August 18, 2016

International Trade

Brazil and Uruguay in clash over Venezuela’s role in MERCOSUR

Brazil has called in Uruguay’s Ambassador in Brasilia to demand explanations over remarks made by Uruguayan Foreign Minister Rodolfo Nin Novoa during a Congressional hearing in his country. Nin told the House Foreign Affairs Committee of Uruguay’s Congress that "We did not much like that (Brazil’s) Foreign Minister José Serra came to Uruguay aiming to suspend the transfer (of MERCOSUR’s chair to Venezuela), and also that if it was suspended they would include us in their negotiations with other countries, as if trying to buy Uruguay’s vote”. He added that the Brazilian position “very much bothered” President Vázquez. Nin said further that Uruguay holds Venezuela as the “legitimate pro tempore chair” and will attend any meetings Maduro calls, even if the others don’t go, adding that other MERCOSUR members want to apply “bullying” over Venezuela’s chairmanship. He also said that Uruguay would for now oppose sanctioning Venezuela under MERCOSUR rules because “conditions aren’t there”. And said “the day they tell us they closed the National Assembly, for us that will be a rupture of democracy. As long as they don’t do so, it is not.” Uruguay called the matter a “misunderstanding” after Brazil expressed “deep dissatisfaction and surprise” over Nin’s statements. More in Spanish: (Infolatam: http://www.infolatam.com/2016/08/16/brasil-convoca-embajador-de-uruguay-por-declaraciones-de-novoa-sobre-mercosur/; Noticiero Venevision,  http://www.noticierovenevision.net/internacionales/2016/agosto/16/166072=canciller-nin-novoa-senalo-que-brasil-quiso-; El Universal: http://www.eluniversal.com/noticias/politica/uruguay-califica-malentendido-roce-diplomatico-con-brasil_432227)

 

Maduro "declares battle" to “save" MERCOSUR

President Nicolas Maduro announced that Venezuela "declares battle" to save the Common Market of the South (MERCOSUR) from what he calls the "triple alliance" of Argentina, Brazil and Paraguay, and thanked Uruguay for the "moral strength" that country has shown. "Venezuela declares a battle to save MERCOSUR from the coup-mongering, far-right triple alliance that aims to destroy the bloc from within, and I thank President Tabaré Vázquez, the people of Uruguay (...) for all the moral force they have shown" said Maduro. He claimed that “the coup-mongering government of Brazil" has tried "unsuccessfully and illegally" to put pressure on Uruguay for Montevideo to join what he described as a "triple alliance" to remove Venezuela from the presidency of MERCOSUR. (El Universal, http://www.eluniversal.com/noticias/daily-news/maduro-venezuela-declares-battle-save-mercosur_432161)

 

Trade Minister says those who repatriate FOREX can keep 100% of export earnings

Foreign Trade and Investment Minister Jesús Faría has called on the private sector to repatriate FOREX and claims they can get back their investment. He says the “the private sector has US$ 500 billion abroad, whether companies or individuals”, and said those who are willing to repatriate their funds to Venezuela “as raw material”” for producing exports can keep 100% of their export earnings “until they get back their investment, when they perform, and this can repeat itself automatically”. He claimed those who use funds abroad to bring raw materials will not be held to the current 60-40% export earnings ratio. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/economia/dejaran-que-las-empresas-retengan-100-divisas_432064)

 

 

Oil & Energy

Venezuela oil exports seen falling as economic woes worsen

The long decline in Venezuela’s oil production is becoming a supply risk for international markets, according to a report by Columbia University’s Center on Global Energy Policy. Venezuela, traditionally a prominent oil exporter, will make a sharply smaller contribution to the global oil market in 2017 as an acute political and economic crisis affects its crude production. Exports from the holder of the world’s largest crude reserves fell more than 300,000 barrels a day in June, compared with the 2015 average, according to the report written by Luisa Palacios, a senior managing director at Medley Global Advisors LLC and fellow at Columbia's University Center on Global Energy Policy. While Venezuela’s output has been declining all year, the impact is only now being felt on international markets because previous losses were offset by slumping domestic oil demand amid an unprecedented economic recession. “Venezuela will represent a growing supply risk for oil markets in 2017,” the report said. “While on average crude oil exports in the first half do not yet show an important decline from the same period a year ago, the latest data point to a deteriorating trend.” (Bloomberg, http://www.bloomberg.com/news/articles/2016-08-16/venezuela-oil-exports-seen-falling-as-economic-woes-worsen; Reuters, http://www.reuters.com/article/us-venezuela-oil-idUSKCN10R1RH)

