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.

Thursday, January 28, 2016

January 28, 2016

International Trade


Money to pay debt to Uruguayan dairy producers is in China, according to Uruguayan Deputy Jaime Trobo. He explained the agreement signed between the two nations established Banco de Desarrollo, BANDES-Uruguay, was to open a trust to pay for food products sold to Venezuela, but Uruguay did not inform producers BANDES could give the money the use it would see fit. (Venecomy,



Oil & Energy


World Bank predicts oil prices will drop further in 2016, and remain low

The World Bank predicts the average price of a barrel of crude oil may drop further to US$ 37 during 2016 due to weak emerging economies and increased supply as Iran comes back into international markets. Barely 3 months after its previous projection, which had oil price averaging US$ 51 per barrel, the Bank has sharply cut back its estimates to a US$ 37 average, and warns this trend will hold “for some time.” More in Spanish: (El Nacional,


Venezuela oil group seeks incentives to lure more foreign money

Venezuela’s main hydrocarbon association has proposed measures aimed at attracting more investment from international oil companies as prices drop to the lowest in more than a decade. Incentives would include reducing royalties and extraction taxes to 20% from 30-35%, applying a single exchange rate for the oil industry and granting more decision-making powers to joint venture partners. The measures, presented yesterday to the President’s National Council for Productive Economy, are needed to support oil-sector investments, according to a document outlining the proposals. “There have to be changes in the oil sector, and not just a more competitive exchange rate for the sector,” Asdrubal Oliveros, director of consulting firm ECOANALITICA, said during a meeting yesterday with foreign press at Bloomberg’s office in Caracas. “Until we have a collapse and change in this model, we will not see more oil sector investments.” (Bloomberg,


Oil minister to visit OPEC, non-OPEC countries

Venezuela's oil minister will tour OPEC and non-OPEC countries in a bid to drum up support for joint action to stem the tumble in crude prices, President Nicolas Maduro announced on Tuesday night. "I've given the order to minister Eulogio del Pino for him to immediately start a tour of OPEC and non-OPEC countries," the leftist leader said in a televised broadcast. The Organization of the Petroleum Exporting Countries is considering a request from cash-strapped Venezuela to hold an emergency meeting to discuss steps to prop up prices, and Venezuela has called for a meeting of OPEC and non-OPEC nations in February. "We must stop this madness," a solemn-faced Maduro said about oil prices, urging "clear, consequential and coordinated" action. (Reuters,


Former Chavez Finance Minister calls for revising credits to PETROCARIBE and other nations

Rodrigo Cabezas, who served as Finance Minister under the late President Chávez, says that in view of the current fiscal situation the country must review each one of its agreements, “soft” credit and subsidies to other nations in the region and with multilateral arrangements such as PETROCARIBE. He called such actions “absolutely pertinent” within fiscal restrictions. Cabezas also said a “default” scenario is “undesireable”. More in Spanish: (El Universal,





Sugar production has dropped 44% over the past year, according to the President of the National Federation of Cane Growers, José Ricardo Álvarez, who says the situation has never been as grave over the past 60 years. “It is now better for growers to leave sugar cane fallow in the fields than harvest it, because one loses less”, he says – and reports sugar growers produced 83,797.64 tons in January 2015 and only 46,177 tons so far this year due to price controls. More in Spanish: (El Nacional;



Economy & Finance


IMF sees inflation explosion here, 18% contraction

According to the IMF: “In Venezuela, longstanding policy distortions and fiscal imbalances were already having a deleterious effect on the economy before the collapse in oil prices. These problems worsened as falling oil prices triggered an economic crisis, with an expected fall in output of almost 18% over 2015 and 2016 (the third sharpest decline in the world). A lack of hard currency has led to scarcity of intermediate goods and to widespread shortages of essential goods—including food—exacting a tragic toll. Prices continue to spiral out of control, and we expect inflation to rise to 720% this year, from a world-high inflation of about 275% in 2015.” (IMF:


NOMURA says economic transition in Venezuela is “irreversible

The latest report from Japan’s NOMURA firm says “economic transition is irreversible” in Venezuela, and explains the drop in commodity prices is aggravating imbalances. It warns economic distortions cannot be solved by reducing imports or a default on foreign debt, either of which can only “aggravate stagflation”.  It says cash flow is shrinking daily “amid a slow political and economic transition”. The firm says the next moves are up to the opposition in their bid for leadership, but the risk remains that the Maduro regime could “make them draw back”.  More in Spanish: (El Nacional:


Venezuela plans to transition away from oil-dependent economy

Venezuela’s Economic Council has presented measures to transition away from an oil-dependent economic model, Vice President Aristobulo Isturiz said Tuesday.  The council, which was created in January, presented its first proposals to the government, which recently announced an emergency decree to battle the economic situation here.  Isturiz said the council’s working groups have been supported by local businessmen.  He said that the state guarantees the production of raw materials, credit and other facilities to domestic producers.  The vice president stressed that the government's priority is to fund social benefits in education, health, food, housing, among others, as well as revitalize the economic and productive engine of the country. He said the council’s roundtables began discussing three of the 11 strategic economic areas—telecommunications, tourism and petrochemicals—began Monday.  Other key areas tapped to reinvigorate the productive economy include food processing, mining, information technology, construction, export, forestry and industry. (TELESUR:


