International
Trade
Cargo that has arrived at Puerto Cabello:
- Over 648 tons of beef,
chicken and ham from Uruguay for CASA
- Over 436 tons of
transformers from Prolec GE Int. for Corporación Eléctrica Nacional (CORPOELEC)
- Over 288 tons of
chicken from Argentina, Sede América S.A. for CASA
Oil &
Energy
Venezuela oil barrel falls to new 5 year low
Venezuela's weekly oil basket fell to its lowest since
2009. 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 January 30 was US$ 38.82, down 70 cents from the
previous week's US$ 39.52. According to official Venezuelan government
figures, the average price in 2015 for Venezuela's mix of heavy and medium
crude is now US$ 40.30. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2372074&CategoryId=10717;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42618&idc=4)
PDVSA oil executives arrested on corruption charges
Venezuela has arrested state oil company PDVSA's
production boss for the oil-heavy western part of the country on corruption
charges, a week after arresting an oil ministry employee, reported to be his
sister, on similar suspicions. Jose Luis Parada is suspected of "administrative irregularities in contracting
companies for the distribution of gasoline," the prosecutor's office
said. The news follows last week's arrest of his sister, oil ministry official
Nubia Parada, in charge of overseeing the domestic fuel market, on suspicion of
corruption. Intelligence officials arrested Jose Luis Parada earlier on Monday
at an air base in the state of Zulia near the Colombian border. Jose Luis
Parada previously ran PDVSA Servicios, which provides services to the company's
oilfields. (Reuters, http://www.reuters.com/article/2015/02/02/venezuela-corruption-idUSL1N0VC1QI20150202)
Antigua wants Venezuela to buy stake in Oil Company
Antigua and Barbuda Prime Minister Gaston Browne has
held talks with President Nicolas Maduro about Caracas’ becoming a shareholder
in the state-owned West Indies Oil Company. Browne “invited Venezuela to take up a stake in WIOC” and to work with
Antigua and Barbuda “as majority
shareholder in transforming WIOC into a key distribution center for petroleum
products in the Eastern Caribbean,” according to a statement released
Friday. “I was impressed by the positive
reaction of the Venezuelan president to our proposals,” Browne said. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2371987&CategoryId=10717)
Ruling in dispute with Venezuela compensates
ExxonMobil's losses
Oil company ExxonMobil managed to limit the negative
impact of the slump in oil prices in 2014, thanks to higher earnings from
chemical business and exceptional revenue from a favorable arbitration ruling
for expropriated assets in Venezuela. In the fourth quarter, ExxonMobil's profits
dropped 21.3%, totaling US$ 6.5 billion, a decline compared to the same period
the previous year. However, the company reported earnings of US$ 1.56 per share
against the expected US$ 1.34 per share last year. The drop in oil prices
caused losses worth US$ 2 billion, ExxonMobil explained in a communiqué. (El
Universal, http://www.eluniversal.com/economia/150202/ruling-in-dispute-with-venezuela-compensates-exxonmobils-losses)
Jesse Chacón says government will invest US$ 4.9
billion in electric system
Jesse Chacón, Minister of Electric Energy and
President of the National Electric Corporation (CORPOELEC) claims that VEB 4.29
billion (US$ 676.41 million) plus US$ 4.9 billion is to be invested to enhance
the National Electric System (SEN), with the addition of more that 1,800
megawatts (Mw) of generating capacity and the expansion of transmission networks.
