november 21, 2014

International Trade

 

Cargo that has arrived at Puerto Cabello:

• Over 776 tons of live cattle from Brazil for Frigorífico Industrial Los Andes, Asociación Cooperativa Hoyo de la Puerta and Carnes El Pozo, C.A.
• Over 1,160 tons of milk and coffee for state companies.

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-tres-mil-reses-llegaron-al-puerto-carabobeno-desde-Brasil-2286379/2014/11/18/395054/)

 

 

Logistics & Transport

 

Air ticket sales down 50% from 2013

Humberto Figuera, president of the Airlines Association of Venezuela (ALAV), reports the number of airplane seats has decreased by 50% in January-October 2014, compared to the same period last year.
Figuera said air tickets sold in 2013 were 3,133,144, and only 1,450,000 tickets have been sold in January-October this year, "that is, half the number sold in 2013". (El Universal, http://www.eluniversal.com/economia/141120/airlines-association-air-ticket-sales-down-50-compared-to-2013)

 

Oil & Energy

 

Venezuela willing to cut oil output along with OPEC

Venezuela would be willing to cut its own oil production if OPEC decides to limit output when it meets on Nov. 27, says Foreign Minister Rafael Ramirez. Ramirez, who was until recently oil minister and president of state oil company PDVSA, declined to say what specific proposal Venezuela planned to take to the Organization of the Petroleum Exporting Countries meeting in Vienna. Asked which OPEC members would support that proposal, Ramirez said: "I hope all of them." Chances have risen that OPEC will agree to reduce production, according to oil industry analysts, citing delegates with the producer group. (Reuters, http://www.reuters.com/article/2014/11/20/us-venezuela-oil-idUSKCN0J424X20141120; El Universal, http://www.eluniversal.com/economia/141120/venezuelas-pdvsa-ready-to-cut-oil-output-to-stop-oil-fall)

 

Paraguaná’s Refining Complex (CRP) is processing crude oil at nearly half its capacity after several power outages, reports union leader Iván Freites on Wednesday. The CRP is processing some 500,000 barrels per day (bpd), compared to its total capacity of 955,000 bpd, with Amuay processing some 240,000 bpd and Cardón, processing 255,000 bpd. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41944&idc=4)

 

Although PDVSA guaranteed fuel supplies to Aragua and Carabobo states on Tuesday, long lines have persisted at the few gas stations selling gasoline. In Carabobo, public transportation has stopped running in some areas as units have been unable to get gasoline. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41936&idc=4)

 

Foreign Minister says Venezuela to continue promoting PETROCARIBE

Foreign Minister Rafael Ramírez says that despite the drop in oil prices Venezuela will continue to meet oil supply agreements in the Caribbean and Central America through PETROCARIBE. He reports 301 million barrels have been supplied over the past nine years, billed at US$ 28 billion, and that Venezuela has received US$ 14 billion in payment, and US$ 3 billion in kind. More in Spanish: (PDVSA, http://www.pdvsa.com/; El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/venezuela-ha-suministrado-301-millones-de-barriles.aspx; AVN; http://www.avn.info.ve/contenido/unión-del-caribe-y-seguridad-energética-son-principal-reto-petrocaribe, http://www.avn.info.ve/contenido/venezuela-garantiza-continuidad-del-intercambio-energético-petrocaribe, http://www.avn.info.ve/contenido/rafael-ramírez-petrocaibe-aminoró-efectos-crisis-del-capitalismo-países-más-pobres; El Nacional; http://www.el-nacional.com/)

 

 

Commodities

 

Economic Affairs VP and automotive industry representatives monitor agreements

Economic Affairs Vice President General Rodolfo Marco Torres has met with representatives of the automotive and spare parts sector to monitor their agreements with the Government aimed at boosting production. GOODYEAR resumed a plan to export tires made in Venezuela amid part of the agreements, says, Marco Torres. He also noted that he held a meeting with representatives of TOYOTA Motor Corporation, also for the follow-up of agreements. "Toyota reaffirms commitment to continue manufacturing vehicles and expresses confidence in Venezuela," he said. (AVN, http://www.avn.info.ve/contenido/vice-president-economy-automotive-representatives-monitor-agreements)

 

 

Economy & Finance

 