Government creates centralized procurement system

President Nicolas Maduro has signed a decree under which Centralized and Standardized System of Government Procurement is established for all the bodies of public administration, effective from Monday, February 1. The president noted that he had received from the National Council of Productive Economy all the proposals brought forward at the work sessions of the nine economic engines. Maduro said he would study all the proposals during the IV Summit of the Community of Latin American and Caribbean States (CELAC). (El Universal,


Venezuela’s economic, social indicators speak for themselves

The country is starting to show cracks everywhere and is reaching boiling point. Several economic indicators more than tell about that situation. Among issues affecting the nation’s economic sphere: Venezuela has the highest inflation rate in the world. Venezuela’s inflation hovered near 300% in 2015, and may reach 720% in 2016, according to the International Monetary Fund. Shortages of food items, medicines and capital goods exceed 80%. The income of citizens slips through their fingers as their purchasing power has been reduced to nothing. Besides becoming desperate and helpless for not finding the essential foodstuff and/or medicines for them or any member of their family. (Latin American Herald Tribune,


Inflation of the food basket goes up 1% daily since December 2015, according to the Venezuelan Teachers’ Federation’s Social Documentation and Analysis Center (CENDAS-FVM). It is the first time such a high is recorded. At the end of December, the food basket was VEB 139,273.68, up 361.5% from December 2014 when it was VEB109,096.86. (Venecomy,;


6.2 minimum wages are now needed to buy the basic food basket

In average, 4.77 minimum wages were needed to cover the basic food basket between 1999 and 2014. However, this changed at the end of 2014 when 6.2 minimum wages were required to cover it until it reached the 14.4 minimum wages at the end of December 2015, according to the CENDAS-FVM. According to CENDES, not even the basic salary of a Major General is sufficient to acquire the basic food basket, A sargeant can only purchase 9.8% of the same basket. (Venecomy,; and more in Spanish: (El Nacional,



Politics and International Affairs


National Assembly President says economic crisis will sink Maduro

National Assembly President Henry Ramos Allup doubts President Nicolas Maduro will serve out his six-year term in view of the acute economic crisis here. He adds that his exit could even take place this year. “In this situation I don’t believe he will serve out his term…..he is being swallowed up by the crisis”. Ramos adds that for the nation to be rid of the highest inflation in the world, economic recession and scarcities, Maduro and his cabinet must step aside. “If they insist – as they are doing – on continuing applying a model that his failed in every sense, the reply is obvious: those who are so insisting in this crisis must leave, otherwise we will not overcome it”. And he adds: “We have insisted that the way out of this crisis must be democratic, constitutional, peaceful and elective. None other.” The opposition coalition has signed an agreement to seek a way out of this situation within six months, and Ramos says they are already working at it because “to wait for the crisis to become worse is an irresponsible political gambit”. More in Spanish: (Infolatam:


Maduro to ask CELAC aid in economic emergency

Upon his arrival in Quito, Ecuador to attend the IV Summit of Heads of State and Government of the Community of Latin American and Caribbean States (CELAC), President Nicolás Maduro said that he would propose some ideas to tackle the economic emergency in Venezuela with the help of Latin American countries. The president said he would meet with his CELAC counterparts to address the economic crisis in his country and "foster fair trade, complementarity, and solidarity. Venezuela comes with a proposal, as always, to find our own solutions and our own path by ourselves." (El Universal,


Chavez's dream of unity stumbles ahead of Latin American summit

Before he died, Venezuela’s late president, Hugo Chavez, had a dream to unite Latin America and the Caribbean against the dark forces of the U.S. empire. It’s not working out like he planned. As presidents and prime ministers from the regional group CELAC meet Wednesday in an attempt to knit closer ties, President Nicolas Maduro, Chavez’s hand-picked successor, finds himself fending off attacks from the nation’s former ally, Argentina. “Why does a country have to put up with the whole onslaught of right-wing governments,” Maduro said Saturday after Argentina’s newly-elected president, Mauricio Macri, criticized his government’s human-rights record. “I’m going to the summit of Latin America and the Caribbean nations in Quito with everything. No one is going to shut me up.” (Bloomberg,


Garrulous Maduro has addressed Venezuela for 500 hours

President Nicolas Maduro has spent more than 500 hours addressing Venezuela since gaining power nearly three years ago, demonstrating a loquacity reminiscent of his late predecessor Hugo Chavez, according to a watchdog. The tally, from the local Citizens' Monitor group which is critical of the government, was based on Maduro's so-called "chain" speeches, when all local broadcasters are required to transmit his words live. Counting other speeches, carried only by state TV, the 53-year-old former bus driver and foreign minister has in fact spent far more time giving public addresses.