 

 

Commodities

Maduro claims Venezuela signed US$ 4.5 billion in deals that include Canadian and U.S. miners

President Nicolas Maduro has claimed that Venezuela struck US$ 4.5 billion in mining deals with foreign and domestic companies, part of plan to lift this nation's economy out of a deep recession causing food shortages and social unrest. Maduro said the deals were with Canadian, South African, U.S. and Venezuelan companies, but did not specify whether contracts had been signed or just initial agreements. He added that he expects US$ 20 billion in mining investment contracts to be signed in coming days and that 60% of the income Venezuela received would be spent on social projects. (Reuters, http://www.reuters.com/article/us-venezuela-mining-idUSKCN10R2N7)

 

 

Economy & Finance

GDP reportedly dropped 11.8% in Q2 2016

According to unofficial data from the Central Bank, Venezuela’s economy shrank 11.8% during the second quarter this year, compared to 2015. This comes along with an 8% drop in consumption during this same quarter, the worst in the past 30 years. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/PIB-cayo-segundo-trimestre_0_904109811.html)

 

Central Bank gold value down 25% over past six months

According to Venezuela’s Central Bank (BCV) June 30^th financial statements, the value of its gold reserves dropped 25% in the past six months and now stands at US$ 7.5 billion. As of December 31, 2015, the value of Venezuela’s gold reserves was registered at US$ 10.04 billion, at US$ 1140.43 per troy ounce. The June statement shows the price of gold at US$ 1181.01 per troy ounce, but the amount of gold held by the BCV has shrunk. Bank officials admitted earlier this year that they were trading in gold bullion for cash. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Oro-monetario-BCV-cayo-meses_0_904709719.html)

 

Bank of America follows Barclays in canceling Venezuela trip

Bank of America Corp. canceled an investor trip to Venezuela planned for next month because of security reasons, making it the second bank to do so in a span of weeks amid rising social tensions in the nation. The bank notified clients last week the trip was off. Its sales staff then told clients in a separate e-mail “the situation has deteriorated in Venezuela in the last few weeks as the economic and political crisis has deepened,” according to people who received the update. “As a result, the perceived safety risks have increased significantly beyond what we are willing to tolerate at the moment.” The decision comes after Barclays Plc scrapped its own Caracas travel plans in July because its security team deemed the trip “unwise” unless the bank took “significantly enhanced” safety measures. Bloomberg reported the Barclays cancellation on Aug. 11. (Reuters, http://www.bloomberg.com/news/articles/2016-08-17/bank-of-america-said-to-follow-barclays-canceling-venezuela-trip)

 

Venezuela seeks annulment of award over Vestey cattle ranch expropriation

Venezuela has requested the annulment of a decision by the World Bank’s arbitral center compelling this nation to pay around US$ 100 million to Britain’s Vestey Group for the nationalization of a number of cattle ranches here. Early in April, the International Center for Settlement of Investment Disputes (ICSID) announced that Venezuela should pay US$ 98 million plus interest for having seized Vestey ranches here in 2005. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuela-requests-annulment-award-over-cattle-ranch-expropriation_432128)

 

POLAR has denounced Maduro regime at ILO

Guillermo Bolinaga, director of Legal and Regulatory Affairs forf Venezuela’s major food producer Empresas POLAR, has denounced the Maduro regime at the International Labor Organization (ILO) in Geneva, Switzerland, for harassment and discrimination. Bolinaga lodged a complaint showing all the attacks against the company and employees in recent months by several representatives of the national government. (El Universal, http://www.eluniversal.com/noticias/daily-news/empresas-polar-denounces-venezuelan-govt-ilo_432011)

