October 08, 2015

International Trade

 

US-Venezuela trade is down 38.6% YTD in August 2015

A report by the Venezuelan-American Chamber of Commerce (VENAMCHAM), based on US Census Bureau figures shows that through August 31st, total trade was US$ 17.273 billion, a 38.6% drop from the same time frame last year. Net total trade was US$ 4.947 billion, a 66.21% drop. More in Spanish: (El Universal, http://www.eluniversal.com/economia/151007/intercambio-comercial-entre-eeuu-y-venezuela-se-ubico-17273-millones; El Nacional; http://www.el-nacional.com/)

 

 

Logistics & Transport

 

CONVIASA suspended its flights to Madrid and Buenos Aires

Without prior notice or any official statement, the Venezuelan air carrier notified passengers via telephone it had suspended flights to these two destinations due to “operational reasons.” Twelve thousand ticket holders have been affected. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45738&idc=3)

 

 

Oil & Energy

 

Venezuelan crude exports to the United States fell 10%  in September

Venezuelan crude exports to the United States declined 10% in September versus the previous month due to lower sales of heavy and medium grades to some of regular customers, according to Reuters trade flows data and PDVSA trade documents. State-run oil company PDVSA and its joint ventures sent 44 crude cargoes to the United States last month carrying 724,230 barrels per day (bpd), compared with 807,065 bpd in August. Sales of diluted crude oil (DCO) made with naphtha rose again to 348,200 bpd, from 311,130 bpd in August, but the increase was not enough to offset an export decline to regular clients including PDVSA's refining unit CITGO Petroleum, MOTIVA Enterprises, PHILLIPS 66 and PBF Energy's Chalmette refinery. Venezuela also delivered in September a 200,000-barrel cargo of natural gasoline and a 240,000-barrel cargo of jet fuel to PETROCHINA with the United States as destination, according to PDVSA's internal imports and exports reports. The country imported four 500,000-barrel cargoes of heavy naphtha last month from trading firms VITOL and TRAFIGURA and PDVSA also bought some 3.8 million barrels of Cabinda, Kissanje, Nemba and Bonny Light crudes received at its Bullenbay storage terminal in Curacao. (Reuters: http://www.reuters.com/article/2015/10/07/us-oil-venezuela-usa-idUSKCN0S12JM20151007)

 

2016 budget projects oil prices at US$ 35-40 per barrel

Sources close to the Finance Ministry report that the government has the 2016 Budget and Debt Law ready, with few surprises. It calls for a "conservative" budget and are estimated oil prices in the US$ 35-40 per barrel range, which was the projection for 2015. The drop in world oil prices will force the government to lower their estimations. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/petroleo-entre--35-y--40-es-la-premisa-presupuesta.aspx#ixzz3nyEsn5QL).

 

Venezuela’s power energy crisis worsens as the direct result of the implementation process of an authoritarian, statist, central-oriented, offhand and arbitrary political project, according to Antonio Patiño, a member of the Engineers’ Guild’s National Power Committee. In a study conducted by 100 electrical engineers in this committee for eight years, they explain the current situation the National Power System faces and its outlook. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45740&idc=3)

 

 

Economy & Finance

 

Venezuela's economy worst in world as IMF Forecasts 10% contraction

Venezuela will see its economy shrink more than any other country in the world this year as lower oil prices drain government coffers, according to the International Monetary Fund. “Venezuela is projected to experience a deep recession in 2015 and 2016,” the IMF said Tuesday in its World Economic Outlook. The country’s real gross domestic product probably will contract 10% this year and 6% in 2016, it said. President Nicolas Maduro’s policy response to the economic crisis remains paralyzed ahead of congressional elections set for Dec. 6. The bolivar has slumped to 792 to the dollar on the black market, while the official rate remains at 6.3. The government has also maintained fixed prices for staple foods, even as supplies run out in many shops and prices for other goods soar. Inflation in Venezuela, already the fastest in the world, will average 159% in 2015 and increase to 204% next year, the IMF said. The price Venezuela receives for its oil exports, which accounts for about 95% of foreign currency earnings, has fallen 52% in the past year. Barclays characterized Venezuela’s economic troubles as the “deepest economic crisis in its history” in a Sept. 25 note to clients. “It is impossible to understand why the government is not reacting to this reality, why it has not taken measures to alleviate the economic distortions that are destroying the real income of Venezuelans,” Barclays said. (Bloomberg, http://www.bloomberg.com/news/articles/2015-10-06/venezuela-worst-in-world-as-imf-forecasts-economy-to-shrink-10-)

 

BARCLAY's: Will Venezuela score an own goal?

