July 04, 2014

International Trade

Imports arrived at Puerto Cabello

• 33,000 tons of yellow corn from Argentina for state company CASA
• 21,000 tons of sugar from Brazil to Moliendas Papelón.
• Over 13,960 tons of wheat from Argentina for Molinos Carabobo.
• 9,000 tons of soy cakes from Argentina for Seravian C.A. and PURINA.
• 6,000 tons of rice from Guyana for CASA
• 1,132 tons of black beans in 51 containers from Costa Rica for CASA
• Over 244 tons of soy oil and 11 tons of coffee for state company Café Venezuela
• 480 tons of milk and cream from Centrolac for CASA
• 307 tons of pork meat from Industrial Comercial San Martín for CASA.
• 161 tons in 11 containers from Farmacuba
• 101 tons for baby formula milk from Nestlé in Cartagena for the local affiliate

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-33-mil-toneladas-de-maiz-al-puerto-local-2190545/2014/07/03/336249; (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-mas-de-mil-toneladas-de-caraotas-negras-2189791/2014/07/03/336074)

23% fewer imports this year according to official sources

The National Statistics Institute (INE) shows U$D 9.210 billion imports during Q1 2014, which is 23% lower than the same period in 2013 and the lowest level since 2010. Public sector imports dropped by 6.2%, and private sector imports fell dramatically by 31.5%. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140704/ine-registra-un-descenso-de-23-en-las-importaciones)

Import levels at Puerto Cabello down by half

Damiano Del Vescovo, President of FEDECÁMARAS Carabobo says there is a lower influx of ships bearing end products to Puerto Cabello. “55% is imported by the government which is granting almost exclusive priority to raw  material for food production...around 70% of the nation's total consumption is imported, but average dock occupancy over the past few months is 52%-60%, which proves a drop in imports”. He adds that assembly plants in the Valencia area are shut down and 75% of companies working are at doing so at 52% capacity." More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Bajan-casi-a-la-mitad-los-niveles-de-importacion-en-Pto-Cabello/2014/07/03/336163)

Logistics & Transport

Airfares will remain at SICAD 1 (VEB 10/U$D 1)

Air and Aquatic Transport Minister General Luis Graterol has confirmed that the reference value for purchasing international airline tickets will remain the rate established by the SICAD 1 system (VEB 10/U$D 1). He called on the international air transport system to "bring international air fares to more 'sincere' levels". More in Spanish: (El Universal, http://www.eluniversal.com/economia/140704/gobierno-ratifica-precio-de-boletos-aereos-a-tasa-sicad-i)

American Airlines has reduced flight frequencies

American Airlines has brought down weekly flights for Venezuela from 48 to 10. Service to Dallas and San Juan has been suspended and flights to Miami are down to one daily flight (from 4), and an additional flight on Saturdays. During the first semester 2014 Venezuela has lost direct air connection to seven international destinations. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/concreto-reduccion-viajes-American_0_437956355.html)

Oil & Energy

PDVSA sent USD 8.3 billion to parallel funds in 2013

PDVSA's 2013 annual report reveals that the state-run oil holding has a structure of parallel funds which received a

total of U$D 8.3 billion last year. (El Universal, http://www.eluniversal.com/economia/140702/pdvsa-has-spent-usd-83-billion-in-parallel-funds-in-2013)

Asia first destination for oil shipments from Venezuela

Most oil shipments from Venezuela headed for Asia in 2013, with China and India on the lead, thus displacing the United States to second place. In its 2013 Management Report PDVSA reports exports of oil and byproducts to Asia soared 9.8%, from 1 million bpd in 2012 to 924,000 bpd in 2013. The number includes 726,000 bpd of oil (10.3% up versus 2012) and 289,000 bpd of byproducts (8.6% up versus 2012) sent from Venezuela to Asia. (El Universal, http://www.eluniversal.com/economia/140702/asia-first-destination-for-oil-shipments-from-venezuela)

PDVSA says it will invest U$D 23 billion in domestic refineries

PDVSA Refinancing Director Jesús Luongo says the company will invest U$D 23 billion in the domestic refining system. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa-invertira--23-mil-millones-en-refinerias-del.aspx#ixzz36Ou3l1QS; PDVSA, http://www.pdvsa.com/)