"This year, five large works are
expected to be ready," says Chacón. "It is a large investment as part of a constant work the government has
been executing, and consolidated efforts," her added. (El
Universal, http://www.eluniversal.com/economia/150202/venezuela-to-invest-usd-49-billion-in-electric-system)
Economy
& Finance
Stock exchanges start testing new FOREX platform
Stock exchanges have started trial runs to launch a
new foreign exchange platform with a free floating rate, the third mechanism
under the foreign exchange controls currently in force. Ricardo Montilla, president
of the National Association of Stock Exchange Operators. He said there will be
"no fixed price but free fluctuation
of supply and demand which will determine price". Cesar Atencio,
President of the Exchange House Association, believes the third market could be
operating next week, and that there will be no official controls except that
all transactions will be authorized by the Central Bank. Montilla added that 36
stock exchange operators met with Finance Minister General Rodolfo Marco Torres
and Central Bank President Nelson Merentes, to discuss the new system's
preliminary conditions. Government officials have said that the new mechanism
would work like the currency swap market of public securities which operated
until 2010, when it was discontinued by the late President Hugo Chávez. (El
Universal, http://www.eluniversal.com/economia/150202/stock-exchanges-start-testing-new-forex-platform;
and more in Spanish: El Nacional; http://www.el-nacional.com/; El Universal, http://www.eluniversal.com/economia/150203/casas-de-cambio-venderan-dolares-al-menudeo; http://www.eluniversal.com/economia/150203/casas-de-cambio-venderan-dolares-al-menudeo)
U.S. companies face billions in Venezuela currency
losses
At least 40 major U.S. companies have substantial
exposure to Venezuela’s deepening economic crisis, and could collectively be
forced to take billions of dollars of write downs, a Reuters analysis shows. The
companies, all members of the S&P 500, and including some of the biggest
names in Corporate America such as autos giant General Motors and drug maker
Merck & Co Inc, together carry at least US$ 11 billion of monetary assets
in the Venezuelan currency, the bolivar, on their books. The official rate is
at 6.3 bolivars to the dollar and there are two other rates in the government
system – known as SICAD 1 and SICAD 2 – at about 12 and 50. The black market
rate, though, was at about 190 bolivars to the dollar on Sunday. The problem is that the dollar value of the
assets as disclosed in many of the companies' accounts is based on either the
rates at 6.3 or 12 and only a limited number of transactions are allowed at
those rates. The assets would be worth a lot fewer dollars at the 50 rate in
the government system and the dollar value would almost be wiped out at the
black market rate. (Reuters, http://www.reuters.com/article/2015/02/02/us-venezuela-usa-corporations-insight-idUSKBN0L60CT20150202)
Central Bank claims international reserves rose US$
1.869 billion in one day
Venezuela's Central Bank is
reporting that international reserves went from US$ 20.626 billion on January
28 to US$ 22.495 billion on January 29. (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/reservas-internacionales-subieron-1-869-millones-e.aspx#ixzz3QaHFK600)
15% increase of Venezuelan minimum wage and pensions to Bs.5,634.47 came into effect yesterday February 1,
as announced by Nicolás Maduro on January 21. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42627&idc=2)
Government expenditures grew 53% in 2014
Both wages and other needs of the official bodies
pushed government expenditure here up in 2014.
Figures from the Ministry of Finance reveal that last
year the Treasury disbursed VEB 955.9 billion (US$ 150.5 billion), up 53% from
2013, when VEB 624 billion (US$ 98.27 billion) were spent. Due to higher
expenditures over the past years, the fiscal gap has soared. In 2013 it was
16.9% of GDP. (El Universal, http://www.eluniversal.com/economia/150202/venezuelan-govt-expenditure-grows-53-in-2014)
Politics and
International Affairs
US rejects accusations that Vice President Biden
conspired against Venezuela
The United States has rejected as "patently false" the claims made by
President Nicolas Maduro that US Vice President Joseph Biden conspired to overthrow
him. Maduro had claimed that Biden had tried to incite the overthrow of the
Venezuelan government during a Caribbean energy summit hosted by the American
vice president in Washington last month. According to Maduro, Biden told to the
leaders of Caribbean nations that the government's days were numbered and it
was time they abandon their support. “The
imperial power of the North has entered a dangerous phase of desperation and
they have gone on to speak to governments of the continent to announce the
overthrow of my government. I accuse U.S. Vice President Joe Biden of having
personally talked with presidents and prime ministers” about it, Maduro
said at a rally. He made the same accusation on Friday but had conceded that he
was willing to give U.S. President Barack Obama the benefit of the doubt on his
involvement in the alleged plot. Biden's office quickly retorted that the
accusations made by Maduro "are
clearly part of an effort to distract from the concerning situation in
Venezuela, which includes repeated violations of freedom of speech, assembly,
and due process." (DW, http://www.dw.de/us-reject-accusations-that-joe-biden-conspired-against-venezuela/a-18231061;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2372154&CategoryId=10717)
US slaps visa restrictions on unnamed Venezuelan
officials
The United States has imposed visa restrictions on
unnamed current and former Venezuelan officials involved in alleged human
rights abuses and on people believed responsible for public corruption in the
oil-exporting nation. The move, which was announced by the U.S. State
Department and could affect immediate family members of those targeted, is the latest sign of the strained
relations between Washington and Caracas. "We are sending a clear message that human rights abusers, those who
profit from public corruption, and their families are not welcome in the United
States," the State Department said in a brief statement, saying it
would not identify the targets of its action because of U.S. visa
confidentiality regulations. President Nicolas Maduro reacted angrily, saying
he would write a letter to Obama over what he called an attempt to violate
Venezuela's national sovereignty. He argued that U.S. policy toward Venezuela
has been kidnapped by "irresponsible,
imperial forces that are putting the United States on a dead-end" in
its relations with Venezuela and the broader region. (Reuters, http://www.reuters.com/article/2015/02/02/venezuela-usa-visas-idUSL1N0VC1PM20150202;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2372232&CategoryId=10717;
El Universal, http://www.eluniversal.com/nacional-y-politica/150202/us-imposes-further-visa-restrictions-on-venezuelan-officials;
Star Tribune, http://www.startribune.com/politics/national/290551491.html)
Regime arrests drugstore chain executives and other
businesses,
The government detained executives of the FARMATODO
drugstore chain and their 167 stores were “intervened”
after being accused by President Nicolás Maduro of reducing the number of
employees working on cash tills in order to create queues and "annoy the Venezuelan people" and
whip up anger with the socialist government. Barely three days earlier, a
letter of intent to guarantee medicine supplies and other products had been
signed between Vice President Jorge Arreaza top representatives from FARMATODO,
FARMAHORRO and LOCATEL. Maduro later said the company "should remain in the hands of its management".