"In the first few weeks of this year, he surpassed 500 hours," the group said this week in a blog. "Every time the presidency holds a 'chain', they are denying Venezuelans their control over freedom of information and entertainment." (Reuters,


Electoral body issues reply on Amazonas contested deputies

The National Electoral Council (CNE), headed by Tibisay Lucena, has issued an "administrative response" to the Supreme Tribunal of Justice (TSJ) regarding the contested election of three deputies for Amazonas state and one indigenous representative. The information was aired by the First Vice-President of the National Assembly, Simón Calzadilla, who heads the parliament committee that studies the case. Deputy Calzadilla said that Lucena refused to reveal the content of the documents that were sent to the TSJ. (El Universal,


Freedom House: Democracy faces challenges in Venezuela

Freedom in the world declined in 2015. Even though Latin America as a whole showed some improvement, democracy in Central America and Venezuela faces serious challenges, according to the annual report released by Freedom House on Wednesday. The organization that advocates freedom and democracy highlighted that democracy and freedom are at risk in El Salvador, Guatemala, Honduras, and Venezuela. In the latter, Freedom House reported "persecution" against the opposition. The Latin American country with the worst score in freedom and democracy is Venezuela, considered "partially free" with a score of 35 out of 100, followed by Haiti (41) and Honduras (45). (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.


Thursday, January 21, 2016

January 21, 2016

International Trade


Venezuela may have lost around US$ 7 billion due to closure of its border with Colombia

Lady Gómez, an opposition legislator from southwestern Táchira reports that the five months since the Colombia-Venezuela border was closed "have led to a Customs, commercial, and industrial blockade, which has deprived the country stop of tax revenues over US$ 7 billion from border customs...Today, we are witnessing increased smuggling, stopped industry and commerce, and an economic impact against the National Treasury. Formal customs economy, which generates income for the State for the country's development, is being replaced with an informal economy," Gómez explained. (El Universal,


Uruguayan farmers, dairy producers protest over Venezuela's debts

Uruguayan milk producers and farmers blocked traffic on Tuesday during an unprecedented demonstration against a generalized raise in taxes and fees, demanding payment of products sold to Venezuela. "There is a trade agreement. The dairy industries sent products to Venezuela, yet money never appeared," Uruguayan dairy producer Marcos Algorta argued. The governments of Uruguayan and Venezuelan Presidents Tabaré Vásquez and Nicolás Maduro, respectively, signed an agreement in 2015 under which Uruguay would pay out oil debts with Venezuela, and Caracas would buy US$ 300 million in food as of December last year. (El Universal,


Oil & Energy


Venezuela's call for emergency OPEC meet gets doubtful response

Venezuela has requested that OPEC hold an emergency meeting to discuss steps to prop up oil prices, which have fallen to their lowest since 2003, two OPEC sources said on Wednesday. But four other delegates from countries in the Organization of the Petroleum Exporting Countries said such a meeting was unlikely to happen. OPEC's Gulf members including Saudi Arabia have opposed earlier calls for emergency meetings. "Venezuela has requested an extraordinary meeting," said an OPEC delegate from a Middle East member-country. Another OPEC source confirmed that such a request had been made. (Reuters,; Bloomberg,; El Universal,


Guyana grants prospecting licenses to oil companies in Essequibo region

Guyana's Ministry of Natural Resources granted a prospecting license to the Tullow Guyana and Eco Atlantic oil companies within the Orinduik block, which is 1,802 square kilometers and is located off the Essequibo coast, a region in dispute with Venezuela. A representative of the ministry added that both oil companies are partners in this agreement, which is initially valid for four years, although it may extend for up to 10 years. The Essequibo region is under UN mediation since the signing of the Agreement of Geneva in 1966, but the dispute heightened when oil giant ExxonMobil found last may oil deposits in waters off the disputed area. (El Universal,




Military strategic command now reports scarcities up to 91% in Western Venezuela

The Strategic Operational Command of the Western Strategic Total Defense Region has reported a survey taken last month which shows scarcities of 59 to 91% in 17 key basic products: Coffee, detergents, sanitary napkins were 91% scarce in visited establishments, the most acute scarcity was reported in the Lara, Falcon, Yaracuy and Zulia states. Beef was 82% short, up to 89% in Falcon state, and 14% in Zulia. More in Spanish: (El Nacional,


Venezuela needs urgent foreign medical aid, pharmaceutical group says

With scores of medicines in short supply due to a severe financial squeeze, Venezuela is suffering a "humanitarian crisis" and requires rapid international assistance, according to a major pharmaceutical association. The Venezuelan Pharmaceutical Federation listed 150 medicines, from those for hypertension to cancer, as well as basics such as prophylactics and antibiotics, which are scarce in the OPEC nation of 29 million people. "The national government must accept we are in a humanitarian crisis in the health sector, with patients dying across our territory for lack of medicines," said association president Freddy Ceballos in a statement. (Reuters,


Six canning operations closed down in Sucre state due to lack of tuna

Roger Palacios, Secretary General of the Alimentos Polar Marigüitar labor union, and food area coordinator for the National Workers Union, reports that some 10,000 workers will become unemployed and 6 canning operations in Sucre state will shut down before the month is up. He says the plants need at least 6,000 tons of tuna to process at 25% capacity. “This is the worst scenario for companies in Sucre in the past 18 years, there is no tuna, the fishing fleet is paralyzed, and it is expected ship owners will sell their vessels”. More in Spanish:  (El Nacional,