 

Minister Faría: Economy and politics are different things

Venezuela’s Foreign Trade and International Investment Minister Jesús Faría attributed consumer shortages to the lack of FOREX needed supply the domestic market, adding that the regime will continue to work with businesspersons who “understand that economy is one thing and politics is another thing.” He says an economic strategy is under way in order to recover foreign currency and resume exports. (El Universal, http://www.eluniversal.com/noticias/daily-news/minister-faria-economy-and-politics-are-different-things_432022)

 

As Venezuela hikes wages without increasing revenue or production, 800% inflation likely to surge

Venezuela’s inflation rate, already expected by the IMF and others to break records this year, is now expected to go even higher after President Nicolas Maduro hiked the minimum wage Monday, analysts say. Inflation is so bad here, that the Central Bank stopped publishing its consumer price index for more than a year. They only resumed regular publication months ago. And when it resumed, it was bad news. Under Maduro, inflation has gone from 20% in 2012 to 181% in 2015 and everybody says it will get worse, pointing to a tenfold increase in liquidity over the same period, a trend that has continued to this day. With the latest increase, announced over the weekend but published Monday, the minimum wage has been hiked 3 separate times for 134% this year alone, in a sinister game of catch-up with inflation, which is expected to top 700%. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2418894&CategoryId=10717)

 

 

Politics and International Affairs

Brazil pressures ‘authoritarian’ Venezuela to hold referendum before the year ends

Brazil’s government is putting pressure on Venezuela to hold a recall referendum on President Nicolas Maduro, who is imposing an "authoritarian" regime on his country, according to Foreign Affairs Minister Jose Serra. "Democratic countries throughout the world should advocate for the referendum," Serra told reporters in the Brazilian capital on Wednesday. Serra’s comments come after Venezuela’s electoral authorities appeared to frustrate the opposition’s push to hold a recall this year that could result in new presidential elections. If the referendum occurs in 2017 and Venezuelans vote to oust the president, his political ally and second in command, Aristobulo Isturiz, would take over the top job until regularly-scheduled elections occur in 2019. Serra said that holding a recall referendum any later than this year, 2016, would be “a complete farce” (Reuters, http://www.bloomberg.com/news/articles/2016-08-17/brazil-pressures-authoritarian-venezuela-to-hold-referendum; More in Spanish: Infolatam, http://www.infolatam.com/2016/08/18/brasil-dice-que-si-el-revocatorio-en-venezuela-no-es-este-ano-sera-una-farsa/)

 

France voices concern over Leopoldo Lopez's conviction

France’s Foreign Ministry says it is “closely” monitoring the ongoing situation in Venezuela, and voiced concern after a Venezuelan court last Friday confirmed a prison sentence against opposition leader Leopoldo Lopez. “We call for observance of the rule of law and government-opposition talks,” said and spokesperson, who noted that this nation is going through “strong tensions since several months ago,” Efe quoted. (El Universal, http://www.eluniversal.com/noticias/daily-news/france-voices-concern-over-leopoldo-lopezs-conviction_432136)

 

Sources claim Elections Council is considering calling the recall vote in March 2017

An allegedly proposed timetable - reportedly leaked by National Elections Council (CNE) sources – shows that the CNE is considering scheduling the presidential recall referendum on March 12, 2017, and delaying regional elections to June next year. The report says the timetable has not yet been approved by the CNE board. (El Nacional, http://www.el-nacional.com/politica/CNE-evalua-realizar-revocatorio-regionales_0_904709768.html)

Ten Venezuelans sentenced for drug trafficking in Air France flight

Ten people were sentenced to 22 years and six months imprisonment for smuggling 1,382 kilograms of cocaine, confiscated on September 20, 2013, in Paris, after the landing of an Air France flight from Venezuela. Three of the involved individuals were agents of the Bolivarian National Guard (GNB). The Prosecutor General’s Office revealed that other seventeen people previously acquitted by the Fourth Criminal Trial Court of Vargas state would remain in custody until the relevant Court of Appeals renders a sentence in connection with an appeal filed by public prosecutors. (El Universal, http://www.eluniversal.com/noticias/daily-news/ten-venezuelans-sentenced-for-drug-trafficking-air-france-flight_432069)

 

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.