Maduro raises taxes, reserves to help growth

President Nicolas Maduro raised taxes on goods ranging from yachts to rum and increased international reserves as the government responds to the lowest oil prices in four years. Bonds rallied by the most in almost six years. The president said that the 28 laws he signed using decree powers will restore growth in an economy suffering the world’s fastest inflation and shortages of basic goods. He ordered that a US$ 4 billion loan from China be added to international reserves. “Maduro is at last recognizing there’s a need for a fiscal adjustment and stronger reserves,” says Orlando Ochoa, economics professor at Andres Bello Catholic University in Caracas. “The measures in themselves are a drop in the ocean given the magnitude of the problem. Rather, this is a signal of bigger steps to come.” (Bloomberg, http://www.bloomberg.com/news/2014-11-19/venezuela-s-maduro-raises-taxes-reserves-to-help-growth.html)

 

Venezuela’s US$ 4 billion reserves boost wins investor approval

Investors in Venezuelan bonds are welcoming steps by President Nicolas Maduro to bolster transparency in government accounts after concern mounted that the country is running out of cash to service its debt. Venezuelan notes posted the biggest rally in three weeks yesterday after Maduro ordered that US$ 4 billion from Chinese loans be added to foreign reserves, which had dwindled to an 11-year low. By transferring the Chinese funds it has increased international reserves to US$ 23.550 billion, according to the Central Bank of Venezuela (BCV). At US$ 21.4 billion, including gold assets, the central bank’s holdings only covered about 60% of debt due by the end of 2017. Venezuela’s borrowing costs are the highest in emerging markets at 20.44%. While the loans are intended to pay for specific projects and aren’t supposed to be used to pay debt, the transfer from off-budget funds to central bank accounts may allay concerns that the country is teetering toward default, according to Goldman Sachs Group Inc. The move is a departure from the opacity that often surrounds cash from Chinese loans, which mostly remains in off-budget funds excluded from parliamentary oversight, Caracas-based researcher ODH Grupo Consultor said. Maduro said Marco will travel to China and some OPEC and non-OPEC countries in the next few days to fine-tune four financing modalities. (Bloomberg, http://www.bloomberg.com/news/2014-11-20/venezuela-s-4-billion-boost-to-reserves-wins-investor-approval.html; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41931&idc=2; http://www.veneconomy.com/site/index.asp?ids=44&idt=41942&idc=2; and more in Spanish: Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/marco-torres-realizara-gira-para-pactar-financiami.aspx#ixzz3JVXJ1yhz; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/se-cumplio-traspaso-de-4-000-millones-al-bcv.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/marco-torres-realizara-gira-para-pactar-prestamos-.aspx; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/gobierno-culmino-traspaso-de--4-000-millones-a-las.aspx#ixzz3JhMk6jK7)

 

Regime seeks additional revenue through tax reform

The government has reformed five tax laws to increase income and bridge the gap in public accounts.
President Nicolás Maduro, in the last days of the expiring enabling law, has made changes to the income tax law, the law on value added tax (VAT), the tax law on alcoholic beverages, the tax law on cigarettes and the organic tax code (COT). Following such move, Economy Vice-President and Finance Minister General Rodolfo Marco Torres said the reform of the legal framework would "optimize tax collection and provide additional income."
Such adjustments, he said, "will benefit all sectors. They will not affect the larger tax base. They are progressive tax reforms. Therefore, those who earn more will pay more." (El Universal, http://www.eluniversal.com/economia/141120/venezuelan-government-seeks-additional-revenue-through-tax-reform)

 

Government debt estimated at 27-30% of GDP for 2015

The Economic Affairs and Finance Ministry estimates that projected indebtedness for 2015 will bring total government debt to around 27-30% of GDP, as reported by Beatriz Bolívar, head of the National Public Credit Office to the National Assembly's Finance Committee. Officials did not reveal current government debt, which stood at US$ 127.7 billion during the first semester this year. More in Spanish: (El Universal, http://www.eluniversal.com/economia/141121/calculan-que-deuda-del-gobierno-en-2015-sera-30-del-pib)

 

Analysts say that Venezuela meets all requirements for hyperinflation

Economic analysts say Venezuela is sunk in a number of economic distortions that will lead the nation into hyperinflation during 2015, if necessary steps aren't taken, particularly in foreign exchange policy. They indicate prices will continue to shoot up along with the parallel exchange rate, and scarcity will worsen by March next due to the drop in inventories. They say the newly enacted fiscal reform will cause demand to shrink further. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/mercados/venezuela-tiene-todas-las-condiciones-para-ir-a-un.aspx#ixzz3JhLsLZan; El Universal, http://www.eluniversal.com/economia/141121/plantean-necesidad-de-una-revision-macroeconomica; El Nacional; http://www.el-nacional.com/)

 