National Assembly calls on government to meet water supply crisis

A unanimous resolution by the National Assembly has called on the Eco-Socialism and Health Ministries to face the water supply crisis, identify contaminated areas and enact short, medium and long term contingency plans to solve the nationwide supply crisis. The proposal was brought forth by opposition legislator Ylidio de Abreu, of Carabobo state, who reported that over the past 18 years only 2 reservoirs have been built, and asked that water desalinization plants be set up on the coast to ameliorate the problem. More in Spanish: (El Universal,


Economy & Finance


Oil rout raises fears of Venezuela debt default

Slumping crude prices have investors bracing for a messy default in Venezuela, where the sovereign and state-owned oil company PDVSA have some US$10 billion in external debt payments due this year. With crude hovering around US$ 28 per barrel, Venezuela - which on Wednesday reportedly requested an emergency OPEC meeting - could have trouble satisfying its obligations. Barclays said the country will have difficulty avoiding a credit event in 2016 - and that is based on the bank's forecast of US$ 37 oil, almost US$ 10 higher than current prices. That sentiment seems to be widely shared in the market, even though President Nicolas Maduro assured the National Assembly last week that Venezuela would continue to pay what it owes. "It is a question of when, not if," said Russ Dallen, a partner at Latinvest in Miami, referring to the possibility of a default. (Reuters,


U.S. companies likely to take further big hits from Venezuela economic turmoil

A slew of major U.S. corporations is likely to announce in the next few weeks whether they will take big write-downs for their troubled Venezuela operations, and some may say they are leaving the country altogether. The companies may decide to slash the valuations of their businesses and take charges based on declines in some of the oil producing nation’s four exchange rates for the bolivar currency, of which three are official and one black market, and then deconsolidate the operations on their balance sheets, Wall Street securities analysts said. The Reuters analysis shows that U.S. companies with exposure could face total write-downs of more than US$3 billion if they revalue their assets in Venezuela using the less preferential SIMADI exchange rate of nearly 200 bolivars to the dollar. In the past, many companies valued their assets using the main official rate of 6.3 bolivars per dollar. But even that change may not reveal the full extent of the problem given that the black market exchange rate has worsened to about 878 bolivars to the dollar from about 190 bolivars a year ago, according to, a website that tracks the rate. They may have more reason to accelerate the process after the socialist government on Friday declared a 60-day economic emergency, which would give President Nicolas Maduro wider powers to intervene in companies or limit access to already scarce dollars in Venezuela. GOODYEAR said in recent financial disclosures that a deconsolidation move would trigger a one-time, pre-tax charge of more than US$ 500 million and what it termed “derecognition” of US$ 293 million of cash on its balance sheet. So far, blue-chip companies that have deconsolidated in Venezuela and written off nearly all of their investment there include PROCTER & GAMBLE, PEPSICO and FORD. Among those who have departed altogether is cleaning products maker CLOROX. One major pressure point could be drug companies. ABBOTT, ABBVIE, MERCK, PFIZER and ZOETIS have about US$ 1.8 billion in combined net monetary assets exposed to the bolivar, recent U.S. regulatory filings show. Other companies selling sensitive products, such as baby formula maker MEAD JOHNSON, have had to adjust their practices because of constraints placed by the Venezuelan government on the release of U.S. dollars to repatriate cash back to the United States. Consumer products maker NEWELL RUBBERMAID has been identified by some Wall Street analysts as the next major U.S. company that will likely take action to protect itself from Venezuela's crumbling economy. If NEWELL were to deconsolidate it would take a one-time charge of US$ 111 million, according to company commentary in recent U.S. regulatory filings. Among U.S. companies, OREO cookies and CADBURY chocolate maker has one of the largest remaining exposures to Venezuela, with US $617 million in net assets, according to the Reuters analysis of corporate disclosures. 3M, COLGATE PALMOLIVE and HERBALIFE have at least raised the specter of insulating their financial results from Venezuela. Toy maker MATTEL has said it may consider ceasing operations in Venezuela. (Reuters:


Council for a Productive Economy sworn in as authorities reject “neoliberal” solutions to crisis

President Nicolas Maduro has sworn in 45 people who will comprise the National Council for a Productive Economy in order to "face the crisis the oil-seeking model is going through and provide shared responses that help develop productive forces," he said. Executive Vice-President Aristóbulo Istúriz and Productive Economy Minister Luis Salas will head the body, whose first working session will take place on Wednesday. Vice-Minister of Investment for Development Simón Zerpa will be in charge of the work agenda. The economic body will be composed of president of the Central Bank of Venezuela (BCV) Nelson Merentes; economists Juan Arias and Rodrigo Cabezas; head of aluminum company Guayana's Venezuelan Corporation (CVG) Justo Noguera Pietri; and the president of CANTV state telecommunications company Manuel Fernández, and includes several business representatives. At the meeting, Vice President Aristobulo Istúriz said the government will avoid a "neoliberal" solutions to the economic crisis, adding that he was confident that the new plan will repair the national economy, which is in an official state of 'emergency'. "We are obliged to build a productive model that allows us to generate wealth and simultaneously maintain and deepen the gains of the people," he told a group of entrepreneurs. (Latin American Herald Tribune,; El Universal,;


