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, April 5, 2016

April 05, 2016

International Trade

Maduro to contact Panamanian counterpart over demand against fishing boats

President Nicolas Maduro says he will get in touch with his Panamanian counterpart, Juan Carlos Valera, to compromise and settle some claims against on Venezuelan fishing boats reported by the Venezuelan Association of Tuna Shipbuilders (AVATUN). Maduro’s remarks came after Lilo Mariscalchi, the AVATUN CEO, complained about “the legal insecurity of ships in Panama city.” Maniscalchi said: “a sort of mafia has been set up, which, in addition to a number of lawyers and the Maritime Court, prepare complaints against our vessels, and with a simple collateral of US$ 3,000 they file a complaint for one or two million dollars. They impose bails and, in the event of not honoring them, the vessel is attached and the fishing works are lost, work and money are lost,” (El Universal,


Export red tape is down 60% this year, according to Foreign Trade and Investment Minister Jesús Farías, who says that in the next few days a new phase of the Single Foreign Trade Window will be launched. More in Spanish: (El Nacional,


Oil & Energy

Venezuela oil price falls back below US$ 30

The price Venezuela receives for its mix of medium and heavy oil fell 6.7% this week -- back below US$ 30 a barrel after 2 weeks above -- as prices around the world slipped on oversupplied markets and Saudi Arabian comments that it would not join a production freeze if Iran did not also freeze production. According to figures released by the Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending April 1 was US$ 29.75, down US$ 2.12 from the previous week's US$ 31.87. (Latin American Herald Tribune,; El Universal,


Venezuela to cut energy output if key dam falls to critical low

Venezuela will reduce power generation if the key Guri dam, which supplies around half of the blackout-hit country's electricity, falls below a minimum level that is fast approaching, an official said on Friday. A severe drought, coupled with what critics say is a lack of investment and maintenance in energy infrastructure, has hit the nation which depends on hydropower for 60% of its electricity generation. The massive Guri dam in Venezuela's central jungle is now at just 244 meters - its lowest level ever and just 4 meters from a critical point where water cannot feed its turbines. "Without a doubt if the level reaches 240 meters we will have to apply certain operative measures, which authorities will announce in due time," Miguel Angel Romero, the head of generation at state-run energy firm CORPOELEC, told Reuters in an interview. (Reuters,


PDVSA says supports Venezuela soccer team, denies lack of funding

State-run oil company PDVSA says its support for the national soccer team had never waned, rebuffing comment from the country's soccer federation (FVF) that it hadn't paid any of the agreed sponsoring money last year. "PDVSA has never stopped honoring its obligations with the Venezuela Football Federation," said the company in a statement, without offering specifics. The federation has said that the lack of funding from PDVSA, its chief sponsor, has hurt its ability to train and travel and made it impossible to attract a world-class international coach. (Reuters,




Poll shows 87% of all Venezuelans are on a “survival” diet

A poll by the nation’s three major universities shows 87% of all Venezuelans do not have income enough to purchase necessary food, and most of their “survival” diet is based on carbohydrates. The poll shows that the items most consume are corn flour, rice, pasta, bread, margarine and mayonnaise, while at lower income levels most say they eat mortadella rather than beef. The study shows that 40% of basic foods consumed here are flours, rice and grease, and 12.1% eat only twice a day. More in Spanish: (El Nacional,


POLAR bottle cap plant halts due to lack of tin foil

Johnny Magdaleno, secretary general of the METALGRAFICA plant union, reports that POLAR’s production of bottle caps has once more halted due to lack of tin plate, which causes a deficit of 30 million daily units at the plant. The supply is imported and depends on FOREX allocations by the government. More in Spanish:  (El Nacional,


Economy & Finance


Venezuela’s Supreme Tribunal has declared Central Bank Reform Law unconstitutional

The Constitutional Chamber within Venezuela’s Supreme Justice Tribunal has declared that a Partial Reform of the Central Bank Law passed by the National Assembly on March 3rd is unconstitutional. The Chamber alleged that a comparative study of central bank legislation in other countries shows that in most cases the power to name authorities rests with the Executive. More in Spanish: (Ultimas Noticias,; Agencia Venezolana de Noticias;; El Universal,


Venezuela’s 2015 Budget: Gaps as gold dwindles

It may be futile to apply generally accepted accounting principles in Venezuela, but Russ Dallen reports that the Venezuelan government released its 2015 budget data on Friday. Dallen, an investment banker and publisher, writes: “The most shocking number is the “Diverse FOREX Assets” on the assets side of the ledger, which went up US$ 137 billion dollars to $185.2 billion in 2015 (without a corresponding offset on the same debit side, of course)! While the make-up of that $185 billion is hidden in a footnote which we do not have access to yet (we are working on it)”. That footnote in early 2015 revealed billions in gold sales, Dallen notes, adding: “the Central Bank’s official 2015 closing figure for Venezuela’s gold reserves is US$ 10.01 billion (“Monetary Gold” under “Reserve Assets”). Venezuela started 2015 with US$ 14.5 billion in gold, so the country sold and/or mortgaged US$ 4.5 billion in gold from its reserves in 2015. … we believe that Venezuela’s gold holdings have now fallen to under US$ 8 billion....With the state of Venezuela’s finances and economy in tatters and knowing that Venezuela has now drawn down their Financial Reserves to US$ 13.237 billion (as of March 31) from the US$ 24.122 billion they were last year on March 1, 2015, you have to wonder under what standard of accounting the BCV can claim that their assets went up US$ 186 billion dollars at the same time?(Barron’s:


