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.

Friday, October 14, 2016

October 14, 2016


International Trade

Cargo that has arrived at Puerto Cabello

  • 1.404 tons of coffee
  • 675 tons of powdered whole milk
  • 1,070 tons of black beans, all consigned to state agency CASA. 
More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/descargadas-m%C3%A1s-tres-mil-toneladas-alimentos-puerto-cabello)

 

231 containers have arrived at La Guaira’s port, bearing basic food items, medicine and personal care products. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34642; El Universal, http://www.eluniversal.com/noticias/economia/arriban-265-contenedores-alimentos-puertos-guaira-guanta_622406)

 

772 tons of food arrived at Guanta port in Eastern Venezuela, aboard 34 containers. The shipment includes 7 containers bearing rice, 7 with pasta, 12 with sugar and 8 with oil. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34646)

 

Maduro seeks a Venezuela-Turkey binational fund

During his visit to Turkey, President Nicolas Maduro meth the board of Turkish bank TURKEXIMBANK to discuss recent financial cooperation agreements between the two nations.  (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuela-and-turkey-mull-over-binational-fund_622265)

 

 

Logistics & Transport

Canada advises citizens to avoid travel to Venezuela, as have the US, Netherlands, Spain and Germany

Canada has joined the list of nations advising their citizens to avoid travel to Venezuela on the basis of safety. A notice by the Canadian Foreign Affairs Ministry says unnecessary travel should be avoided due to the “significant level of violent crime”, as well as “unstable political and economic conditions”, and the “decline in basic living conditions, including scarcity of medicine, food and water”. The United States Department of State, Netherlands Foreign Affairs Ministry, Spain’s Foreign Ministry and Germany’s Embassy in Caracas have issued similar warnings. More in Spanish: (El Universal: http://www.eluniversal.com/noticias/politica/canada-suma-los-paises-que-recomiendan-evitar-viajar-venezuela_622407)

 

Oil & Energy

Maduro says oil prices must be “fairer, more realistic

Global oil prices need to be fairer and more realistic to encourage investment and OPEC members should reach an agreement to bring price stability, President Nicolas Maduro told an energy congress on Monday. "OPEC members should reach an agreement and should work for the stability of the oil industry. Prices must be fairer, more realistic, and they should be an incentive for investors. For that we need fair prices," Maduro told the World Energy Congress in Istanbul, according to a translation of his comments. He said he hoped an agreement could be reached at a meeting of energy ministers next Wednesday and that Venezuela was ready to be part of any alliance among producers. (Reuters: http://www.reuters.com/article/us-oil-opec-venezuela-idUSKCN12A1J8?il=0)

 

PDVSA seeks to supply oil to Global Liman

The world largest operator of ports and cruises Global Liman and state-run oil company Petroleos de Venezuela (PDVSA) are evaluating the possibility for PDVSA to supply oil to meet the needs of cruises and other ships. A Memorandum of Understanding was signed during President Nicolas Maduro’s visit to Turkey. According to the document, the parties promised to evaluate and set terms and conditions for supplying oil. (El Universal, http://www.eluniversal.com/noticias/daily-news/pdvsa-signs-memorandum-with-global-liman_622097; http://www.eluniversal.com/noticias/daily-news/venezuela-and-turkey-strike-new-energy-deals_622059)

 

Commodities

Decree orders that 50% of all products must be sold to government

A decree just published by the Maduro regime forces “public and private companies that produce agribusiness supplies or products, personal care and home products, must sell 50% of their production to public institutions”. All productive units, companies, sugar mills, factories, industries, farms, productive plants, processing plants, slaughterhouses, importers, distributors, wholesalers and merchants are subject to this decree, under penalty if they refuse, delay or do not comply with the decree. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/economia/2016/octubre/13/172107=decreto-establece-que-50-de-la-produccion-agricola,-higiene-personal-y-aseo-se-destinara-a-los-clap; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/oficializan-normas-para-la-venta-del-50--de-produc.aspx)

 

Maduro seeks wheat supply from Russia

President Nicolas Maduro says he will soon sign agreements with Russia intended to ensure bread wheat for over 10,000 bakeries nationwide in the upcoming years. He claimed that under instructions from his Russian counterpart Vladimir Putin, the two leaders are “to close a deal to provide all the wheat that Venezuela needs to make bread for years 2017 and 2018. Russia is the world's largest wheat producer. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuela-secures-wheat-supply-from-russia_622408)

