February 22, 2013

Economics & Finance

Recession feared as Giordani blocks easing exchange controls

Experts at the Central Bank fear a recession starting in this quarter, due to the absence of alternate access to foreign exchange. Around 12% of all imports were processed through SITME, now abolished, and are not being met by the Currency Administration Commission, which is now empowered to approve all FOREX requests. They also say that that even if all requests were approved, the Central Bank does not have sufficient international reserves to meet dollar demand. In the meantime, Finance and Planning Minister Jorge Giordani has not yet approved alternate means for allocating FOREX legally, along with the Foreign Exchange Commission (CADIVI), arguing this would mean further devaluation of the Bolivar. Two options remain under study: dollar auctions through the financial system or through the Public Stock Exchange. More in Spanish: (El Nacional, 02-22-2013; http://www.el-nacional.com/)

Reserves down U$D 2.36 billion to date this year

Venezuela's international reserves plunged 8% (U$D 2.36 billion) during the first seven weeks this year, to U$D 27.37 billion on February 19. Reserves are mainly gold, so there is far less cash available for companies to obtain U$ dollars for imports. SINTESIS FINANCIERA reports that Venezuela's liquid or cash reserves are U$D 4.30 billion. Even if authorities thoroughly review FOREX authorizations in an attempt to avoid over-invoicing, available reserves are not enough for an adequate flow of imports or for curbing basic food shortages. (El Universal, 02-21-2013; http://www.eluniversal.com/economia/130221/venezuelas-reserves-down-usd-236-billion-so-far-this-year)

Venezuela among nations holding greatest gold reserves in the world, according to data from the World Gold Council, which indicates it is among the 13 countries with the greatest gold inventories in the world. More in Spanish: (El Mundo, 02-22-2013; http://www.elmundo.com.ve/Noticias/Economia/Industrias/Venezuela-entre-los-paises-con-mas-reservas-de-oro.aspx)

Central Bank sends financial aid to state enterprises... which operate at 50% capacity

The Central Bank is not just aiding PDVSA, it is also funding state enterprises to the tune of VEB 16.9 billion through the end of January, and this financial support rises 9% each month. The bank is printing currency to support the enterprises and cover public sector deficits. In the meantime, according to Roberto León Parilli, President of the National Consumers Alliance, state companies processing precooked corn and rice are either paralyzed or at 50% capacity due to lack of raw material and labor difficulties derived from the new Labor Law. More in Spanish: (El Nacional, 02-22-2013; http://www.el-nacional.com/ and El Universal, http://www.eluniversal.com/economia/130222/crece-la-asistencia-financiera-del-bcv-a-las-empresas-estatales)

Minimum wage purchasing power down 10% due to inflation

According to a report by ECONOMETRICA, prices have risen swiftly since October last year and are eating up the base salary's purchasing power. The report shows an 11.2% jump in inflation from October to January, which means purchasing power at minimum wage levels is down 10%, and says the decrease will rise to 16% by April. More in Spanish: (El Universal, 02-22-2013; http://www.eluniversal.com/economia/130222/inflacion-redujo-10-capacidad-de-compra-del-salario-minimo)

Key legislator denies plans to raise VAT tax, or tax bank withdrawals

National Assembly’s Finance and Economic Development Committee Chairman Ricardo Sanguino discards the possibility of raising the Value Added Tax (IVA, in Spanish) or a tax on bank withdrawals. (Veneconomy, 02-20-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33804&idc=2)

Venezuela has the worst business climate in the region

Venezuela's business climate is the worst in Latin America, according to a joint report produced by Brazilian Getulio Vargas Foundation and the University of Munich. In an Economic Climate Indicator for Latin America dated January, Venezuela made only 1.5 points, below the region's average (5.5 points) and way below ratings for Paraguay and Peru, 7 points. Venezuela's indicator is less than it was at third quarter 2012, when it rated 3.4 points. (El Universal, 02-21-2013; http://www.eluniversal.com/economia/130221/venezuela-with-the-worst-business-climate-in-the-region)

