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.

Tuesday, August 11, 2015

August 11, 2015

International Trade


Venezuela's trade with the US is down 36.61%

Total Venezuela-US trade during the first half of this year was US$ 12.952 billion, a 36.61% drop from last year's first semester, which stood at US$ 20.433 billion, according to a report prepared by the Venezuelan American Chamber of Commerce and Industry (VENAMCHAM), based on US Census Bureau data. Oil exports were 47.57% less, mainly due to the drop in oil prices. More in Spanish: (El Mundo,


A rocky path for exports

In 1998 the export of non-oil products brought in 29% of the country's revenues. Today it makes up barely 3% of the country's total revenues, according to figures from the National Institute of Statistics (INE). Procedural hurdles, permits, falling production, foreign exchange controls and economic decrees, not to mention inefficiency, are among the many stumbling blocks to bridging the gap between a packaged product placed in a container and the buyer abroad who would be a potential source of foreign currency earnings. Ramón Goyo, head of the Venezuelan Exporters Association (AVEX) says Venezuela has lagged in this area and that the downward trend in non-oil exports will continue in the coming years if controls and monitoring that further compound the difficulties of exporting remain in place. (El Universal,



Oil & Energy


Venezuela oil price tumbles even further

Venezuela's weekly oil basket price fell to within US$ 5 of its 2015 lows as oil prices slipped in international markets on economic worries about China, a nuclear deal that would allow Iran to sell more oil, in addition to the U.S. market remaining amply supplied. 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 August 7 was US$ 43.15, down US$ 2.72 from the previous week's US$ 45.87. (Latin American Herald Tribune,; Veneconomy,


Over 30% of PDVSA’s workers are staging protests in different areas of the state oil company, said Zulia’s oil workers’ representative José Boada. Workers at the San Francisco, Maracaibo and Costa Oriental del Lago docks have begun a series of protests that have resulted in partial stoppage in seven docks. (Veneconomy,


Improvised engineers for PDVSA

The Venezuelan regime is “training” workers to receive degrees as bachelors and superior technicians in careers that will allow them to manage PDVSA and other government key companies, much as it did with the so-called community doctors. Courses offered, professors and students in this university do not comply with the requirements set by the traditional university system. (Veneconomy,





Looters target Venezuelan food stores as shortages spark frustration

Venezuelan supermarkets are increasingly being targeted by looters as lines and prolonged food shortages spark frustration in the nation struggling with an economic crisis. Shoppers routinely spend hours in lines to buy consumer staples ranging from corn flour to laundry soap, turning lines into venues for shoving matches and frequent attempts to plunder shops. 56 lootings and 76 looting attempts took place in the first half of 2015, according to the Venezuelan Observatory of Social Conflict, which based the figures on media reports and testimony of observers around the country. More frequent than these serious events are minor melees that ensue when delivery trucks arrive at stores carrying prized products such as chicken or milk. Lines are increasingly filled with smugglers who buy subsidized goods and resell them at a profit on the black market or in neighboring Colombia, generating tension between resellers and those trying to stock their own kitchens. Local food producers ranging from neighborhood bakeries to an industrial pasta maker have halted or slowed operations for lack of raw materials or machine parts. Obtaining low-cost food and medicine, once the hallmark of the Hugo Chávez era, has become a daily struggle. (The Guardian,


COLGATE PALMOLIVE stopped producing powdered soap

Workers at the COLGATE PALMOLIVE detergent plant in Valencia have been notified by the company that powdered soap production has ceased indefinitely due to lack of packaging material. The flier indicates the company has been losing on detergent production for months because official prices do not cover production costs. (El Nacional;


Poultry farms shutting down for lack of feed

Rafael Moreno, President of the Táchira State Poultry Association, reports more farms there are closing down due to lack of feed, baby chicks and medicines. (El Nacional;



Economy & Finance


Venezuela ‘terrorized by oil price drop’

Amid lower oil prices, Venezuela is struggling to maintain the social spending that characterized the Chávez era. Crude accounts for 96% of export revenues: a halving in the oil price over the past 14 months means revenues have slumped by about US$ 36 billion compared with the average of the previous two years, when the government raked in almost US$ 79 billion. The fall in oil prices has inflicted massive pain on exporting countries, widening budget deficits and weakening currencies around the world. Energy companies have been forced to lay-off thousands of workers and scrapped multibillion-dollar projects. But Venezuela is facing the greatest economic threat of any of the world’s major producers. With shortages of basic goods — from milk to nappies — becoming more acute each day as imports shrink, it is not only populist housing projects that are likely to be shelved, warn observers.  Venezuela is running on fumes,” says Russ Dallen, who heads investment bank, LATINVEST. “The current oil income is insufficient to allow the country to pay its debts, fund its imports and service its foreign bonds.” The debt — issued by the government and a handful of state-run companies including the oil group PDVSA — adds up to a total of US$ 128 billion to be paid back over the next 24 years. But US$ 6.3 billion of that falls due before the end of the year, according to Bank of America. So far Caracas has been able to keep paying its foreign bond creditors by selling assets, securitizing oil debts and raiding its foreign reserves, burning through more than US$ 7billion since late February. They now stand at US$ 16.9 billion, one of their lowest levels in the past decade, according to central bank data amid fears that the coffers could run empty in the first quarter of 2016, triggering a possible balance of payments crisis and knock-on implications for heavily exposed bondholders. The economy is forecast to shrink by 7% this year. This is not solely due to a fall in the oil price. The mismanagement of the industry — the failure to invest — and a series of unsuccessful nationalizations are key to understanding Venezuela’s plight. (The Financial Times,