 

March 22th, 2013

Economics & Finance

Business decries limited access to U$D

Despite the creation of an ancillary Foreign Currency Administration System (SICAD), many companies will not be able access U$D through this device, according to FEDECÁMARAS First Vice President Jorge Roig, who points out the in order to use SICAD companies must have been previously enrolled in the Register of FOREX Users (RUSAD), which excludes most commercial operations, mid size and small business, and individuals. The new system seems a minefield due to the large number of obstacles along the process -hurdles that may lead to higher inflation. Economist Ángel García Banchs says the new system will bring few benefits to importers and corruption will undermine controls, and adds: "There is no better business in Venezuela than to get dollars at VEB 6.30 and sell them above this price".(El Universal, 03-21-2013; http://www.eluniversal.com/economia/130321/venezuelan-entrepreneurs-regret-limited-access-to-us-dollars) and http://www.eluniversal.com/economia/130321/obstacles-in-venezuelas-ancillary-forex-system-threaten-to-spur-shorta; and more in Spanish: Tal Cual; http://www.talcualdigital.com/index.html)

Maduro threatens U$D ‘speculators’ with jail time

Acting President Nicolas Maduro says the government is investigating cases of foreign exchange corruption and threatened “speculators” with jail time. “We’re investigating, and we’re going to pursue them,” Maduro said on state television. “We hope to have those responsible for dollar speculation soon. We want to see them in prison.” A shortage of dollars here has deepened since February, when 32% devaluation went into effect and the separate central bank- administered currency market was shut down. While the government sells dollars for priority imports at 6.3 bolivars, those who can’t access the system pay as much as 24 bolivars per dollar on the black market, according to Dolar Today, a website that tracks the exchange rate on the Venezuelan border with Colombia. (Bloomberg, 03-21-2013; http://www.bloomberg.com/news/2013-03-21/venezuela-threatens-dollar-speculators-with-jail-time.html)

Socialist economic model is said to be "exhausted"

The so-called 21st Century Socialism is an "experiment" with very bad results, says former Argentinean Economy Minister Ricardo López Murphy. "I have this feeling that it will be quite challenging to understand the reasons that, despite great favorable circumstances to Venezuela, led to a poor economic performance," López Murphy said. "Severe" foreign exchange restrictions despite high oil revenues; destruction of added value; erosion of net worth in key state-run industries; "collapse" in production, and rampant indebtedness are just some of the effects of the model promoted for several years by the late President Hugo Chávez, says López Murphy. (El Universal, 03-21-2013; http://www.eluniversal.com/economia/130321/socialist-economic-model-is-said-to-be-exhausted)

Commodities

Four new oil tankers arrive

Four new oil tankers for PDVSA's fleet arrived in Venezuela's eastern state of Anzoátegui on Wednesday. The tankers were received by acting president Nicolas Maduro, who inspected the vessels, along with Oil and Mining minister Rafael Ramirez , Anzoátegui governor Aristóbulo Isturiz, Chief of Staff minister Carmen Melendez. "The idea is to manage 40% of our production, of our exports with our own fleet," said Ramirez during the inspection. (AVN, 03-21-2013; http://www.avn.info.ve/contenido/four-new-oil-tankers-reinforce-sovereignty)

Pernambuco Refinery forges ahead with or without PDVSA

PETROBRAS Chief Gracia Foster said the Brazilian State oil company will conclude the Abreu e Lima Refinery in Pernambuco “with or without the promised support of Venezuela because it is vital for its management and business plan.” She says she has requested a meeting with PDVSA Chief Rafael Ramírez. (Veneconomy, 03-20-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34090&idc=4)