 

Economy & Finance

PDVSA warns bondholders to swap 2017 notes by next Monday, sues local newspaper

Petroleos de Venezuela SA’s President said holders of US$ 7 billion of the company’s 2017 bonds would be best advised to tender them in a swap offer, because the alternative is worse. He declined to give further details. “The best option they have is the exchange, and if it doesn’t happen we will be evaluating all options,” Eulogio Del Pino, also the country’s oil and energy minister, said in an exclusive interview from Caracas. “We are against the clock and there isn’t time for us to make a better offer.” The state-owned oil company is trying to persuade holders of at least half of its bonds due next year -- US$ 3 billion that mature in April and the rest in November -- to swap them for new notes that pay out between now and 2020. That would “give us breathing room,” and allow PDVSA to shift maturities into 2018 and 2019 when it doesn’t have big liabilities, “as any company would,” Del Pino said. Venezuelan bonds are the best-performing in emerging markets this year, with a return of about 60%, as the country defied expectations it would default on its debt. While some ratings companies have said they would treat the swap transaction as a default, investors had been betting that it will allow both the company and the country to keep making payments.  PDVSA will cancel the deal if it doesn’t achieve its target, Del Pino said. The company has pledged 50.1% of its stake in the holding company of U.S. refining arm CITGO Petroleum Corp. as a guarantee for the bonds. To go ahead with less than 50% participation would dilute the value of that stake, according to the company.  “CITGO has a value for us and we’re not going to exchange it for anything less than a minimum 50%,” he said. “We are giving two days for bondholders to understand that. This is a good offer and the best option there is. Otherwise we will have to analyze all options.” The company plans to pay the US$ 1 billion of debt it has coming due later this month, he said. He declined to make the same commitment for US$ 2 billion in payments on the 2017 bonds that fall due this November. So far, take-up of the swap offer has been very low, Del Pino said. PDVSA has twice extended the deadline, which now runs out on Monday at midnight New York time. PDVSA also filed a lawsuit against local newspaper El Nuevo Pais, accusing it of defamation and damaging efforts to persuade investors to take up a US$ 5.3 billion bond swap offer. "They are trying to harm, in whatever way they can, an operation that we have offered transparently," Del Pino said of El Nuevo Pais outside the Caracas courthouse after filing the lawsuit. The government has repeatedly insisted that it would pay its debts. Central bank President Nelson Merentes assured investors, in a rare private meeting in Washington last week, that they would be paid. (Reuters; http://af.reuters.com/article/commoditiesNews/idAFL1N1CK10E; http://www.reuters.com/article/us-venezuela-pdvsa-debt-idUSKCN12D1VK; http://www.reuters.com/article/venezuela-pdvsa-swap-idUSL1N1CJ026; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2422977&CategoryId=10717; Bloomberg, http://www.bloomberg.com/news/articles/2016-10-13/pdvsa-bonds-fall-after-swap-deadline-extended-for-second-time; https://www.bloomberg.com/gadfly/articles/2016-10-11/saudi-pdvsa-bond-sales-reveal-the-sorry-state-of-oil)

 

Inflation in Venezuela seen hitting 1,500% in 2017 as crisis goes from bad to worse

The economic situation in Venezuela continues to go from bad to worse, and things are unlikely to get better, experts have warned. This week, Venezuela's congress was stripped of its powers over the budget, viewed as a move by the country's President Nicolas Maduro as an attempt to consolidate power. On top of this, the country lacks many basic goods and inflation is out of control. Year-on-year inflation is expected to reach 700% this year and UBS forecasts it will reach 1,500% next year. "This situation is vastly deteriorating," Diego Moya-Ocampos, senior Latin America analyst at IHS Country Risk, told CNBC Thursday. "We expect the economy to contract at least 11.5%, inflation to hit 700%, already the highest in the world." (CNBC: http://www.cnbc.com/2016/10/13/inflation-in-venezuela-seen-hitting-1500-in-2017-as-crisis-goes-from-bad-to-worse.html)

 