Venezuela: a nation in a state

The price of oil, which provides 95% of Venezuela’s foreign-exchange earnings, has long dictated the popularity of its leaders. The government's income from oil in the year to November 2015 was two-thirds lower than during the same period the year before. The oil price has fallen further since then. With less money coming in and demand for imports still strong, the value of Venezuela's foreign-exchange reserves has dropped alarmingly. A fall during 2015 in the price of gold, of which Venezuela has substantial holdings, has contributed to the decline in reserves. The current oil slump would be painful, whoever was in power. The regime has greatly compounded the damage with policies that, though designed to favor the poor, end up impoverishing them and the state. Price controls—along with the shortage of foreign exchange—have led to acute shortages of basic goods, forcing people to queue for hours to buy necessities. Inflation is officially running at 141% as of September last year (the latest available figure). Analysts believe the true figure is at least 200% a year; some predict hyperinflation in 2016. The massive budget deficit, which the Central Bank finances by printing money, contributes to that risk. The sharp recession is undermining one of the regime's proudest claims: that under its rule Venezuela's poverty has fallen. In January 2016 Maduro appointed a new economics team, but there are doubts about its willingness to tackle the nation's troubles. The minister in overall charge of the economy, Luis Salas, is a left-wing sociologist who, like others in the government, attributes the country's problems to an "economic war". He rejects some basic tenets of conventional economics, for example that printing too much money causes inflation. (The Economist:


Venezuela paid out US$ 27 billion in foreign debt over 16 months

President Nicolas Maduro has announced that over 16 months, Venezuela has paid US$ 27 billion in principal and interest on the foreign debt. He said the Venezuelan government has complied "first and foremost with the homeland" and also with the obligations of the Republic, which have been met and will continue to be met. (El Universal,;


Kenneth Rapoza says Venezuela default imminent, Chavez legacy rests in pieces

Venezuela has been on default watch for months. Its credit rating is already in the gutter, at CCC at Standard & Poor’s. With oil now US$ 20 lower than it was when the S&P made that call, a default is no longer a question of if, but when. A recent emergency economic decree is likely too late to save anyone but president Nicolas Maduro. After two years of inaction and the recent decline in oil prices, Barclays Capital analyst Alejandro Arreaza said a “credit event” in 2016 is “increasingly difficult to avoid.” In other words, oil major PDVSA and the government it bankrolls is going bankrupt. With oil under US$ 30, Venezuela would need to use 90% of PDVSA’s oil export revenue to meet debt obligations to local and foreign creditors. Figures released Wednesday by the Central Bank of Venezuela show that foreign currency reserves were just around US$ 20 billion in the third quarter, but by the end of November they hit just US$ 14 billion, the lowest ever. Net assets are also seen shrinking to around US $24 billion, roughly US$ 10 billion less than a year ago. Considering current oil prices, any reasonable additional import cuts may be insufficient to cover the financing gap. Maduro keeps reiterating his government’s willingness to pay its debts, but his anti-Yankee rhetoric and is hardline against multinationals there makes him hard to believe. The official position shows a lack of understanding of the magnitude and roots of the crisis, making for this default to be the biggest Latin America has seen since Argentina’s in 2001 and its more strategic default on the same debt in 2014. (FORBES:


Politics and International Affairs


Full National Assembly to debate on Economic Emergency decree tomorrow

National Assembly President Henry Ramos Allup announced that the Legislature will hold a full debate on President Maduro’s proposed Economic Emergency Decree in plenary session this Friday, January 22nd.  According to Venezuelan law, both the Legislature and the Supreme Tribunal have up to 8 days to take a stand on the petition by the Executive. The Supreme Tribunal has promptly declared the proposed decree is “constitutional”. The Assembly is calling in the heads of the Central Bank, SENIAT (tax collection), Foreign Trade Center (CENCOEX), PDVSA and the Nutrition Ministry for questioning in audiences open to the media, The ministers called stalled their scheduled morning appearance to late afternoon today, and sought to have media excluded from the hearings.(El Universal,; and more in Spanish: (El Universal,; El Nacional,; El Mundo,; AVN;; El Nacional,


Deputy Guerra says Venezuelan crisis is not due to oil price drop

Opposition Deputy José Guerra, who heads the Committee that is evaluating the Economic Emergency Decree drafted by President Nicolas Maduro, has said that Venezuela’s economic crisis is not due to the fall in oil prices. "This crisis, which began in 2013, is not a consequence of the drop in oil prices, for prices back then stood at US$ 110 per barrel and ended at a high price that year. In January-June 2014, prices hit US$ 101 (per barrel), and the economy tumbled. Plummeting oil prices did not spark off the crisis we are facing today," says Guerra. (El Universal,


Legislator says proposed Economic emergency decree can lead to bank account freeze

Elias Matta, a legislator from the opposition coalition and member of the Special Committee considering President Maduro’s proposed Economic Emergency Decree says article 4 of the decree opens the door to a “corralito” or freeze on private bank accounts. He says the Parliament will assess "why the decree allows the government to manage the remaining balance of Fiscal Year 015 and spend it without the approval of the National Assembly (AN). It is worrisome that items that do not exist in the 2016 budget can be created and spent in any way." (El Universal,


FEDECAMARAS says proposed Economic Emergency Decree “can make the situation worse