He then personally ordered the intervention of the 39 store DÍA A DÍA market
chain operating in poorer neighborhoods and the arrest of its management, as
well as of a beef distribution firm in Falcón state, which he asked Captain
Diosdado Cabello, President of the National Assembly, to personally supervise. (Reuters,
http://www.reuters.com/article/2015/02/02/venezuela-shortages-jail-idUSL1N0VB0QB20150202; BBC
News; http://www.bbc.com/news/world-latin-america-31086391?utm_source=Sailthru&utm_medium=email&utm_term=%2AMorning%20Brief&utm_campaign=2014_MorningBrief_Feb.2.2015; Veneconomy,
http://www.veneconomy.com/site/index.asp?ids=44&idt=42626&idc=3;
http://www.veneconomy.com/site/index.asp?ids=44&idt=42625&idc=3;
and More in Spanish: El Universal, http://www.eluniversal.com/economia/150203/descartan-expropiacion-de-la-cadena-farmatodo; El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/fotos---villegas--encontramos-productos-basicos-en.aspx; El Nacional; http://www.el-nacional.com/; Diario 2001, http://www.2001.com.ve/en-la-agenda/89628/maduro-ordeno-ocupar-supermercados--dia-a-dia--durante-la-madrugada.html; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/fotos---villegas-encontramos-productos-basicos-en-.aspx; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/gobierno-ocupa-distribuidora-carnica-2005-y-detien.aspx#ixzz3Qg3ttS7C; AVN; http://www.avn.info.ve/contenido/fotos-hallan-este-lunes-productos-acaparados-depósito-supermercado-día-día; http://www.avn.info.ve/contenido/empresa-cárnica-2005-vendía-carne-pollo-y-pescado-sobreprecios-hasta-1000; http://www.avn.info.ve/contenido/empresa-cárnica-ocupada-falcón-será-transformada-para-estar-al-servicio-del-pueblo)
Maduro announces future actions to solve shortages
Nicolás Maduro claims 1,000 State PDVAL’s grocery stores
will be set up in all the slums in the country to “guarantee food for the people.” He says he has already authorized
the funds and the construction of said facilities which will have to be ready “this very month.” (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42624&idc=3)
Defense Minister accuses local media of "causing uneasiness"
Defense Minister General Vladimir Padrino López, has
defended his resolution to allow troops to use firearms to control protests in
the event of "deadly risk situations."
Padrino questioned the work of "some
media outlets," which have been "taking out of context" excerpts of the resolution to "cause uneasiness among the Venezuelan
population."