RUSORO Mining files UD 3 billion claim against Venezuela

RUSORO Mining Ltd, backed by Russia's Agapov family, said on Thursday it had filed a statement of claim against the Venezuela state and is seeking U$D 3.03 billion in compensation over the nationalization of its gold assets in Venezuela. The claim was filed at the World Bank's International Center for Settlement of Investment Disputes, or ICSID, under the provisions of Canada-Venezuela bilateral investment treaty. (Reuters, 03-21-2013; http://www.reuters.com/article/2013/03/21/venezuela-canada-rusoro-idUSL1N0CDFSE20130321)

ALCASA and BAUXILUM fell short of 2012 production goals

State owned aluminum companies ALCASA and BAUXILUM fell short of their production goals for 2012. ALCASA processed 55,585 metric tons, which is 86% of their planned 64,653 MT. At the same time, BAUXILUM met only 49% of its plan that is 807,324 tons out of 1,650,000 tons planned. More in Spanish. (El Universal, 03-22-2012; http://www.eluniversal.com/economia/130322/alcasa-y-bauxilum-incumplieron-metas-de-produccion)

International Trade

Brazil's AMBEV says exit from Venezuela limited to plant closure

Cia de Bebidas das Americas SA, Latin America's largest brewer, plans to limit its exit from the Venezuelan market to closing a plant and will market its products here through a local partner. The company, known as AMBEV, plans to sell some of its brands through Cerveceria Regional, with which it announced a strategic alliance in 2010, according to an emailed statement on Thursday. AMBEV is part of Anheuser-Busch InBev SA, the world's biggest brewer. (Reuters, 03-21-2013; http://www.reuters.com/article/2013/03/21/ambev-venezuela-exit-idUSL1N0CDI6R20130321)

Brazilian firms root for Chavez's man in Venezuela vote

If Brazil's business leaders could vote in Venezuela's election next month, they would cast their ballots for Hugo Chavez's political heir, acting president Nicolas Maduro. They never supported the anti-capitalist bluster of Chavez, who died of cancer last month, but they hope to hold on to lucrative contracts for food exports and construction projects that he signed with Brazil's former leftist leader Luiz Inacio Lula da Silva and his successor, Dilma Rousseff. "In the near term, a Maduro win would be best," said Jose Augusto de Castro, head of Brazil's Foreign Trade Association. (Reuters, 03-21-2013; http://www.reuters.com/article/2013/03/21/us-venezuela-brazil-business-idUSBRE92K0ZY20130321)

Sino-Venezuelan company plans to export vehicles into MERCOSUR

ZGT Automotive Corporation in Aragua state, a joint venture by China's ZGT and the Venezuelan government, expects to increase production of CHERY X1 and TIGGO vehicles and export them to MERCOSUR. ZGT Operations Vice President Harold Maison says they have produced 13,980 vehicles in 18 months and plan to export their vehicles to Latin America. More in Spanish: (AVN; http://www.avn.info.ve/contenido/empresa-mixta-chino-venezolana-prev%C3%A9-exportar-veh%C3%ADculos-al-mercosur)

Logistics & Transport

Three additional airlines to service Barcelona airport in Anzoátegui state

The terminal's coordinator, José García, has announced three additional airlines will service Barcelona airport in the Eastern state of Anzoátegui, starting within the upcoming months. The airlines are RUTACA, ESTELAR and LASER. Service to the terminal is currently provided by CONVIASA, ASERCA and AVIOR. More in Spanish: (AVN, 03-22-2013; http://www.avn.info.ve/contenido/tres-nuevas-aerol%C3%ADneas-entrar%C3%A1n-operaci%C3%B3n-aeropuerto-barcelona)