Commodities

VENALUM paralyzed, declares "force majeure"

CVG VENALUM, the state owned aluminum company has been paralyzed for the past 15 days, receiving no metal, due to labor strife that has closed down the administrative area of this industry. The company has declared "force majeure", admitting their inability to meet supply contracts with their clients; and this has in turn paralyzed private sector processing industries such as PIANMECA and SURAL. Metal dispatches stopped on February 7th. More in Spanish: (El Universal, 02-22-2013; http://www.eluniversal.com/economia/130222/venalum-declara-fuerza-mayor-ante-paralizacion)

Debate starts on domestic gasoline prices

Several Cabinet members have called for a public debate on the use and price of gasoline, which remains the same since 1996 and is sold for U$D 0.01 per liter, an amount President Chavez himself termed "ridiculous". At current prices, a cup of coffee is 1,000 times more expensive and a bottled water is 700 times more than a gallon of "premium" 95 octane gasoline. Economists believe the government is preparing to raise gasoline prices in order to reduce the fiscal deficit, estimated at 14-16% of GDP. More in Spanish: (Ultimas Noticias, 02-22-2013; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/se-abre-debate-para-aumento-de-precio-de-la-gasoli.aspx; El Mundo, http://www.elmundo.com.ve/Noticias/Economia/Politicas-Publicas/Analisis---Gobierno-venezolano-rompe-tabu-y-abre-d.aspx)

PDVAL supplies 61% of national food consumption

PDVAL Vice President for Food Production and Distribution, Heber Aguilar, claims "PDVAL dispatches at least 50,000 tons of food monthly, which is 61% of the basic food basket and serves 17 million people nationwide." More in Spanish: (AVN, 02-22-2013; http://www.avn.info.ve/contenido/pdval-abastece-61-del-consumo-nacional-alimentos)

Chavez brother slams "irrational" use of energy

Argenis Chavez, president of Venezuela's National Electrical Corporation (CORPOELEC), points to "an irrational use of energy" in the country, which he attributes to increased demand that puts pressure on the National Electric System (SEN). "We waste much energy in the country. We lack an energy saving culture," Chávez said. (El Universal, 02-21-2013; http://www.eluniversal.com/economia/130221/top-official-reports-irrational-use-of-energy-in-venezuela)

International Trade

Fuel imports from the US rose in November

Data from the US Energy Information Administration reveals US crude and oil derivate exports to Venezuela rose from 2.588 million to 3.338 million barrels in November 2012. The figure does not include information for December. More in Spanish: (El Mundo, 02-22-2013; http://www.elmundo.com.ve/Noticias/Petroleo/Industria/Venezuela-elevo-compras-de-combustible-a-EEUU-en-n.aspx)

Politics

Chavez respiratory infection persists, and tendency is unfavorable

Information Minister Ernesto Villegas announced that President Chavez remains under treatment, saying "the respiratory insufficiency which arose after his operation is persisting and the tendency has not been favorable, so it continues to be treated". More in Spanish: (AVN, 02-22-2013; http://www.avn.info.ve/contenido/ministro-villegas-presidente-ch%C3%A1vez-contin%C3%BAa-tratamiento-sin-efectos-adversos; El Universal, http://www.eluniversal.com/nacional-y-politica/130222/persiste-insuficiencia-respiratoria-del-primer-mandatario)

Venezuela accuses US of meddling...

