International
Trade
Venezuela's trade with the US is down 36.61%
Total Venezuela-US trade during the first half
of this year was US$ 12.952 billion, a 36.61% drop from last year's first
semester, which stood at US$ 20.433 billion, according to a report prepared by
the Venezuelan American Chamber of Commerce and Industry (VENAMCHAM), based on
US Census Bureau data. Oil exports were 47.57% less, mainly due to the drop in
oil prices. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/venamcham--intercambio-comercial-con-eeuu-cayo-36-.aspx#ixzz3iV9C6Hj6)
A rocky path for
exports
In 1998 the export of non-oil products brought
in 29% of the country's revenues. Today it makes up barely 3% of the country's
total revenues, according to figures from the National Institute of Statistics
(INE). Procedural hurdles, permits, falling production, foreign exchange
controls and economic decrees, not to mention inefficiency, are among the many
stumbling blocks to bridging the gap between a packaged product placed in a
container and the buyer abroad who would be a potential source of foreign
currency earnings. Ramón Goyo, head of the Venezuelan Exporters Association
(AVEX) says Venezuela has lagged in this area and that the downward trend in
non-oil exports will continue in the coming years if controls and monitoring
that further compound the difficulties of exporting remain in place. (El
Universal, http://www.eluniversal.com/economia/150808/a-rocky-path-to-exports)
Oil &
Energy
Venezuela oil price tumbles
even further
Venezuela's weekly oil basket price fell to
within US$ 5 of its 2015 lows as oil prices slipped in international markets on
economic worries about China, a nuclear deal that would allow Iran to sell more
oil, in addition to the U.S. market remaining amply supplied. 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 August 7 was US$ 43.15, down US$ 2.72 from the previous week's US$ 45.87.
(Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2394108&CategoryId=10717;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44997&idc=4)
Over 30% of PDVSA’s workers are staging protests
in different areas
of the state oil company, said Zulia’s oil workers’ representative José Boada. Workers
at the San Francisco, Maracaibo and Costa Oriental del Lago docks have begun a
series of protests that have resulted in partial stoppage in seven docks.
(Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44998&idc=4)
Improvised engineers for PDVSA
The Venezuelan regime is “training” workers to receive degrees as bachelors and superior
technicians in careers that will allow them to manage PDVSA and other
government key companies, much as it did with the so-called community doctors.
Courses offered, professors and students in this university do not comply with
the requirements set by the traditional university system. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44988&idc=4)
Commodities
Looters target
Venezuelan food stores as shortages spark frustration
Venezuelan supermarkets are increasingly being
targeted by looters as lines and prolonged food shortages spark frustration in
the nation struggling with an economic crisis. Shoppers routinely spend hours
in lines to buy consumer staples ranging from corn flour to laundry soap,
turning lines into venues for shoving matches and frequent attempts to plunder
shops. 56 lootings and 76 looting attempts took place in the first half of
2015, according to the Venezuelan Observatory of Social Conflict, which based
the figures on media reports and testimony of observers around the country. More
frequent than these serious events are minor melees that ensue when delivery
trucks arrive at stores carrying prized products such as chicken or milk. Lines
are increasingly filled with smugglers who buy subsidized goods and resell them
at a profit on the black market or in neighboring Colombia, generating tension
between resellers and those trying to stock their own kitchens. Local food
producers ranging from neighborhood bakeries to an industrial pasta maker have
halted or slowed operations for lack of raw materials or machine parts. Obtaining
low-cost food and medicine, once the hallmark of the Hugo Chávez era, has
become a daily struggle. (The Guardian, http://www.theguardian.com/world/2015/aug/07/looters-target-venezuelan-food-stores-as-shortages-spark-frustration)
COLGATE PALMOLIVE
stopped producing powdered soap
Workers at the COLGATE PALMOLIVE detergent
plant in Valencia have been notified by the company that powdered soap
production has ceased indefinitely due to lack of packaging material. The flier
indicates the company has been losing on detergent production for months
because official prices do not cover production costs. (El Nacional; http://www.el-nacional.com/)
Poultry farms shutting
down for lack of feed
Rafael Moreno, President of the Táchira State
Poultry Association, reports more farms there are closing down due to lack of
feed, baby chicks and medicines. (El Nacional; http://www.el-nacional.com/)
Economy
& Finance
Venezuela ‘terrorized by oil price drop’
Amid lower oil prices, Venezuela is struggling
to maintain the social spending that characterized the Chávez era. Crude
accounts for 96% of export revenues: a halving in the oil price over the past
14 months means revenues have slumped by about US$ 36 billion compared with the
average of the previous two years, when the government raked in almost US$ 79
billion. The fall in oil prices has inflicted massive pain on exporting
countries, widening budget deficits and weakening currencies around the world.
