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, 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.

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