Venezuela's government is criticizing the U.S. State Department for comments about a possible transition in the country, calling a spokeswoman's remarks an attempt by Washington to meddle in Venezuela's affairs.  U.S. State Department spokeswoman Victoria Nuland referred to the possibility of a new presidential election in Venezuela when asked on Tuesday about ailing President Hugo Chavez's return from Cuba. Nuland noted that if Chavez should "become permanently unavailable to serve, our understanding is that the Venezuelan Constitution requires that there be an election to seek a new president." Ms. Nuland has replied her statement was misinterpreted, saying she was "spelled out what we understand the Venezuelan Constitution says. That's different from whether the president can serve during his term". (Fox News, 02-20-2013; http://www.foxnews.com/world/2013/02/20/venezuela-accuses-us-meddling-with-state-department-comments-about-possible/#ixzz2LZat7ESi; AVN; http://www.avn.info.ve/contenido/venezuela-rejects-us-government-meddling; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/130222/nuland-dice-que-venezuela-interpreto-mal-sus-declaraciones)

... and yet, Ecuador's Correa says Maduro could run Venezuela if Chavez resigned

Ecuador's President Rafael Correa says Hugo Chavez is recovering from cancer surgery, but if he had to step down Vice President Nicolas Maduro would be "extremely capable" of running the nation. Correa told Reuters he thinks Maduro is the right person to take over in Venezuela if the socialist leader needs to step down. "Regardless of who may take charge, my main concern is that Chavez recovers ... but in case he cannot be in charge, Vice President Maduro is extremely capable," Correa told Reuters in an interview. (Reuters, 02-21-2013; http://www.reuters.com/article/2013/02/21/venezuela-chavez-correa-idUSL1N0BL9FQ20130221; El Universal, 02-20-2013; http://www.eluniversal.com/nacional-y-politica/130220/ecuadorian-president-rafael-correa-to-visit-chavez)


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 11th, 2011

Economics & Finance

Venezuela Roils Multinationals

Venezuela's currency devaluation wreaked havoc on the balance sheets of multinational companies last year and remains a challenge for companies operating in the country this year. It's the latest in a series of issues—ranging from price fixing to the nationalization of certain industries—that multinationals are contending with in the Latin American country as they chase growth markets outside the U.S. and Europe and set their sights on Latin America's burgeoning middle class.

Doing business overseas can bring with it challenges such as unstable currencies and political turmoil, but Venezuela has proven to have an inordinate number of pitfalls. (The Wall Street Journal, 03-07-2011; http://online.wsj.com/article/SB10001424052748704076804576180772710245068.html)

Decline in investment limits Venezuelan economic recovery

After two years of decline, skyrocketing oil prices are a key factor bolstering Venezuela's economy. However, some serious imbalances -such as the collapse of investment- have become an almost insurmountable barrier.
Petrodollars allow both the government to encourage consumption and companies to increase sales, just as in previous periods when crude oil prices sharply increased. However, when machinery and equipment available are used to a maximum level, economic growth goes to a standstill due to the investment deficit.
The Central Bank of Venezuela (BCV) data show that after a period of recovery, following a lockout in 2002, investments in machinery and equipment that help to increase production have fallen in the past three years, for an accumulated decline of 15.4% between 2007 and 2010. (El Universal, 03-09-2011; http://english.eluniversal.com/2011/03/09/decline-in-investment-limits-venezuelan-economic-recovery.shtml)

Supply of US dollars through SITME falls by 28.5% percent

In March 2010, the Venezuelan Ministry of Finance closed down the Forex parallel market that allowed individuals and businesses to buy US dollars through brokerage firms. Since then, the Venezuelan market has faced a severe shortage of foreign currency. The Executive Office created the Transaction System for Foreign Currency Denominated Securities (SITME), so that individuals and corporations could purchase US dollars at a higher price that the official exchange rate but at a lower price than the unofficial market. There is an underlying problem in this: the supply of foreign currency is very small. Data from SITME’s administrator, the Central Bank of Venezuela (BCV), shows that between September and December 2010, the daily supply of US dollars averaged USD 42 million, but it fell further to USD 26 million in January and slightly increased to USD 30 million in February. (El Universal, 03-08-2011; http://english.eluniversal.com/2011/03/08/supply-of-us-dollars-through-sitme-falls-down-to-285-percent.shtml)