Energy companies have been forced to lay-off thousands of workers and scrapped
multibillion-dollar projects. But Venezuela is facing the greatest economic
threat of any of the world’s major producers. With shortages of basic goods —
from milk to nappies — becoming more acute each day as imports shrink, it is
not only populist housing projects that are likely to be shelved, warn
observers. “Venezuela is running on fumes,” says Russ Dallen, who heads
investment bank, LATINVEST. “The current
oil income is insufficient to allow the country to pay its debts, fund its
imports and service its foreign bonds.” The debt — issued by the government
and a handful of state-run companies including the oil group PDVSA — adds up to
a total of US$ 128 billion to be paid back over the next 24 years. But US$ 6.3
billion of that falls due before the end of the year, according to Bank of
America. So far Caracas has been able to keep paying its foreign bond creditors
by selling assets, securitizing oil debts and raiding its foreign reserves,
burning through more than US$ 7billion since late February. They now stand at US$
16.9 billion, one of their lowest levels in the past decade, according to
central bank data amid fears that the coffers could run empty in the first
quarter of 2016, triggering a possible balance of payments crisis and knock-on
implications for heavily exposed bondholders. The economy is forecast to shrink
by 7% this year. This is not solely due to a fall in the oil price. The
mismanagement of the industry — the failure to invest — and a series of
unsuccessful nationalizations are key to understanding Venezuela’s plight. (The
Financial Times, http://www.ft.com/intl/cms/s/0/c9c4b05c-0b81-11e5-994d-00144feabdc0.html#axzz3iM8zNJnr)
JP Morgan says that Venezuela's economic crisis
will be worse than expected
The firm had estimated GDP contraction for 2015
at 5.5%, but since the crisis has been worse than expected and no steps have
been taken to meet it, it has changed its estimation to a 8% GDP contraction. It
also expects inflation to hit 200% by the end of the year and the forcecast
continues worsening. JP Morgan says "the lack of official reports has made
us revise our prognosis for 2015, which reflects greater deterioration than we
previously expected". More in Spanish: (El Nacional; http://www.el-nacional.com/)
TPCG Group reports that drawing funding from the
PETROCARIBE system appears exhausted
The international consulting firm says most of
the debt under this agreement is currently in the hands of countries with few
possibilities to take advantage of recent refinancing, such as the ones done by
the Dominican Republic and Jamaica. It claims only greater cuts of crude oil
shipments will allow putting a limit to the cost continuing with the agreement
costs Venezuela. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45006&idc=4)
High cash withdrawals restricted at banks
Zulia state’s regional daily PANORAMA reports
that individuals have been told at different banks they can withdraw up to
Bs.20,000-Bs.40,000 due to shortages of high-denomination bills, money fleeing
through the border and problems with paper money to print bills. The situation
has been echoed in other states as well. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45005&idc=2)
"Simplification" will not mean
lifting FOREX controls
Pro-government legislator Alexander Dudamel, a member
of the Finance Committee at the National Assembly, says foreign exchange
simplification will not mean lifting foreign exchange control. His reference is
to a proposal by former Chavez minister of finance Rodrigo Cabezas. Dudamel
says: "The government will not let
foreign exchange control slip from its grasp, because even with that measure in
force, speculation is ravaging the economy," he commented. He stressed
that the government needed to maintain foreign exchange control along with
appeals for dialogue with productive sectors, plus improvements in foreign
exchange disbursements, to build more trust. (El Universal, http://www.eluniversal.com/economia/150808/simplification-does-not-mean-lifting-forex-control)