Isturiz says exchange controls here are a political measure, not economic policy

Venezuela’s Executive Vice President Aristobulo Isturiz says exchange controls in Venezuela are not an economic policy but rather a political instrument. “If we remove exchange controls we would be overthrown …. Exchange controls here are not an economic policy, but a political one…That is the truth, and we cannot allow ourselves to be overthrown, let them kill us first because we have a commitment to the people”. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/economia/2016/octubre/11/171955=isturiz-afirma-que-control-cambiario-en-venezuela-no-es-una-medida-economica-sino-politica

 

CONINDUSTRIA says Supreme Tribunal rulings frighten away investors

Juan Pablo Olalquiaga, President of the Confederation of National Industries (CONINDUSTRIA) says that the ruling by the Supreme Tribunal (TSJ) that allows President Maduro to decree the 2017 budget without legislative approval will frighten away investors. He explained that decisions that bypass the Constitution do not project Venezuela as a trustworthy nation that can attract foreign investment. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/economia/2016/octubre/12/172019=presidente-de-conindustria-expreso-que-sentencias-del-tsj-genera-desconfianza-en-inversionistas

 

Venezuela says it makes us$ 201 million interest payment on some PDVSA bonds

Petróleos de Venezuela, S.A. (PDVSA) says it has made the US$ 201 million interest payments for its PDVSA Bonds maturing April 2017, 2027 and 2037. This semi-annual interest payment was due to bondholders on Wednesday, October 12, 2016, according to the payment conditions. "PDVSA honors the commitment with the people and all investors of bonds issued by the national oil company, which confirms the financial soundness of the main industry of Venezuelans," PDVSA said in a statement. The bonds are part of a US$ 7.5 billion, three maturity issue that the government of President Hugo Chavez sold in the markets on April 12, 2007. PDVSA issued US$ 3 billion of the PDVSA 5.25% of April 12, 2017, for which it paid US$ 79 million in interest for the last 6 months. That US$ 3 billion comes due, along with the final interest payment, in April of next year. Rather than have to pay the US$ 3 billion, PDVSA is currently trying to swap holders into a new bond maturing in 2020, collateralized by a first lein on 50.1% of its CITGO Holding company in the United States. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2422846&CategoryId=10717)

 

An unlikely winner in Venezuela crisis: high-end real estate

Building luxury apartments or corporate office towers might seem like an odd investment in an economy reeling from a deep recession, triple-digit inflation and chronic product shortages. Unless it's Venezuela. The combination of soaring prices and exchange controls that prevent businesses from buying dollars has made high-end real estate an attractive way for companies to protect the value of revenue earned in the increasingly worthless bolivar currency.  (Reuters, http://www.reuters.com/article/us-venezuela-construction-idUSKCN12715A)

 

ECLAC forecasts Venezuela’s economy will shrink by 8% in 2016

The UN Economic Commission for Latin America and the Caribbean (ECLAC) projects that Venezuela’s Gross Domestic Product (GDP) will fall by 8% this year, hitting the region's economic growth with an average shrinkage of -0.9%. (El Universal, http://www.eluniversal.com/noticias/daily-news/eclac-forecasts-venezuelan-economy-shrinkage-2016_622403)

 

Politics and International Affairs

National Assembly defies Executive and Supreme Tribunal

Venezuela’s opposition says it is the Executive and the Supreme Tribunal (TSJ) that are in contempt of the Constitution. The National Assembly decided it will not recognize “the authority and validity of Executive actions and TSJ sentences that contradict democratic values, principles and guarantees, and violate basic rights”. Julio Borges, leader of the opposition majority in the National Assembly accused the government of being the number one transgressor of the Constitution: “It is Nicolas Maduro who is outside the Constitution when he holds political prisoners, when he persecutes media, when he destroys productions, when he denies property, then he forces the Armed Forces to act as an appendix of the PSUV (ruling party)”. Congressman Simon Calzadilla said: “Where does the Constitution say that the TSJ can pass a law? Because the national budget is a law and it must be approved by the National Assembly. And they are so shameless as to say the National Assembly is in contempt. Contempt lies with the TSJ and this regime!” The legislature’s resolution orders the leadership of the National Assembly “to lead consultations and the organization of Venezuelan society to promote a great national civil movement to defend the Constitution, democracy and the right to vote”.  It also demands that the National Elections Council set a date for the recall referendum and regional elections within this year, and calls on the Armed Forces to disregard Executive and TSJ orders that violate the Constitution, and demand that the President respect the will of the people. In addition, it decided to create the Judiciary Nominating Committee to replace TSJ justices named in December 2015 and another Committee to investigate the TSJ decision to name Elections Council members in December 2014. During the fiery debate PSUV legislator Hugbel Roa threw his microphone at another legislator and also tried to throw his laptop, for which his right to debate was suspended for one month. More in Spanish: (El Nacional: http://www.el-nacional.com/politica/AN-desconocera-Ejecutivo-antidemocraticos-TSJ_0_938906402.html)