BOFA estimates unified exchange rate should be VEB 35/US$1, subsidy now around US$ 50 billion

Francisco Rodríguez, Chief Economist for the Andean Region at Bank of America Merrill Lynch says a

Venezuela's unified exchange rate should be VEB 35/US$ 1, which is the average of current operations. He says the cost to the government of keeping the subsidized three tiered system is around US$ 50 billion yearly, and advises unifying rates and raising gasoline prices in order to finance subsidies for the neediest. Rodriguez says that by delivering cheap FOREX, Venezuela is "at this time (Venezuela) is paying the greatest tax there is: inflation. Deteriorating buying power is what supports the exchange rate subsidy." More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/rodriguez--tipo-de-cambio-para-la-unificacion-podr.aspx#ixzz3JbTElYwQ, and El Nacional; http://www.el-nacional.com/)

 

The overhaul of the Income Act (ISLR), signed by Nicolás Maduro, eliminates tax waivers for cooperatives and foundations. It also eliminates the “inflation adjustment” used by companies. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41934&idc=2)

 

 

Politics and International Affairs

 

 

Obama administration would back sanctions against Venezuela

The Obama administration would like to work with the U.S. Congress to impose sanctions on Venezuela in response to a crackdown on anti-government protests, President Barack Obama's deputy national security adviser told lawmakers on Wednesday. Tony Blinken, who is Obama's choice to be deputy secretary of state, said Washington had refrained from pushing for sanctions in the past few months to allow diplomatic efforts by some Latin American countries to secure the release of opposition leaders from jail and nudge Caracas toward electoral reform. But those efforts have failed, Blinken told the Senate Foreign Relations Committee at his nomination hearing. "We would not oppose moving forward with additional sanctions," he said. (Reuters, http://www.reuters.com/article/2014/11/20/us-usa-venezuela-sanctions-idUSKCN0J400X20141120; El Universal, http://www.eluniversal.com/nacional-y-politica/141120/us-govt-seeks-sanctions-on-venezuela-for-repression-during-protests)

 

Brazilian Foreign Affairs Minister slams visit by Venezuela's Jaua

Brazilian Foreign Minister Luis Alberto Figueiredo told his nation's Lower House’s Foreign Affairs Committee that Brazil forcefully demanded an explanation from Venezuelan authorities since a visit by Venezuelan Communes Minister Elías Jaua was never notified. Jaua used the visit to sign an agreement with a Brazilian rural movement in Sao Paulo, an agreement Brazil does not consider valid. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41943&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/141120/brazil-in-disagreement-with-venezuela-over-unreported-agreement; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2361545&CategoryId=10717)

 

Bruised Venezuelan opposition may make headway in 2015

National conditions may be slowly turning in favor of the opposition. A sharp economic decline in the OPEC nation, made worse by falling oil prices, means they could make significant gains at legislative elections in 2015. A strong result would encourage the opposition to then seek a recall referendum in 2016 to try and end Maduro's presidency half-way through. It could also embolden factions within the ruling Socialist Party disillusioned with Maduro. He is currently taking a battering in the polls. DATANALISIS, perhaps the country's most respected pollster, said 80% of Venezuelans now view the state of the nation negatively and disapprove of the socialist economic model. Maduro's rating is off from about 50% when he came to power to 30% now, according to the survey in September, while remarkably 68% think he will be out by 2016. "If the elections were today, the government couldn't win," DATANALISIS head Luis Vicente Leon said, predicting the opposition would win with a 20-point margin. Though the next elections for the 165-seat assembly have to be held by the end of 2015, and are traditionally in the last quarter, there is speculation the government might bring them forward to reduce fallout from a deteriorating economy. The opposition coalition's new executive secretary, Jesus Torrealba, insists that change is coming. "The glacier that was 'Chavismo' is starting to melt," he says. (Reuters, http://www.reuters.com/article/2014/11/20/us-venezuela-opposition-idUSKCN0J41E220141120)

 

Leopoldo López says he will not attend any more hearings until a decision is reached on a motion filed by his defense over Judge Susana Barreiros’ dismissal of the UN’s resolution before the Appeals Court. López’ attorneys claim the Venezuelan State has no option but to comply with the UN’s recommendation. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41935&idc=1)

 

Venezuelan appointed UN’s Economic Development Deputy Secretary General

Lenni Montiel, is replacing Pakistani Shamshad Akhtar. Montiel was Economic, Social and Development Affairs Director in the Executive Office of the UN’s Secretary General. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41932&idc=2)

 

 

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.