(El Universal, http://www.eluniversal.com/nacional-y-politica/150202/venezuelan-media-accused-of-causing-uneasiness)
(El Universal, http://www.eluniversal.com/nacional-y-politica/150202/venezuelan-media-accused-of-causing-uneasiness)
Capriles asks army not to use firearms in
demonstrations
Opposition leader and governor of Miranda state
Henrique Capriles has urged the military to ignore a government resolution
allowing them to use firearms to suppress demonstrations in the country. "Demonstrations must not be broken up with
bullets, but with water, tear gas. I request the military to ignore the
resolution and I ask: do you want to become unpopular and be linked to such a
disaster?" says Capriles. He said the resolution is a maneuver by President
Nicolás Maduro's government to divert attention away from the problems of
Venezuela. (El
Universal, http://www.eluniversal.com/nacional-y-politica/150202/capriles-requests-venezuelan-army-not-to-use-firearms-in-demonstration)
Machado warns that Venezuela risks a humanitarian
crisis
Ousted opposition legislator María Corina Machado
believes that if Venezuela continues in the direction it is going "we are running the risk of a humanitarian
crisis, because the people are hungry, public health has collapsed and income
is not sufficient. We must react and face the fact that a change of government
is the only way to recover". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/150202/machado-venezuela-corre-el-riesgo-de-una-crisis-humanitaria; El Nacional; http://www.el-nacional.com/)
Nine out of ten Venezuelans oppose devaluation, six
out of ten support adjusting gasoline prices
According to polls taken by
HINTERENLACES - which some consider pro government - nine out of every ten
Venezuelans oppose another "devaluation",
six out of ten agree the government should "freeze the price of food", eight out of ten support raising
wages, and six out of ten support an increase in the price of domestic
gasoline. More in
Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/150202/6-de-cada-10-ciudadanos-avalan-aumento-de-gasolina;
El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/hinterlaces--62--de-los-venezolanos-apoya-posible-.aspx;
Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/hinterlaces-62-de-los-venezolanos-apoya-posible-au.aspx)
Running out of time: Dimming prospects for reform in
Venezuela
In the absence of new loans from new sources,
Venezuela’s government is rapidly running out of resources. A Wall Street
investment bank recently calculated that, even under extremely generous
assumptions about revenues and one-time sales of government assets such as
CITGO, Venezuela would still be short US$ 7 to 8 billion in foreign exchange in
2015. With almost no savings to fall back on during the present crisis and
little access to new loans, Venezuela will have to look to cut spending and
increase revenues. If oil prices remain at low levels during 2015, there are
really only two options for Venezuela: seek a traditional bailout with the
assistance of international financial institutions or undertake some form of
default. President Maduro has so far ruled out going to the IMF for support.
The alternative is that he will eventually be forced to default on Venezuela’s
international debt obligations. To minimize the amount of international assets
that might be seized by creditors in the event of a default, Venezuela would be
likely to shift its exports onto leased tankers. It would also be likely to
require buyers to take delivery of product while it is still in its home ports.
CITGO, which is wholly owned by the Venezuelan government, would be at risk in
this scenario. Even a partial default, though, would mean further economic
hardship for Venezuelans, greater scarcity and deeper economic contraction. Any
successful reform will require that Venezuelans achieve a degree of political
and social consensus that they do not presently possess. This means dim
prospects for pulling back from the abyss, and an increased likelihood of further
political and social turmoil in this troubled nation. (Brookings, http://www.brookings.edu/research/articles/2015/01/28-economic-reform-venezuela-trinkunas)
Nisman notes allege
Venezuelan hand in Iran's Buenos Aires bombing cover-up
The ongoing investigations and fast-paced
developments surrounding the death of Argentinean prosecutor Alberto Nisman
have brought forth the alleged involvement of a Venezuelan official. In the
accusation Nisman filed before his death — an alleged draft of which was published
in Argentinean daily Clarín — the prosecutor wrote that Venezuela’s
then-ambassador to Argentina, Roger Capella, had in 2006 contributed to the
cover-up of the 1994 AMIA terrorist attack. According to Nisman’s evidence, the
diplomat helped foment protests against the arrest of Iranian suspects ordered
by the Argentinean judiciary. Argentinean government chief of staff Jorge
Capitanich departed from usual procedure during a morning press conference on
January 2, when he shredded several pages of local newspaper Clarín, claiming
that its coverage of Nisman’s accusations was “not truthful.” (Panampost, http://panampost.com/belen-marty/2015/02/02/nisman-notes-allege-venezuelan-hand-in-bombing-cover-up/)
The Caribbean faces
the challenge of oil independence
Energy independence in the Caribbean could take
a decade. In the worst scenario, however, it could not consolidate in some
nations. In fact, oil provides 90% of the energy consumed in the region, and
Venezuela's subsidy remains of the essence. Cuba, for instance, has embarked on
getting offshore oil and gas. For this reason China, with the help of
Venezuela, has invested US$ 5 billion in the initiative. For its part, Antigua
and Barbuda is willing to upgrade its terminal of oil byproducts in West Indies
Oil Company for re-export in the Caribbean. While some Caribbean nations are
the recipients of investments for refineries and welfare (in 2013, Pdvsa had 13
joint ventures in 10 Caribbean countries), some others open their markets to
the business of renewable energy. (El Universal, http://www.eluniversal.com/economia/150202/the-caribbean-faces-the-challenge-of-oil-independence)
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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