Venezuela’s main business federation, FEDECAMARAS says the proposed Economic Emergency Decree “could make the already precarious situation in Venezuelan homes even worse”. It adds that “the government has had and has in its hands legal powers to make the necessary corrections with no need for economic emergency decrees”. FEDECAMARAS says the proposed decree does not face the nation’s economic problems, which require “a thorough economic plan, within an institutional framework that promotes a strong, stable, productive and innovative economy”. (Ultimas Noticias,


Lopez’ wife and mother report harassment and child abuse during jail visit

Lilian Tintori and Antonieta Mendoza, the wife and mother of jailed opposition leader Leopoldo López, have reported to the special office on gender violence at the Prosecutor General’s office, that they were seriously mistreated in the presence of Lopez’s 3 and 6 year-old children. They report that as they visited the opposition leader at the Ramo Verde military jail near Caracas, they were forced to strip naked and inspected in their intimate parts in the presence of the children, by order of Colonel Viloria. Ms. Tintori told media that “I want an investigation, they should go to Ramo Verde and investigate the military…they should tell all that happened there, demand the videos, there are cameras everywhere in Ramo Verde”. She added that “I don’t trust military authorities at Ramo Verde, the Colonel is an accomplice of Diosdado Cabello (Vice President of the ruling PSUV party and former National Assembly President), the orders come directly from Nicolas Maduro and Diosdado Cabello because this is what we are told at that jail each time we ask where the orders come from”, she said. Ms. Mendoza said that, after being forced to strip in the presence of her grandchildren, two female sergeants “tried to touch” Lopez’ 6 year-old daughter, Manuela. She said López has spoken to his lawyer and “is indignant”, adding that “this happens in other jails”, and this is not an isolated case. More in Spanish: (Infolatam,


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, January 19, 2016

January 19, 2016

International Trade

Government responsible for over 50% of all imports during 2015

According to recently published Central Bank data government imports were more than half of total imports during Q2 and Q3 2015, a trend that has been sustained over the past two years. More in Spanish: (El Mundo,


Foreign Trade Minister says bureaucratic barriers to exporting will be demolished

Jesús Farías, Venezuela’s new Foreign Trade and Investment Minister, says his goal is to demolish bureaucratic barriers to exporting, work toward improving ports, and generate confidence for exports with an aim to produce hard currency income in the short and long term. More in Spanish: (El Mundo,; Ultimas Noticias,


Uruguay dairy producers protest Venezuela's debt

Milk producers throughout Uruguay announced they would block traffic in several national roads as a way to demand answers over the Venezuelan government's non-payment to dairy companies that sold it their products to Caracas. Venezuela has failed to pay Uruguayan dairy producers and farmers that sold products to Venezuela against the backdrop of a bilateral agreement signed by the government of Tabaré Vázquez and his Venezuelan counterpart Nicolás Maduro, which has proven hard to meet. "Today (Venezuela) owes US$ 100 million to the dairy sector," said dairy producer Marcos Algorta. "The debt owed to CANAPROLE alone (the largest dairy company in Uruguay) is US$ 86 million, for merchandise that was already delivered, Venezuelans already ate it," he commented. (El Universal,


Oil & Energy

Venezuela oil barrel sinks below US$ 25

The price Venezuela receives for its mix of heavy oil continued tumbling this week, hitting a 12-year low as oil prices around the world continued falling on slowing demand and plentiful supply. 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 15 was US$ 24.38, down US$ 3.49 from the previous week's US$ 27.87. (Latin American Herald Tribune,


Venezuela's PDVSA asks partners to pick up tab as oil prices sink

Venezuela's state-run company PDVSA has requested its partners in at least a half dozen joint ventures pay for naphtha imported to produce exportable crudes amid a punishing oil price crash, according to sources and a company letter seen by Reuters. With at least some partners likely to balk at the request, PDVSA [PDVSA.UL] could face even bigger obstacles to import diluents and, in consequence, to keep barrels flowing from the Orinoco belt, its main producing region. PDVSA is responsible for providing the naphtha, or light crude, needed to dilute the extra heavy oil produced at the Orinoco Belt, according to contracts signed with foreign partners including CHEVRON, REPSOL and ONGC. But the company has now asked some of its foreign partners to cover the payments as of this year. (Reuters,


Iran-Venezuela oil tanker deal hit by sanctions snags

An agreement to build oil tankers in Iran for Venezuela has been left in limbo years after it was announced as Western sanctions plus disagreements over payments and delivery terms took their toll, sources familiar with the matter say. The deal was heralded in 2006 with much fanfare by Tehran and the socialist government of then-president Hugo Chavez to build four oil tankers in Iran on behalf of Venezuela's state oil company PDVSA as part of a wider global order for 42 ships. According to sources and backed up by shipping data, the Iranian order was never completed. A former adviser to PDVSA's maritime subsidiary involved in the deal said the imposition of tougher sanctions in 2012, including banking, insurance and shipping restrictions, weighed on the deal, making the procurement of insurance tough. (Reuters,


Nicolás Maduro modified PDVSA’s board of directors

Among the changes, he replaced his wife’s nephew Carlos Malpica Flores with Ana María España, as Vice President and Finance internal director, according to a presidential decree published in Gaceta Oficial. Malpica who last Friday was also replaced as the Nation’s Treasurer, had occupied those posts since December 2014. The board of directors was also extended to include 11 directors. (Veneconomy,