Politics

Venezuela plot claims are ‘outlandish allegations,’ U.S. says

The U.S. State Department said today claims by Venezuelan officials of U.S.-based plots to destabilize the country are “unsubstantiated and outlandish.” Venezuela’s government has stepped up its anti-U.S. rhetoric after former President Hugo Chavez’s death from cancer March 5 triggered snap elections scheduled for April 14. His handpicked successor, acting President Nicolas Maduro, said he has evidence that former U.S. officials are plotting to assassinate opposition candidate Henrique Capriles Radonski as a way of inciting a coup. Foreign Minister Elias Jaua yesterday suspended talks with U.S. Assistant Secretary of State for Western Hemisphere Affairs Roberta Jacobson after U.S. officials were expelled from Venezuela. Maduro accused them of seeking to destabilize Venezuela by meeting with military officials. (Reuters, 03-21-2013; http://www.bloomberg.com/news/2013-03-21/venezuela-plot-claims-are-outlandish-allegations-u-s-says.html; El Universal, 03-21-2013; http://www.eluniversal.com/nacional-y-politica/130321/washington-disappointed-at-venezuela-hopes-for-productive-relation; The Washington Post, http://www.washingtonpost.com/world/the_americas/us-denounces-outlandish-allegations-from-venezuela-after-suspension-of-communication-line/2013/03/21/2ddf5224-9251-11e2-9173-7f87cda73b49_story.html)

US-Venezuela diplomatic communication suspended

Communication channels established to improve relations with the United States have been temporarily suspended after "attacks" by Roberta Jacobson, Assistant Secretary of State for Western Hemisphere Affairs, on Venezuela's election system, says Foreign Affairs minister Elias Jaua. "I hope there will be a correction and US meddling ceases," added the Minister, recalling that the commissioner to keep the communication channel with Mrs. Jacobson was Venezuela's ambassador to the Organization of American States (OAS), Roy Chaderton Matos. (AVN, 03-20-2013; http://www.avn.info.ve/contenido/suspended-venezuela-us-communication-channels; El Universal, http://www.eluniversal.com/nacional-y-politica/130320/venezuela-hangs-up-contacts-with-the-us; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=717949&CategoryId=10717; Fox News, http://www.foxnews.com/us/2013/03/20/venezuela-halts-all-diplomatic-communication-with-us-after-diplomats-expelled/)

Pro government gangs attacked student march en route to Elections Council

Student demonstrations marching to the National Elections Council in order to present demands for transparency and equity in upcoming Presidential elections on April 14t, were blocked by pro government gangs who attacked the march with sticks and stones, and wounded 7 students. More in Spanish: (El Nacional, 03-22-2013; http://www.el-nacional.com/)

Southern Command: Caracas may have to restate foreign policy if Maduro wins

The US Southern Command believes Nicolás Maduro can become the new Venezuelan president and that the Chavista line will continue at least in the near future. However, the Venezuelan government might reconsider the practice of "buying friends" with oil, according to John Kelly, Chief of the US Southern Command. "Expectations are that the Vice-President (Maduro) will win the election of April 14 and things will be business as usual, at least for the time being. Who knows within five years," the military chief answered a question as to his estimate of Venezuela's future after the demise of President Hugo Chávez during a hearing held on Wednesday in Washington, says DPA. (El Universal, 03-20-2013; http://www.eluniversal.com/nacional-y-politica/130320/southern-command-caracas-may-have-to-restate-foreign-policy-if-maduro-)

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.

November 18th, 2011

Economics & Finance

Central Bank: says economy grew 3.5%+ in Q3; agribusiness down 9.1%, Guayana industry falls by 2.1%

Venezuela's economy grew more than 3.5% during the third quarter of 2011 compared with the same period a year ago, according to the head of the Central Bank. Its economy expanded 2.5% in the second quarter and 4.8% in the first quarter versus the same periods in 2010, boosting the government's confidence in sustained growth following an 18-month recession that ended late last year. However, agribusiness dropped by 9.1%, and basic industries in Guayana fell by 2.1%. President Hugo Chavez is seeking to spur the economy ahead of an election next October. (Reuters, 11-15-2011; http://www.reuters.com/article/2011/11/15/venezuela-economy-idUSN1E7AD1ZJ20111115; AVN, 11-15-2011; http://www.avn.info.ve/contenido/venezuelan-economy-rose-35-third-quarter-2011). More in Spanish: (Tal Cual, 11-18-2011; http://www.talcualdigital.com/index.html; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/produccion-de-alimentos-es-la-cenicienta-de-los-re.aspx; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/economía-entró-en-nueva-fase-de-expansión-al-crecer-38-entre-enero-y-septiembre; http://www.avn.info.ve/contenido/economía-entró-en-nueva-fase-de-expansihttp://www.avn.info.ve/contenido/merentes-crecimiento-de-la-economía-en-lo-que-va-de-año-se-acerca-4; El Universal, http://www.eluniversal.com/economia/111118/economia-crece-42-pero-areas-clave-permanecen-estancadas)