Venezuela today looks like Zimbabwe 15 years ago

Might Venezuela go the way of Zimbabwe? They are culturally very different, but the political parallels are ominous. Both countries have suffered under charismatic revolutionary leaders. Robert Mugabe seized big commercial farms without compensation, wrecking Zimbabwe’s largest industry. Chávez expropriated businesses on a whim, sometimes on live television. Mugabe lost a referendum in 2000 but rigged the subsequent election to keep the (more popular) opposition out of power. The chavistas lost a parliamentary election in December but have used their control of the presidency and supreme court to neuter the (more popular) opposition. Mugabe recruited a ragtag militia of “war veterans” to intimidate his opponents. Chávez recruited gangs from the slums, known as colectivos, to terrorize his. Yet the key similarity between the two regimes is not their huggishness but their economic ineptitude. Both believe that market forces can be bossed around like soldiers on parade. In both cases, the results are similar: shortages, inflation and tumbling living standards. Mugabe has long blamed his country’s economic woes on speculators, traitors, imperialists and homosexuals. Maduro, to his credit, doesn’t blame gay people. But he insists that local capitalists and their American allies are waging an “economic war” on Venezuela. This is absurd: in both economies the assaults have come from their own governments. Real incomes in Zimbabwe fell by two-thirds between 1980, when Mugabe took over, and 2008. They have partially recovered, thanks to dollarization and the scrapping of some of the old man’s daftest policies. For Venezuela, the lesson is plain. (The Economist:


Politics and International Affairs


Capriles: We have about half the votes needed to recall Maduro

The opposition presidential candidate in the last two Venezuelan general elections, Henrique Capriles, said on Sunday that they have “almost” half of the four million votes needed to try and end Nicolas Maduro’s presidency via a recall referendum. “The will for change is being felt in all corners of the country. Almost two million people have provided their information because they are ready to sign for the recall,” wrote Capriles in his Sunday press column. Next week, he added, “we will be reporting on what is happening with the recall and what the next activities that we will announce will be to exercise our constitutional right to change the government” of Maduro, who was elected in 2013 for a six-year term. (Latin American Herald Tribune,


Venezuela opposition sees “long road” ahead to sack Maduro 

The Venezuelan government is seen as dragging its feet against a call for a recall vote against President Nicolas Maduro, with opposition lawmakers saying they see “a long road” ahead of them before the poll is taken. Already, a first draft of a special law for recall votes has been approved by the opposition held National Assembly and passage in a second vote seems assured but opposition lawmakers don’t kid themselves: the government will put up a fight. “The referendum is waiting for CNE (the government controlled electoral authority) response. We are waiting for it over the next few days. But it will be a long road”, opposition lawmaker and Assembly Vice President Enrique Marquez wrote to LAHT. (Latin American Herald Tribune,


The National Assembly unanimously approved Pope Francis I call for peace here, in which the Pontiff asks for peace talks in Venezuela. More in Spanish: (Ultimas Noticias,


Capriles says Maduro cannot veto National Assembly laws

Opposition leader Henrique Capriles Radonski has recently said that “Maduro cannot veto laws passed by the National Assembly because there is no veto power in Venezuela.” More in Spanish: (El Universal,


UNASUR calls for talks here due to clash over Amnesty Law

Ernesto Samper, Secretary General of the South American Nations Union (UNASUR) called for talks here and warned that the new Amnesty Law is leading to an “imminent train crash” in this country. More in Spanish: (El Universal,


CELAC, UNASUR reject Obama's decree

The Community of Latin American and Caribbean States (CELAC) and the Union of South American Nations (UNASUR) have said the extension for one year of a decree issued by US President Barack Obama, calling Venezuela an extraordinary threat for the United States, is meddling. “We cannot imagine that one of our member countries can be a threat for the most powerful country in the world,” stated a communiqué read out at the Tenth Meeting of CELAC Foreign Ministers held in Santo Domingo, Dominican Republic. A communiqué issued by UNASUR maintained that “the extension of the US executive order avoids the UNASUR request for its abrogation with no consideration.” (El Universal,


Human Rights Watch reports policy brutality and 20 extrajudicial executions in Venezuela

Human Rights Watch and PROVEA, a local NGO, have jointly reported random mass detentions, abuse of those detained, evictions by force and at least 20 extrajudicial executions in police and military raids in immigrant and popular neighborhoods in Venezuela. The report says “dozens of residents in Caracas and five states (Carabobo, Miranda, Nueva Esparta, Vargas and Zulia) say they have been victims of abuse during raids or have witnessed abuse on others”. More in Spanish: (Venevision:


The National Assembly will investigate “Panama Papers” links to Venezuela, according to Freddy Guevara, Chairman of the Comptroller Committee of the legislature here. More in Spanish: (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.

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