Shortage of some products from the food basket was 87%, said a report from the Central Bank (BCV) published in its web this Friday. The BCV blames the shortages on “hoarding of products.” The financial institution had not published figures in at least 22 months. (Veneconomy,


Some 800,000 tons of sugar cane at risk here

José Ricardo Álvarez, President of the Sugar Cane Farmers Federation (FESOCA) has described as "very serious" the current sugar production situation in Venezuela, and described the situation as unprecedented. He says the sector is concerned over the fact that the grinding of at least 800,000 tons of sugar cane is lagging behind. Therefore, he said an emergency plan needs to be implemented to save part of the sugar cane crops in the country. (El Universal,


Economy & Finance

Maduro publishes 60-day economic emergency decree, proposes new currency controls

President Nicolas Maduro’s administration has prepared a 60-day nationwide state of economic emergency decree, to be approved by the National Assembly. The emergency, which can be extended for an additional 60 days, is intended to “protect the people from existing threats,” the country’s vice president for the economy, Luis Salas, said after it was published in the Official Gazette. The decree would empower the executive branch to “adopt appropriate measures to effectively address the exceptional, extraordinary and cyclical situation that the Venezuelan economy is suffering,” Salas said, alluding to high inflation, a severe recession and big drop in foreign reserves triggered by a steep decline in oil prices. The published decree includes enforcing measures to “protect Venezuela’s currency”, said Salas. “The ministries involved in economic and financial matters could coordinate with the Central Bank (BCV) to set maximum income and expenditure limits of Venezuela’s currency in cash, as well as restrictions to defined commercial operations or financial transactions, to restrict said operations to protect the national currency.” The decree was published last Thursday. The National Assembly has eight calendar days (until January 22), from the moment it was published to pass it or reject it, and the majority opposition bloc will debate it within several legislative committees, including the Comptrolle, Domestic Affairs, Comprehensive Social Development and Finance Committees. (Latin American Herald Tribune,; Veneconomy,;


EVP and Ministers outline goals of the Economic Emergency Decree, deny more expropriations

Executive Vice President Aristobulo Isturiz says the goals of the economic emergency decree are to reduce tax evasion, speed up government purchases, guarantee that purchase financing is in tune with production, better use FOREX allocations, improve import procedures, analyze FOREX procedures, promote foreign investment, and increase production of non-traditional goods. Planning VP Ricardo Menendez says they are facing two challenges in reviewing product and income distribution systems, claiming that the private sector has expatriated US$ 163 billion over the past few years. The newly appointed Trade and Industry Minister, Miguel Perez Abad, claimed the new decree will not lead to more expropriations. More in Spanish:  (El Mundo,; AVN;;; El Universal,; El Nacional,;


CARACAS CHRONICLES: The real economic emergency is having this guy in charge

There’s a little riff in Economics Vice-president Luis Salas’s maiden interview with TELESUR that’s really worth revisiting. In just over one minute, Luis Salas fleshes out in as much detail as he’s able, his implicit mental model for how speculation and usury causes a general rise in the price level that’s unrelated to monetary expansion. For Salas, prices rise because merchants as a group make a grab for windfall profits by raising their prices. But as they do that, they find that of course they strain consumers’ capacity to pay for products. So their sales tend to fall. So, in fact, they’re all made worse off by the decision in the medium term, and many wind up having to close up shop. That’s the implicit microeconomic model behind the governing elite’s economic strategy. (Caracas Chronicles:

CONINDUSTRIA says emergency decree endangers economic freedom

Juan Pablo Olalquiaga, President of the National Council of Industries (CONINDUSTRIA) says the decree proposed by President Nicolas Maduro is a new attack on business, which grants government more power and puts property rights and economic freedom at risk. “It is like giving the government a blank check, and they have been the creators of the distortions here. We ask that it not be approved as presented, as it would be an enormous risk of slowing down the economy even further.” More in Spanish: (El Nacional,


Default looms as Venezuelan bonds in freefall due to plunging oil prices

Venezuela and PDVSA bonds have dropped an average 15 percentage points since January 1st. BARCLAYs Capital says the biggest loser in all of Latin America is “clearly Venezuela. At this point a possible default or credit event during 2016 seems hard to avoid”. More in Spanish: (El Mundo,


International Monetary Fund (IMF) forecasts inflation over 500% in 2016, says its Latin American Department Chief Alejandro Werner. The IMF estimates inflation in Venezuela in 2015 was 270%. The Venezuelan Central Bank (BCV) finally reported last Friday inflation was 141.5% in 2015. The IMF will publish its entire outlook in the next few days. Venezuela’s central bank published economic statistics for the first time in a year, confirming the country had plunged deeper into recession and that inflation had spiraled into triple digits. The bank reported that the annual inflation rate ended the third quarter at 141.5%, compared with 68.5% the last time they reported the number in December 2014. Gross domestic product fell 7.1% in the third quarter from the year earlier. The central bank laid blame for the economy’s plight upon collapsing oil prices -- Venezuela’s only significant export -- and an “economic war” it alleged was being waged against the country. President Nicolas Maduro, who addressed an opposition-controlled National Assembly for the first time, said the moment had come to raise gasoline prices and that he would look at adjusting the country’s fixed currency rates in the coming days. (Veneconomy,; Bloomberg,; and more in Spanish: El Nacional,


