, after meeting with Lilian Tintori, wife of Venezuelan opposition leader. He stressed that the European Union has been worried about the trial facing López. Further, he highlighted the need to respect freedom of expression and the right to demonstrate peacefully in Venezuela. The Venezuelan government quickly rejected Rajoy's "interventionist" comments in a protest note to the Spanish Foreign Ministry. (El Universal,; and more in Spanish: AVN;ñol)



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.