Reserves down U$D $3,6 billion in 45 days

Central Bank statistics show that by November 15 reserves stood at U$D 27.4 billion, down from U$D 31.1 billion on September 30, despite crude oil prices averaging U$D 100 PB. More in Spanish: (El Universal; http://www.eluniversal.com/economia/111117/las-reservas-caen-36-millardos-en-mes-y-medio)

Current economic climate is unfavorable in Venezuela, according to the Latin American Economic Climate Index (ECI) published by German Ifo and Brazilian Fundación Getulio Vargas (FGV). (Veneconomy, 11-16-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28466&idc=3)

Barclays says ‘very strong’ PDVSA earnings support credit

“Very strong” earnings for state- oil company Petróleos de Venezuela, S.A., reported earlier this week by Fitch Ratings, are good for the South American company’s credit, Barclays Capital said today in a note to clients.

Fitch Ratings said Nov. 15 in a statement that PDVSA, as the Caracas-based company is called, reported earnings before interest, taxes, depreciation and amortization, known as Ebitda, of U$D 32.1 billion for the 12-month period that ended June 30. (Bloomberg, 11-16-2011; http://www.bloomberg.com/news/2011-11-16/barclays-says-very-strong-pdvsa-earnings-support-credit.html)

Only 7 Chinese companies benefit from Chinese Fund operations

Financial reports from the China Development Bank (CDB) for 2008, 2009 and 2010 show that its infrastructure loans to Venezuela have benefited 7 Chinese companies in the fields of hydrocarbons, electricity, mining and construction: PETROCHINA, SINOPEC, State Grid, CITIC Pacific, Tongling Nonferrous Metals Group, Goldwind A and Xi’an Electric Engineering. CDB loans are tied to contracts with Chinese companies. More in Spanish: (El Nacional, 11-18-2011; http://www.el-nacional.com/)

Commodities

Oil sector slows down; debt soars

The steady increase in revenues of state-run oil company Petróleos de Venezuela (PDVSA) has failed to spur oil activity in Venezuela, according to data provided by the Executive Office on the country's gross domestic product (GDP) in the third quarter of 2011. President Hugo Chavez, accompanied by Nelson Merentes, president of the Central Bank of Venezuela (BCV), announced GDP's results from July to September 2011. During this period, oil activity climbed 0.2% only, which is a slowdown compared to the second quarter of the year, when the oil sector GDP grew 0.8%. (El Universal, 11-16-2011; http://www.eluniversal.com/economia/111116/venezuelan-oil-sector-slows-down-debt-soars)

International Trade

Exports up 53.4% in 3Q 2011, oil sales grew 47.8% due to price increases and volume was up 5%

Central Bank figures show exports rose to U$D 23,812 billion from August to October, an increase of U$D 15,520 billion over the same period last year, which is a 53.4% growth in exports led by petroleum sales which rose 478% due to price increases and a 5% growth in sales volume. More in Spanish: (El Mundo, 11-18-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/exportaciones-suben-53,4--en-el-tercer-trimestre-2.aspx)

CADIVI has authorized over U$D 5.2 billion for food imports YTD

The National Currency Board (CADIVI) has authorized U$D 5.224 billion for food imports over the first 10 months this year, an increase of 12% over the same period last year. Key imports include wheat, corn, soya oil, powdered milk, malt, animal and vegetable oils. More in Spanish (Tal Cual, 11-18-2011; http://www.talcualdigital.com/index.html)