 

Venezuelan democracy takes another blow as Congress bypassed

Venezuela’s democracy took another blow late Tuesday when the Supreme Tribunal ruled that its constitutional chamber had the authority to approve the 2017 budget instead of the opposition-controlled National Assembly. Citing a previous ruling that nullified any acts passed by the National Assembly after it reinstated three disputed lawmakers and President Nicolas Maduro’s emergency powers, the court bypassed the congress completely. The government now has five days to submit the budget to the constitutional chamber, one of the Supreme Court’s six chambers. The ruling will intensify a political standoff in the country as the opposition tries to gather signatures later this month to push for a recall vote on Maduro in the face of a collapsing economy and rampant inflation. Since winning control of congress in December elections, the opposition has seen most of its legislative initiatives blocked or overturned by the Supreme Tribunal, which was stacked with pro-Maduro judges by the outgoing, pro-government congress. The tribunal based its decision "on the need to complete the legal formation of the national budget ... with the aim of maintaining the state's functions, guaranteeing fundamental rights and constitutional order." (Bloomberg, http://www.bloomberg.com/news/articles/2016-10-12/venezuelan-democracy-takes-another-blow-as-congress-bypassed; El Universal, http://www.eluniversal.com/noticias/daily-news/tsj-lets-venezuelas-maduro-enact-national-budget-without-congress-consent_622248; Reuters, http://www.reuters.com/article/us-venezuela-politics-budget-idUSKCN12C21O)

 

"Public loans will be null and void after top court's decision on budget"

José Guerra, head of Budget Subcommittee of National Assembly’s Finance Committee, says the country is undergoing a scam by the Supreme Tribunal of Justice (TSJ), following a Tuesday ruling that authorizes President Nicolas Maduro to submit the nation’s 2016 budget for to the TSJ Constitutional Chamber instead of the Legislature. Guerra added that the government could have serious troubles with public loans operations should the domestic budget be not enacted by Congress. Likewise, the official claimed the government does not want to deliver the budget to the Legislature, in order to have at its disposal a level of spending that will be illegal. “This does great damage harm to the country. The government should have better presented the budget and the Law on Indebtedness at the Congress for us to make relevant comments and ultimately pass them (both instruments) to prevent the country from facing something that will happen in 2017 regrettably,” he said. National Assembly President Henry Ramos says the ruling reflects the court’s “lawbreaking attitude.” (El Universal, http://www.eluniversal.com/noticias/daily-news/public-loans-will-null-with-top-courts-decision-budget_622371; http://www.eluniversal.com/noticias/daily-news/venezuelan-dissent-deplores-top-court-decision-budget-fy2017_622293;  The Washington Post: https://www.washingtonpost.com/world/the_americas/venezuela-top-court-president-can-bypass-congress-on-budget/2016/10/12/92edf0e8-90a0-11e6-bc00-1a9756d4111b_story.htm)

 

Capriles: Venezuelans to take streets if high court halts recall

Two-time Venezuelan presidential candidate Henrique Capriles said Wednesday that Venezuelans will mobilize nationwide if the Supreme Tribunal issues a ruling paralyzing the process of holding a referendum to recall President Nicolas Maduro. The governor of the central state of Miranda said that the Venezuelan opposition had been informed that the high court allegedly is preparing a preventive measure to halt the process for activating the referendum begun last March but which still has not been announced because the magistrates hold “divided” positions on the matter. “We have to be on maximum alert, if they try via a preventive measure to rob us of our right, immediately the response must be to ... defend the Constitution and ... our right for this country to get out of this situation,” Capriles told reporters. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423018&CategoryId=10717)

 