PDVSA will pay nationalized service firms U$D 169 million and VEB 442 million

PDVSA reports it has signed 17 repayment agreements with nationalized oil service firms that are carrying out crude extraction projects in the Lake Maracaibo area. The agreements call for paying them U$D 169 million and VEB 442 million. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/pdvsa-firm%C3%B3-acuerdos-17-empresas-nacionalizadas-que-extraen-crudo-zulia; PDVSA, http://www.pdvsa.com/; Panorama, http://panorama.com.ve/portal/app/push/noticia118165.php; El Regional del Zulia, http://www.elregionaldelzulia.com/ani11/default.asp?ID=9173)

Commodities

International long distance telephone rates increase by up to 500%

The national telephone company CANTV has increased domestic and corporate long distance telephone rates by between 16%-500%. Rates to the US are up by 98%. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Economy & Finance

Maduro brings in former "Ché" Guevara aide as advisor on economic policy

Cuba's Orlando Borrego has been named a member of the commission designated by President Nicolas Maduro to carry out a restructuring of the government and government agencies. The group will be led by Executive Vice President Jorge Arreaza and Planning Minister Ricardo Menendez. Maduro says Borrego - who was part of "Che" Guevara´s team in Cuba - will help bring about "a total and deep revolution within public administration: A revolution within the revolution!". More in Spanish: (El Nacional; http://www.el-nacional.com/; El Universal, http://www.eluniversal.com/economia/140704/asesoria-de-borrego-apunta-a-profundizar-el-modelo-socialista)

SPECIAL REPORT: The Giordani legacy

Prominent economist Leonardo Vera writes that in his controversial letter to President Maduro, former Planning Minister Jorge Giordani claims he is under an obligation to render an accounting to the nation, but does nothing of the sort.  Vera signals the main points absent from the letter by the longest lasting and most powerful minister within the Chavez entourage:

• "Planning": Venezuela's development plans over the past 15 years are no more than a wish list, a slew of slogans without a trace of technical support.
• Waste: FONDEN - the National Development Fund was created to bypass funds from the budget and international reserves and use them at the regime's discretion, with no transparency whatsoever. Under Giordani it became a black hole that devoured U$D 116 billion and has left behind a number of unfinished projects and weapons purchases.
• Indebtedness and corruption: Venezuela received loans up to U$D 40 billion through agreements negotiated by Giordani with China, again with no accounting. It is only known that U$D 10 billion were used to buy consumer goods in China. The Planning Ministry reports that U$D 4.055 billion from the Chinese fund were used for 52 agricultural projects, U$D 3.814 billion for 20 transport projects, and U$D 2.192 billion for industrial projects - three areas that are now bankrupt. What we do know is that U$D 84 million were embezzled through the BANDES development bank.
• Reserves: By the end of 2011 liquid reserved had disappeared
• Recession: Venezuela has suffered 3 recessions over the past 15 years and is heading for a new episode, which Giordani explains in his letter stating that when Venezuela's crude oil exports dropped by almost U$D 35 billion in 2009 "spending was adjusted to oil income". He thus managed the economy for 15 years, expanding spending when oil income rose and contracting when it was lower. This explains greater impact and extreme macroeconomic volatility undergone here for years.
• Exchange controls: The worst policy imposed by Giordani's Planning Ministry was to anchor the foreign exchange rate against all odds. Fixing the exchange rate for a long time amid two digit inflation is criminal within any economy. With this policy, Venezuela buried its domestic productive sector, erasing competitiveness and relying on artificially cheapened imports. Non-oil exports have collapsed, leaving the nation at the mercy of oil income.
• Capital flight: The control regime has become corrupted. In the end, exchange controls have been useless: ECLAC reports that between 2004 and 2013 the net transfer of Venezuelan funds abroad was U$D 234 billion.
• Devaluation: For the past 15 years Venezuela has undergone 8 maxi-devaluations and inflation reigns. What asset base, income or salary can withstand such an onslaught?
• Price controls: The Planning Ministry established price controls on over 20,000 items or products leading to lower production and the disappearance of products from usual networks - and sold at astounding prices on the street.
• War on private enterprise: The regime's war on private enterprise stems from the belief that Venezuelan businessmen are "parasitic agents" that must be replaced by a new productive ethic, which Giordani imbedded into the so-called First Socialist National Plan 2007-2013. The constant offensive against the private sector has ended up in broken industries and a stagnant non-oil sector.
• War on local government: By underestimating the price of oil within the formal national annual budget and thus strangling financial resources for state and municipal government, the Planning Ministry led the charge against local government that has resulted in ghost towns and cities, streets filled with holes and garbage, abandoned parks, broken sidewalks, no public lighting, recreation or joy. Full report in Spanish: (INFOLATAM)