JP Morgan says that Venezuela's economic crisis will be worse than expected

The firm had estimated GDP contraction for 2015 at 5.5%, but since the crisis has been worse than expected and no steps have been taken to meet it, it has changed its estimation to a 8% GDP contraction. It also expects inflation to hit 200% by the end of the year and the forcecast continues worsening. JP Morgan says "the lack of official reports has made us revise our prognosis for 2015, which reflects greater deterioration than we previously expected". More in Spanish: (El Nacional;


TPCG Group reports that drawing funding from the PETROCARIBE system appears exhausted

The international consulting firm says most of the debt under this agreement is currently in the hands of countries with few possibilities to take advantage of recent refinancing, such as the ones done by the Dominican Republic and Jamaica. It claims only greater cuts of crude oil shipments will allow putting a limit to the cost continuing with the agreement costs Venezuela. (Veneconomy,


High cash withdrawals restricted at banks

Zulia state’s regional daily PANORAMA reports that individuals have been told at different banks they can withdraw up to Bs.20,000-Bs.40,000 due to shortages of high-denomination bills, money fleeing through the border and problems with paper money to print bills. The situation has been echoed in other states as well. (Veneconomy,


"Simplification" will not mean lifting FOREX controls

Pro-government legislator Alexander Dudamel, a member of the Finance Committee at the National Assembly, says foreign exchange simplification will not mean lifting foreign exchange control. His reference is to a proposal by former Chavez minister of finance Rodrigo Cabezas. Dudamel says: "The government will not let foreign exchange control slip from its grasp, because even with that measure in force, speculation is ravaging the economy," he commented. He stressed that the government needed to maintain foreign exchange control along with appeals for dialogue with productive sectors, plus improvements in foreign exchange disbursements, to build more trust. (El Universal,


FEDECAMARAS open to talks with Maduro

Francisco Martínez, President of the Venezuelan Federation of Chambers of Commerce and Industry (FEDECÁMARAS) has said the institution expects dialogue with the President  after a meeting held last week with the Vice-president of the Congress, Deputy Elvis Amoroso. Martínez says that both private and public companies have long expected to hold unbiased and sincere talks to address the root causes of the country's problems. He also asked the vice-president of the Parliament to publish economic indicators collected by the Central Bank of Venezuela, so all productive sectors can be aware of real inflation rates here. (El Universal,; Veneconomy,;



Politics and International Affairs


Maduro and Granger invited to meet at the UN

Guyanese Foreign Minister Carl Greenidge has confirmed that UN Secretary General Ban Ki-moon is seeking to set up a meeting between his country's President David Granger and Venezuela's Nicolás Maduro, to discuss the Essequibo border dispute during the upcoming UN General Assembly in September. More in Spanish: (El Universal,


Venezuela's first transgender candidate to run for Congress

The first transgender politician to run for popular election in Venezuela has registered as candidate for Congress as part of the opposition bloc, promising to advance gay rights in the traditionally macho society. Lawyer and gay rights activist Tamara Adrian had to register under her given name Thomas Adrian despite a 2002 sex change, because Venezuelan law does not allow anyone born male to legally become female or take a woman's name. "We're going to fight so that everyone gets respect," said Adrian, amid a tussle of candidates and cheering supporters at the gates of an elections authority office in Caracas. Adrian is running with the opposition party Voluntad Popular, which includes some of the most outspoken critics of President Nicolas Maduro. Two gay candidates are also running with Voluntad Popular. (Reuters,


Prominent American lawyer John Pate murdered in his apartment in Venezuela

Prominent lawyer John Pate, a US citizen, was stabbed to death by assailants in his apartment in Caracas on Sunday evening. Pate, 71, was a member of the Editorial Board of the Caracas Daily Journal, the predecessor of the Latin American Herald Tribune. He received his J.D. law degree from Boston University in 1969; and an M.A. and an M.A.L.D. from The Fletcher School of Law and Diplomacy at Tufts University in 1971 and 1972, respectively. He was Vice Chair of the Latin American and Caribbean Law Committee in the International and Business Law Sections of the American Bar Association. Pate came to Venezuela as a professor of International Business and Latin American Integration at the Institute for Higher Administration Studies (IESA, 1974-1977); and later was a founding member of De Sola Pate & Brown. He served in numerous institutions, was a Director of the Entrepreneurial Center for Conciliation and Arbitration – CEDCA, Director of the Centro Venezolano Americano – CVA, and a member of the Legal Affairs Committee of VENAMCHAM. His first wife, Gertie Paez Pate, a well-known Peruvian painter and descendant of Venezuela's first President José Antonio Páez, died of cancer in 2007. According to police, the criminals reportedly entered his apartment with the intent to rob him, but instead killed him with multiple stab wounds. His companion, Sally Evan Oquendo, 67, was wounded and is hospitalized. (Latin American Herald Tribune,



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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