Venezuela in a vise

A so-called recall referendum may be held if 20% percent of registered voters in each state sign a petition at the end of this month. Even if they do, however, a meaningful recall vote is far from guaranteed. Under the Constitution new elections won’t take place if the referendum is scheduled after Jan. 10. In that case, and if President Nicolas Maduro is voted out, the vice president will serve the remaining two years of Maduro’s term in his place. It’s up to the national election commission to determine when to hold the referendum, and the commission has a long record of pro-government partisanship. Earlier this year, it took over a month to produce the simple one-page official form that the political opposition needed to collect signatures for the referendum. This foot-dragging has been called unconstitutional, undemocratic, a desperate ploy to hang on to power. Desperation is roiling just beneath the surface. Voters said to be in favor of removing Maduro from office far outnumber those against: nearly 68%, compared with 23.5%, according to a poll taken this summer by VENEBAROMETRO, a respected local pollster. Some 92% of respondents also said the country’s situation was “somewhat bad,” “bad” and 57% calling it “very bad.” Venezuela is no longer a country split between roughly two antagonistic halves: a pro-government left and an opposition-minded right. Now, a small, heavily militarized state elite rules over a hungry, desperate mass of people who increasingly hate it. A broad and diverse opposition movement has coalesced around the need to return Venezuela to democracy. But it finds itself in a peculiar predicament: Although its numbers are strong, it is virtually powerless. And now the Maduro government, by maneuvering to deny a timely recall vote, is shutting down any institutional avenue out of the crisis. Which is why today, depressingly, Venezuela’s fate once again may rest where it should never be: with the armed forces. Yet Chavistas, of all people, should realize the dangers of making it necessary for a group of desperate officers, spurred on by history, to go off into the middle of the night to see what comes of it. (The New York Times OP-ED by Francisco Toro: http://www.nytimes.com/2016/10/12/opinion/venezuela-in-a-vise.html?_r=1)

 

VP party denounces “wave of persecutions” by regime

Representatives of the Voluntad Popular party, which is headed by imprisoned opposition leader Leopoldo Lopez, has presented a 300-page complaint to the Organization of American States, denouncing what they call a “wave of persecutions” by the Maduro regime, which they say has become “systematic” against opposition parties. They say around 250 Voluntad Popular activists are being persecuted and there are 8 jailed, two underground and over five in exile. More in Spanish: (Infolatam: http://www.infolatam.com/2016/10/10/partido-de-lopez-denuncia-en-la-oea-ola-de-persecuciones-del-gobierno/

 

Cardinal Porras says Elections Council must abide by the Constitution on recall process

Newly appointed Cardinal Baltazar Porras has said that the National Elections Council (CNE) and the Supreme Tribunal (TSJ) must follow the lines set out in the Constitution with regard to the recall referendum process, and adds that criticism by the Catholic Church should not be taken as partisan. “Each time a criticism is made or real problems are pointed to because we see what people tell us, that is not to be in the opposition, or for or against any side, it is basically the wish to help those most deprived who are the ones that suffer the most”.  More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/10/171785=cardenal-baltazar-porras-expreso-que-el-cne-debe-respetar-lineamientos-de-la-constitucion-sobre-rr

 

European Parliament asks EU to assist European prisoners in Venezuela

The Human Rights Subcommittee of the European Parliament has asked the European Union to “go into action” to solve “the humanitarian crisis” in Venezuela and “assist” European political prisoners that remain detained in this country. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/internacionales/2016/octubre/12/172014=eurodiputados-piden-que-ue-actue-para-ayudar-a-presos-europeos-en-venezuela)

 

Clinton or Trump? Both bad, Maduro bemoans

Venezuela's president has blasted White House contenders Republican Donald Trump and Democrat Hillary Clinton, panning their weekend debate and warning either becoming the next U.S. president would be bad for Latin America. "I have not seen a more miserable, more immoral debate in the United States' political history, which I've followed for 30 years," said Socialist Nicolas Maduro, during an event to mark "Indigenous Resistance Day" in Venezuela, a former Spanish colony. "If half of what they told each other is true, neither of them can be president of the United States or any other country in the world," added Maduro, a former bus driver and union leader who had previously thrown his support behind former Clinton rival, Senator Bernie Sanders, calling him his "revolutionary friend." (Reuters, http://www.reuters.com/article/us-usa-election-venezuela-idUSKCN12C2LY)

 

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.

1 comment:

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    :)

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