Capriles charges the regime's "model" has failed

Miranda Governor Henrique Capriles says the national "model" promoted by the regime has failed. "It's not possible that Venezuela has so much oil and there are communities that do not receive a drop of water. No one should believe the lack of water is due to drought, it's a problem with the planning." More in Spanish: (El Nacional; http://www.el-nacional.com/)

Politics

Arrest warrants issued against opposition leaders, Cabello reveals names

Prosecutor General Luisa Ortega says arrest warrants will be issued for persons involved in alleged assassination plans against President Maduro. She said "we cannot provide names for the moment because if the person knows he will probably flee. But National Assembly President Captain Diosdado Cabello went on television to identify former presidential candidate Henrique Salas Romer and lawyer Gustavo Tarre Briceño, a former legislator, as those to be arrested. More in Spanish:  (El Nacional; http://www.el-nacional.com/; and El Universal, http://www.eluniversal.com/nacional-y-politica/140704/cabello-emitieron-ordenes-de-captura-contra-salas-y-tarre)

Opposition leader López to face trial on July 23

Opposition leader Leopoldo López, founder of opposition Voluntad Popular (People's Will) party is to face trial on July 23 after being charged with public instigation. The information was released by judicial sources that reported the case will be heard by Judge Susana Barreiros, who issued on Wednesday the notice to the parties. (El Universal, http://www.eluniversal.com/nacional-y-politica/140702/venezuelan-opposition-leader-lopez-to-face-trial-on-july-23)

Two opposition leaders released after 99 days in prison

Members of opposition Primero Justicia (Justice First) party, Hernando Garzón and his wife, Sandra Flores, were released on Wednesday after 99 days held in custody.  Following a preliminary hearing lasting one hour, the dissenters were ordered to appear in court every other week and banned from traveling abroad and taking part in violent protests. After his release, Hernando Garzón expressed his solidarity to the relatives of individuals held in prison. "I am fully aware of the Venezuelan injustice," he said. (El Universal, http://www.eluniversal.com/nacional-y-politica/140702/two-opposition-leaders-released-after-99-days-in-prison)

Venezuela restored normal relations with Panama after President Juan Carlos Varela was sworn-in this Tuesday. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40016&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/140702/venezuela-panama-resume-relations; Reuters, http://www.reuters.com/article/2014/07/02/us-venezuela-panama-idUSKBN0F707220140702)

2,464 violent deaths in Caracas in six months

Up to 2,464 violent deaths were recorded in Caracas from January 1 - June 30, according to non-official figures on the number of bodies taken to the morgue in Caracas. Some 80% of the deaths were the result of murders, and the other 20% were suicides, car accidents, and other causes yet to be determined. So far this year, the lowest death toll was reported in June, with 379 bodies. (El Universal, http://www.eluniversal.com/nacional-y-politica/140702/violent-deaths-in-caracas-total-2464-in-six-months)

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 26, 2013

Economics & Finance

Venezuela launches first auction of new FOREX system

Venezuela offered U$D 200 million to local businesses yesterday in the first auction of a new foreign currency system that will bring another partial devaluation of the Bolivar. The government devalued the fixed rate of the local bolivar currency from 4.3 to 6.3 against the dollar last month. Monday's formal launch of the previously-announced Complementary System for Foreign Currency Administration (SICAD) sets up a parallel mechanism for businesses unable to cover all their dollar needs at that rate via state currency board Cadivi. (Reuters, 03-25-2013; http://www.reuters.com/article/2013/03/25/venezuela-economy-idUSL2N0CH0G820130325; AVN, 03-25-2013; http://www.avn.info.ve/contenido/convened-private-business-sicad-foreign-currency-auction; El Universal, http://www.eluniversal.com/economia/130325/venezuelan-finance-ministry-calls-for-first-us-dollar-bid)