Imports from Brazil increase by 104%

Brazil's agricultural exports grew 22.6% in October 2011 compared to the same month in 2010, despite the effects of the global crisis, according to the Brazilian Government. The Ministry of Agriculture says exports of agricultural products amounted to U$D 8.58 billion in October 2011 compared to U$D 7 billion in the same month last year. (El Universal, 11-16-2011; http://www.eluniversal.com/economia/111116/venezuelan-imports-from-brazil-increase-by-104)

Venezuela imports 850,000 tons of corn from the US

The United States has become one of the main providers of the corn to Venezuela, which is now the eighth largest client for corn produced in the US. According to data provided by the National Agriculture Statistics Service, US Department of Agriculture, Venezuela imported 850,000 tons of corn grain from the United States between January and October 2010. This year, purchases of the grain, which is a raw material for the production of concentrate feed for animals, declined 24% compared to 2010, when Venezuela purchased 1,120,995 tons from the United States. Despite the decline, imports represent a significant volume in the domestic market. (El Universal, 11-16-2011; http://www.eluniversal.com/economia/111116/venezuela-imports-850000-tons-of-corn-from-the-us)

Politics

Chavez opponents vie for 2012 presidential ticket

Opposition leaders faced off in a rare live debate this week during campaigning for a primary in February where they are vying for the right to challenge President Hugo Chavez in a presidential vote. Echoing Venezuelans' top concerns, the candidates have all stressed beating crime and cutting unemployment as their priorities. Chavez mocked the opposition figures this week as the "horses of the Apocalypse."  The candidates are:

•          Henrique Capriles-Radonski, youthful governor of Venezuela's second-most populous state leads polls ahead of the Feb. 12 primary contest. He wants to copy Brazil's "modern left" model of economic and social policies and has sought to appeal to traditional Chavez supporters by stressing inclusiveness

•          Leopoldo López, a Harvard graduate and former mayor of the Chacao district in Caracas, who is the most-recognized abroad of the opposition candidates because of his long and highly publicized legal fight after being disqualified from politics in 2008.

•          Pablo Pérez, governor of the oil-rich western state of Zulia, is running a close second in the polls and has the important endorsement of two heavyweight parties from the pre-Chavez era: Democratic Action and COPEI.

•          María Corina Machado, recently elected as a legislator and an industrial engineer by training, was widely praised for her performance in this week's debate where she reeled off far more data and details than her rivals.

•          Diego Arria, a former governor, minister and envoy to the United Nations in the early 1990s, appears to be positioning himself as something of an elder statesman for the opposition movement; and impressed viewers with deeper, different and more historically nuanced answers to most of the questions in this week's debate. (Reuters, 11-16-2011; http://www.reuters.com/article/2011/11/16/venezuela-chavez-opposition-idUSS1E78J1JB20111116)

Chavez deploys troops to fight Venezuela crime wave

President Hugo Chavez has ordered thousands of National Guard troops onto the streets to tackle widespread violent crime. The troops have been placed under a new command known as the People's Guard. They will operate in the capital Caracas and two neighboring states - Vargas and Miranda. The new body will eventually comprise 3,650 troops, officials said. Rising levels of murder, kidnap and robbery in recent years have made Venezuela one of the most dangerous countries in Latin America. Rising crime has become a major source of public dissatisfaction, and a key campaign issue for opposition leaders seeking to challenge Mr Chavez in presidential elections in October 2012. (BBC, 11-18-2011; http://www.bbc.co.uk/news/world-latin-america-15786541)

Government forces sale of rental properties

President Hugo Chavez has signed a new rental law into effect over the weekend that obliges landlords to sell their property to tenants of more than 20 years at state-mandated discounts based on how long the space has been rented. (The Wall Street Journal, 11-15-2011; http://online.wsj.com/article/SB10001424052970204190504577038533596342536.html?KEYWORDS=Venezuela)

President Chavez and Colombian President Santos will meet November 28 in Caracas, ahead of a meeting scheduled to launch the Community of Latin American and Caribbean nations, according to Venezuela’s Foreign Ministry. More in Spanish: (El Nacional, 11-18-2011; http://www.el-nacional.com/)

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.