Barclays reports that its own estimates support a statement by Finance Minister Rodolfo Marco Torres that the Venezuelan government owns 20-25% of its own bonds. It adds that the Venezuelan government’s high exposure to its own debt implies that the public sector would be a big loser in a default scenario. This, it says, combined with a still non-negligible position in hard currency assets, reinforces their view of a strong willingness to pay among the country’s authorities. The report adds that the public sector debt portfolio is highly concentrated in five PDVSA bonds that, in total, should account for around 70% of the portfolio: PDVSA 26, 24, 22N, 15, and 17N. The largest holders of this debt are Banco de Venezuela, BCV and the PDVSA pension fund.  Barclays concludes that although the government has indicated hard currency assets of US$ 46 billion, they estimate the disposable assets total around US$ 15.1 billion, and believe this should allow the government to meet debt payments until at least Q116, though at the expense of depleting its liquidity position. (BARCLAYS: Full report attached).

 

Venezuela’s liquid international reserves were US$ 1.7 billion as of September 30, down 9.62% from September 16, according to Inter American Trends. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45742&idc=2)

 

Bonds buyback prevents Venezuela's possible default

Ramiro Molina, the Director of the Center of Finance and Economy Studies (CEFE), said foreign debt maturities of the Venezuelan government and state-run oil company Petróleos de Venezuela (Pdvsa) in 2016 amount to nearly US$ 9.93 billion, including payment of principal and interests. Venezuela "has the capacity to honor foreign debt," said Molina, despite persistent concerns in international markets about a possible default by Venezuela. He added that the country "is in a more comfortable position upon bonds buyback" mainly by PDVSA. Molina said  those operations make a default less likely. (El Universal, http://www.eluniversal.com/economia/151007/bonds-buyback-prevents-venezuelas-possible-default)

 

PepsiCo’s Q3 earnings per share fall 73% on Venezuela charges

Food and beverage giant PepsiCo said that its earnings per share fell 73% in the third quarter due to charges of US$ 1.4 billion, or US$ 0.92 per share, related to a change in the way it accounts for its operations in Venezuela. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2397728&CategoryId=10717)

 

 

Politics and International Affairs

 

President Maduro rejects US ambassador's remarks on the Essequibo

President Nicolás Maduro has rejected statements made by US Ambassador to Guyana, Perry Holloway, regarding the territorial conflict between Guyana and Venezuela. Maduro also alerted that his Guyanese counterpart, David Granger, sought to create a "major" conflict with Venezuela by disregarding the Geneva Agreement, which was endorsed by both countries as a mechanism to try to find a peaceful solution to the border dispute. "All the governments of Guyana have acknowledged the Geneva Agreement, except for Granger's government," Maduro noted. (El Universal, http://www.eluniversal.com/nacional-y-politica/151007/president-maduro-rejects-us-ambassadors-remarks-on-the-essequibo)

 

...and National Assembly Speaker Cabello: Guyana's government is "out of its mind; it wants war"

National Assembly Speaker Lieutenant Diosdado Cabello called Perry's statements "very serious"; and said the government of President David Granger is "out of its mind," because, in his view, Guyana "wants a war" with Venezuela over the Essequibo. "We are not going to war; we will not do that. We want peace," Cabello stressed. (El Universal, http://www.eluniversal.com/nacional-y-politica/151006/congress-speaker-cabello-guyanas-govt-is-out-of-its-mind-it-wants-war)

 

Venezuela arrests 250 in crackdown on Colombian border
Venezuelan authorities say that 250 people have been arrested along the western border of Tachira state – including Venezuelan police officers, soldiers and 34 suspected Colombian paramilitaries – since President Nicolas Maduro ordered the closure of the border with Colombia on Aug. 19. Tachira Governor Lieutenant Jose Vielma Mora and the military commander on the border, General Efrain Alvarado, announced the tally during a nationally broadcast joint press conference in the state capital. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2397730&CategoryId=10718)