SICAD is doomed to fail

According to financial analysts, the SICAD system is doomed to failure since it calls for compulsory use of letters of credit in order to access FOREX, and due to the insistence by Finance and Planning Minister Jorge Giordani in having the Central Bank pay foreign exporters directly. Experts say the procedure is not possible since letters of credit are regulated internationally and establish that banks undertake these obligations on behalf of clients, not third parties such as the Central Bank. Within the international system payments must be made within a set time frame, and any delays on the part of SICAD would make the Central Bank liable. Businessmen report the entire system is complicated because "purchase orders must be made through a pro forma invoice", along with a certification by the national importers registry (RUSAD) and another certificate that planned imports are not domestically produced. In addition the company must register electronically with the Finance and Planning Ministry and fill out customs information in items to be imported, all of which must be presented overnight.  More in Spanish: (Tal Cual, 03-26-2012; http://www.talcualdigital.com/index.html; El Nacional; http://www.el-nacional.com/)

CANTV turned VEB 1.8 billion profits over to the Government for social programs. Last week a group of workers from the national company delivered a check for this amount to acting President Nicolas Maduro. More in Spanish: (AVN, 03-26-2013; http://www.avn.info.ve/contenido/dividendos-generados-cantv-2012-se-destinar%C3%A1n-grandes-misiones)

Economy shows signs of slowdown

After the Venezuelan economy gained 5.5% in Q4 2012, authorities predicted vigorous growth would take place this year, but actual results are flashing warning signs. Automotive production for the first two months this year has dropped 53.5% from the same term in 2012; and the banking sector is also showing weakness.
Data from consulting firm Softline Consultores shows that overall loans through the end of February have increased 1.2%, versus 2.5% for the same period in 2012. (El Universal, 03-23-2013; http://www.eluniversal.com/economia/130323/venezuelan-economy-shows-signs-of-slowdown)

Lack of industry limits growth

Figures from the Central Bank of Venezuela (BCV) indicate that 96% of the country's income stems from oil activity, and that manufacturing rose a mere 1.8%, lagging behind commerce, telecoms, and financial institutions. (El Universal, 03-25-2013; http://www.eluniversal.com/economia/130325/lack-of-industrial-policies-limits-venezuelas-domestic-output)

Venezuela’s minimum wage now ranks 10th in Latin America, well below Argentina ($600), Costa Rica ($500), Panamá, Chile, Uruguay, Paraguay and Colombia ($400), and Honduras and Brazil which exceed Venezuela’s ($325), says Primero Justicia national coordinator Julio Borges. He explains that the comparison that really matters is what is called “the buying power” in each country and there “we are doing much worse”. (Veneconomy, 03-25-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34156&idc=2)

Officials claim unemployment is 7.6%

According to the National Statistics Institute (INE) 1,027,994 were out of the labor market in February, either because they lost their jobs or because they failed to find their first job. This is a 7.6% unemployment rate, a drop of 1.6% from 9.2% (1,210,964 people) in February 2012. (El Universal, 03-25-2013; http://www.eluniversal.com/economia/130325/unemployment-rate-in-venezuela-at-76)

Commodities

PDVSA revenue slips on domestic fuel sales, net profits down 6.1%

State oil company PDVSA's 2012 revenue slipped 0.2% from the year before despite an increase in oil prices as the company sold more fuel on the subsidized domestic market, the oil minister said Friday. The nation's fuel subsidy leaves the cost of gasoline and gas oil for power generation at less than 10 cents per gallon, which creates consistent losses for the state oil giant. The company paid U$D 43.9 billion to finance social programs and a development fund created by the late Hugo Chavez. Under his leadership, PDVSA evolved from a profit-oriented company into the financial engine of anti-poverty efforts. "This is not a company designed to generate profits. This is a national company. We're not here to provide benefits to private individuals," Oil Minister Rafael Ramirez, who is also PDVSA president, said in comments to reporters. The oil giant's revenues were U$D 124.75 billion in 2011, with average oil prices at U$D 101.06 per barrel. 2012 income was US$D 124.45 billion. Net profits tumbled 6.1%, from U$D 4.49 billion in 2011 to USD 4.21 billion in 2012 (Reuters, 03-22-2013; http://www.reuters.com/article/2013/03/22/venezuela-pdvsa-idUSL1N0CEB7U20130322; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=722412&CategoryId=10717; El Universal, 03-23-2013; http://www.eluniversal.com/economia/130322/venezuelan-oil-giant-pdvsas-net-profit-down-61-in-2012)