FEDECAMARAS open to
talks with Maduro
Francisco Martínez, President of the Venezuelan
Federation of Chambers of Commerce and Industry (FEDECÁMARAS) has said the
institution expects dialogue with the President after a meeting held last week with the
Vice-president of the Congress, Deputy Elvis Amoroso. Martínez says that both
private and public companies have long expected to hold unbiased and sincere
talks to address the root causes of the country's problems. He also asked the
vice-president of the Parliament to publish economic indicators collected by
the Central Bank of Venezuela, so all productive sectors can be aware of real
inflation rates here. (El Universal, http://www.eluniversal.com/economia/150810/commerce-chamber-expects-unbiased-talks-with-the-executive-office;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44996&idc=2;
http://www.eluniversal.com/economia/150810/national-assembly-commerce-chamber-talks-move-forward)
Politics and
International Affairs
Maduro and Granger invited to meet at the UN
Guyanese Foreign
Minister Carl Greenidge
has confirmed that UN Secretary General Ban Ki-moon is seeking to set up a
meeting between his country's President David Granger and Venezuela's Nicolás
Maduro, to discuss the Essequibo border dispute during the upcoming UN General
Assembly in September. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/150811/invitan-a-maduro-y-granger-a-reunirse-en-la-onu)
Venezuela's first transgender candidate to run
for Congress
The first transgender politician to run for
popular election in Venezuela has registered as candidate for Congress as part
of the opposition bloc, promising to advance gay rights in the traditionally
macho society. Lawyer and gay rights activist Tamara Adrian had to register
under her given name Thomas Adrian despite a 2002 sex change, because
Venezuelan law does not allow anyone born male to legally become female or take
a woman's name. "We're going to
fight so that everyone gets respect," said Adrian, amid a tussle of
candidates and cheering supporters at the gates of an elections authority
office in Caracas. Adrian is running with the opposition party Voluntad
Popular, which includes some of the most outspoken critics of President Nicolas
Maduro. Two gay candidates are also running with Voluntad Popular. (Reuters, http://www.reuters.com/article/2015/08/07/venezuela-politics-idUSL1N10I1BJ20150807)
Prominent American lawyer
John Pate murdered in his apartment in Venezuela
Prominent lawyer John Pate, a US citizen, was
stabbed to death by assailants in his apartment in Caracas on Sunday evening. Pate,
71, was a member of the Editorial Board of the Caracas Daily Journal, the
predecessor of the Latin American Herald Tribune. He received his J.D. law
degree from Boston University in 1969; and an M.A. and an M.A.L.D. from The
Fletcher School of Law and Diplomacy at Tufts University in 1971 and 1972,
respectively. He was Vice Chair of the Latin American and Caribbean Law
Committee in the International and Business Law Sections of the American Bar
Association. Pate came to Venezuela as a professor of International Business
and Latin American Integration at the Institute for Higher Administration
Studies (IESA, 1974-1977); and later was a founding member of De Sola Pate
& Brown. He served in numerous institutions, was a Director of the
Entrepreneurial Center for Conciliation and Arbitration – CEDCA, Director of
the Centro Venezolano Americano – CVA, and a member of the Legal Affairs
Committee of VENAMCHAM. His first wife, Gertie Paez Pate, a well-known Peruvian
painter and descendant of Venezuela's first President José Antonio Páez, died
of cancer in 2007. According to police, the criminals reportedly entered his
apartment with the intent to rob him, but instead killed him with multiple stab
wounds. His companion, Sally Evan Oquendo, 67, was wounded and is hospitalized.
(Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2394180&CategoryId=10717)
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.