 

Opposition coalition rejects agreement to abide by results

Jesús Torrealba, Executive Secretary of the Democratic Unity Conference (MUD) said the regime has failed to abide by recent results, and it is not possible to trust an agreement proposed by President Nicolás Maduro calling for respecting the results of December 6th parliamentary elections. He pointed to several instances where "the government has shown disrespect for election results", not only against opposition officials, but also against former chavistas "who defect". More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Lucena says the National Elections Council does not count polls, it counts votes

Tibisay Lucena, Chair of the National Elections Council rejected "negative matrixes" against the institution she heads, and  spoke of "real reality versus fabricated reality". She said it is not possible to speak of "fraud" and cast doubt on the Council's "transparency", which she believes seeks to disqualify the institution. Lucena added that there were no changes to election constituencies. "There are the same ones as in the 2010 parliamentary elections. Not one was created." She also denied the Council is discouraging opposition voters: "Had there been a 'hidden' elections registry, there would not have been 2.2 million voter moves, through changes in address and new registrations", she argued. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Spain asks "all parties" to accept election results in Venezuela

The Spanish Minister of Foreign Affairs and Cooperation, José Manuel García-Margallo, has said he expects the December 6 parliament vote in Venezuela to be held "in normal conditions" and that "all parties accept the electoral result." "The minister added that he knew he would be lambasted for his statements. (El Universal, http://www.eluniversal.com/nacional-y-politica/151006/spain-asks-all-parties-to-accept-election-results-in-venezuela)

 

MERCOSUR refuses to invoke "democratic clause" on Venezuela over López' imprisonment

Brazil's Florivaldo Fier, MERCOSUR's High Representative, says "the democratic clause is applied when there is a coup against a constitutional government", and is applied through consensus, "not at the request of one of its members".  Fier was responding to a statement by Argentine presidential candidate Mauricio Macri, who said that if elected he would ask MERCOSUR to demand freedom for jailed Venezuelan opposition leader Leopoldo López. Macri said "we are doing to demand freedom for Leopoldo López, and if Maduro does not accept we are going to call a meeting with MERCOSUR nations and ask that the democratic clause be applied." (Infolatam: http://www.infolatam.com/2015/10/08/mercosur-descarta-clausula-democratica-a-venezuela-por-lopez/)

 

Socialists’ grip on power in Venezuela may be too strong to dislodge

Amid food shortages, galloping crime and inflation that could top 150% this year, polls show swelling support for the country’s political opposition which could win a majority in the Dec. 6 legislative elections. Should that happen it would be a first major breakthrough for the opposition, which has lost nearly every local and national election since the late Hugo Chavez ushered in Venezuela’s socialist revolution in 1999. It would break the power monopoly of the ruling Socialist Party, which controls the judiciary, the legislature and government watchdog agencies — all of which answer to President Nicolas Maduro. And it would open the door for a recall referendum to remove Maduro from power. The problems started under Chavez, who died of cancer in 2013, but have accelerated under Maduro, who lacks the charisma of his predecessor. “No Socialist Party candidates want Maduro to visit their states because that would be the kiss of death,” says Jesus Torrealba, spokesman for the opposition coalition known as the Democratic Unity Roundtable. Under these conditions, an opposition victory in December might seem like a certainty. It’s not. State workers are now being pressured to vote for ruling party candidates who also count on government financing and a propaganda boost via the many TV and radio stations controlled by the government. Some opposition leaders have been sidelined by judicial fiat. Pollster Luis Vicente Leon said that over 16 years in power, first Chavez and now Maduro have mastered the electoral arts. “They fiercely control the institutions and the money which allow them to become stronger through electoral engineering even when their support is flagging,” Leon wrote. Even so opposition candidates are expected to win a majority of the 164 seats. Yet their power would be limited. Political analyst Carlos Romero says that before new deputies take the oath of office in January, the outgoing Maduro-controlled National Assembly could renew the extraordinary powers that have allowed the president to rule by decree since March. New laws that challenge government authority could be thrown out by judges loyal to Maduro. Victory on Dec. 6, Romero says, “is important for the opposition in political terms but it’s not going to change the course of the country.” (TIME: http://time.com/4061641/socialists-venezuela-maduro/)

 

 

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.