National Economic Council proposes a new foreign indebtedness strategy

The non-governmental organization National Economic Council (CEN) has proposed in the short term "stimulating domestic supply and reducing monetary funding of domestic public expenditure." According to a CEN document, local supply is "restricted due to the low allocation of foreign currency for imports, especially of raw materials, and due to institutional changes which have hit private activities." Meanwhile, domestic demand has been "encouraged by the implementation of an expansive fiscal policy funded with oil and non-oil fiscal revenues, domestic debt, and monetary funding by the Central Bank (of Venezuela-BCV)." (El Universal,



Politics and International Affairs


Opposition renews call for Maduro resignation due to economic catastrophe

One day after President Nicolas Maduro described the nation’s economic condition as “catastrophic”, many opposition leaders are talking about cutting short his term. Julio Borges, who heads the majority opposition bloc in the National Assembly, said it is a “duty to demand” Maduro’s regime “change course”, and warned “if he does not make this change we must lead the country to change the government”. He added that Maduro and his allies “have understood nothing”, and said the proposed decree insists on state controls, which “have only caused a scandalous increase in corruption and scarcity”. Vente Venezuela party leader María Corina said: “Maduro says he wants to promote investment, production and exports. There is one step that would achieve this immediately: Count and resign”, and called the proposed decree “irrational”. Former presidential candidate Henrique Capriles supported talks, but said “this is not to do as the government wants, and much less with those who have led the nation into ruin”, and called the decree “a vial of poison for Venezuelans”. Capriles also said Central Bank inflation data is fake, and that the percentage is much higher. “They think the people are stupid”, he said. Finally, Jesus Torrealba, Executive Secretary of the MUD opposition alliance accused Maduro of publishing his proposed decree “without seeking any sort of consensus” and said it is no more than a device “to grant more power to the government mafia that has created the emergency, the looters”. More in Spanish: (Infolatam:


Precedent indicates contested elections to be repeated only if results are altered

The eight petitions filed by pro-government leaders with the Supreme Tribunal of Justice contesting results of the December 6 parliament vote seek new elections in six constituencies across four states. The plaintiffs argue that there were electoral crimes and irregularities such as vote buying, manipulation of assisted voting, and an unusual number of invalid votes. However, a 2000 decision by the Elections Court holds that in order to repeat the vote in such constituencies, proving allegations is not enough, and that a new vote is only to be held if the reported irregularities have "an incidence on the final vote outcome." (El Universal,


National Assembly evaluates proposed Justice Commission

Leaders of the majority opposition and minority pro government bloc within the National Assembly will meet to consider the “immediate installation” of a balanced commission proposed by President Maduro, to seek “justice, truth and peace”. The announcement was made by the majority leader Julio Borges. (El Universal,


Public Defender will review proposed Amnesty Law

Public Defender Tarek William Saab says he will review the Amnesty Law proposed by the new National Assembly majority, and meet with relatives of prisoners and political prisoners. More in Spanish: (El Universal,


Foreign Minister says Spain’s García-Margallo has nothing to say about our country

Foreign Affairs Minister Delcy Rodríguez has rejected statements by Spanish Foreign Affairs Minister José Manuel García-Margallo, and said his words showed "historic ignorance and imperial tutelage of its former colonies." "You need to abide by public international law, Foreign Minister García-Margallo, before even thinking about giving orders here," Minister Rodríguez said in replying to her Spanish counterpart, who said on Monday that he would voice Spain's concern over the situation in Venezuela at the Foreign Affairs Council of the European Union (EU).
(El Universal,


Border with Colombia will remain shut indefinitely until all the social, economic and security life in every inch of our territory is restored,” said Nicolás Maduro during his address to the National Assembly. Maduro asked people at the border his support and thanked Táchira Governor José Gregorio Vielma Mora for his efforts since last August 19, 2015 when he ordered the border shut. (Veneconomy,


Colombian gang’s leader killed in Venezuela

The leader of Los Rastrojos, a drug trafficking organization with roots in the Colombian paramilitary movement, was killed in a firefight with the security forces in Tachira, a Venezuelan state on the border with Colombia, officials said. Walter Raul Silva died early Saturday in a clash with Military General Counterintelligence Administration, or DGCIM, troops and CICPC law enforcement agency personnel, according to Tachira state Governor Jose Vielma Mora. Silva was wanted on murder, kidnapping, extortion and forced disappearance charges, Vielma Mora said. (Latin American Herald Tribune,


Former Venezuela bank official avoids prison time in bribery case

A former official with a Venezuelan state-owned bank has avoided prison time beyond the 16-1/2 months she has already served after admitting that she accepted millions of dollars in bribes from a Wall Street brokerage to which she steered business. Maria de los Angeles Gonzalez de Hernandez, who was a senior official at the government’s Economic and Social Development Bank, also known as BANDES, was further ordered by U.S. District Judge Denise Cote to forfeit the roughly US$ 5 million she garnered from the scheme. Cote said she was "affected by the degree of remorse" Gonzalez showed in a statement she read to the court through an interpreter. "We're enormously grateful for the court's compassion and understanding," said Jane Moscowitz, Gonzalez's attorney, after the sentencing. (Reuters,



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.