Oil Ministry reports 1.4% hike in oil output

Increase in oil and gas output was reported in 2012, According to a report submitted by the Ministry of Oil and Mining to the National Assembly oil and gas output increased in 2012. The preliminary report (since operating and financial results from the audit on Pdvsa are not disclosed) indicates Venezuela's oil output averaged 3.03 million barrels per day in 2012, 1.4% above the 2.99 million recorded a year earlier. The Ministry claims "production levels are in keeping with the 364,000 bpd cut in output agreed by OPEC (Organization of Petroleum Exporting Countries) to stop the drop in prices and bring them up again." (El Universal, 03-25-2013; http://www.eluniversal.com/economia/130325/venezuelan-oil-ministry-reports-14-hike-in-oil-output)

SIDOR production down 50% in 2012

Workers at the SIDOR Orinoco steel plant have stopped work there for the past five days, and have paralyzed the entire production chain. Liquid steel production in 2012 was 1510220 tons, 50% less than had been budgeted for the entire year, according to the annual report by the Ministry for Industries. The report says the drop was due to "lack of equipment and spare parts, delays in special maintenance, lack of working capital, and continuous labor stoppages". More in Spanish: (El Nacional, 03-26-2013; http://www.el-nacional.com/)

International Trade

Maduro proposes ALBA-MERCOSUR economic alliance

Acting President Nicolás Maduro is calling for broadened economic integration, exchange and complementariness mechanisms among member states of the Bolivarian Alliance for the Peoples of our America (ALBA) and the Common Market of the South (MERCOSUR). (AVN, 03-25-2013; http://www.avn.info.ve/contenido/venezuela-proposes-alba-mercosur-economic-alliance)

Politics

Electoral Council, UNASUR agree on attendance for election

The National Electoral Council (CNE) has entered into an agreement with the Union for South American Nations for their attendance during Presidential elections to be held next April 14. The agreement was signed by the principal director of the Council, Tibisay Lucena, and the pro tempore president of Unasur's Electoral Council, Francisco Tavara Córdoba. (El Universal, 03-25-2013; http://www.eluniversal.com/nacional-y-politica/130325/venezuelas-electoral-council-unasur-agree-on-accompaniment-for-electio)

HR advocate says 4,500 people killed in Venezuela under Nicolás Maduro

Lawyer and human rights advocate Alfredo Romero says some 4,500 people have been killed in the first 100 days of acting President Nicolás Maduro's government. He charged this is the result of inefficiency and anarchy due to the government's lack of political will to cope with crime, one of the main problems facing Venezuelans. "Twenty security plans have been implemented, yet violent crime continues escalating. This will go on as long as anarchy prevails in the legal system, and hatred and death are encouraged," Romero outlined. According to the United Nations Report on Human Development and Violence, Venezuela is in the top-five list of violent countries in the world. (El Universal, 03-23-2013; http://www.eluniversal.com/nacional-y-politica/130323/hr-advocate-4500-people-killed-in-venezuela-under-nicolas-maduro)

Paris refuses to name location after "Hugo Chávez"

The Paris Mayoralty refuse to name a location there after Hugo Chávez, after the proposal was made by Communist aldermen and their allies. More in Spanish: (Tal Cual, 03-26-2013; http://www.talcualdigital.com/index.html)

A study shows "chavismo" polarizes Latin America

A study by Spain's International Perspectives Institute shows Latin America, in general, does not support the continuation of support for the system established by the late Hugo Chavez, but reflects deep divisions within Latin American public opinion in this matter. According to the study there is "intense and general" support for the movement in Bolivia, Cuba, Ecuador and Nicaragua; and "general rejection for it in Chile, Colombia, Guatemala, Haiti, Panama and Paraguay. Polarization is not as strong in Brazil and Mexico. More in Spanish: (El Universal, 03-26-2013; http://www.eluniversal.com/nacional-y-politica/130326/un-estudio-revela-que-el-chavismo-polariza-a-america-latina)

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.