Venezuelan private sector GDP plummets; public sector's soars

On May 27, 2010 Venezuela's President Hugo Chávez admitted that he aims at "burying Venezuelan capitalism." He vowed that his government would take control of key economic areas. In fact, the process had begun earlier when Venezuelan authorities launched a frantic nationalization process in 2007. Data from the Central Bank of Venezuela (BCV) show that private sector's production has not grown since 2007 and it has instead accumulated a 6.6 percent fall in the last three years. In the same period, the State has increased its control of the economy. In fact, public sector's GDP advanced by 18 percent throughout the period. (El Universal, 03-08-2011; http://english.eluniversal.com/2011/03/08/venezuelan-private-sectors-gdp-plummets-public-sectors-soars.shtml)

Colombia sales to Venezuela fell 74.5% in the last 2 years

None of the 13 agreements signed by the authorities last week provide an incentive for Venezuelan exports. The 13 agreements signed last week between officials of Colombia and Venezuela concentrated on purchases from the neighboring country. Bilateral trade, which peaked at USD 7.29 billion dollars in 2008, collapsed over the following years because of political differences between Presidents Chavez and Uribe and economic problems due to falling oil prices. The Colombian National Bureau of Statistics reports that trade with Venezuela fell to USD 4.61 billion dollars in 2009 (36.8% less than in 2008) and USD 1.73 billion in 2010 (62.5% by below the previous year), for a cumulative decline of 76.3%. More information in Spanish. (Canal de Noticias, 03-10-2011; http://www.canaldenoticia.com/index.php?option=com_content&view=article&id=45245:ventas-a-colombia-retrocedieron-745-en-los-ultimos-2-anos&catid=48:america&Itemid=67)

Venezuela, Bolivia and Argentina with the highest inflation rates

Venezuela, Bolivia and Argentina are the Latin American countries where food prices have increased the most over the last year, according to official data from Latin American governments that were compiled by Spanish news agency EFE. Between January 2010 and January 2011, the price of foodstuffs was up 37.2% in Venezuela, well above general inflation rate in (28.5%). Food prices shot up 14% in Bolivia whereas general inflation rate rose 8.4%. Finally, the price of foodstuffs in Argentina edged 13.1% and the inflation rate climbed to 10.6%. The upward inflationary trend persists in Paraguay, Venezuela and Bolivia. (El Universal, 03-07-2011; http://english.eluniversal.com/2011/03/07/venezuela-bolivia-and-argentina-with-the-higher-inflation-rates.shtml)

Venezuela shuts down five more brokerage firms, Gazette Says

Venezuela’s securities regulator ordered four brokerage firms closed after spotting irregularities in their operations and granted another brokerage permission to close permanently, according to a resolution published in today’s Official Gazette. The government shut down Strategos Sociedad de Corretaje, SFC Investment Venezuela Sociedad de Corretaje, Fidevalores Sociedad de Corretaje and La Primera brokerages. The regulator granted the Banexpress firm permission to cease operations, the resolution said. (Bloomberg, 03-09-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aOHRyVMcM9LM)

Government decrees animal protein customs waivers for imports related to bovine production as well as to those necessary elements for the provision of animal protein to the population (Friday, March 4 Gaceta Oficial, circulating today). The waiver depends on the issuance of the Non-Production or Insufficient Production Certificate which must accompany the information on the products to be imported. (Veneconomy, 03-09-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25179&idc=3)

Commodities

China May Approve PetroChina-Venezuela Refinery This Year

China may approve a 57 billion-yuan (USD 8.7 billion) refining venture between PetroChina Co. and Petróleos de Venezuela SA this year, according to the economic planning agency in Guangdong, where the plant will be built. The southern province will also develop emergency oil reserves, Li Miaojuan, director of the Guangdong Development and Reform Commission, told reporters at the National People’s Congress in Beijing today, without giving details. Guangdong, the nation’s manufacturing hub, is adding oil- processing capacity to meet rising demand for industrial fuels including diesel. Construction of the 400,000 barrel-a-day refining venture in Jieyang may begin this year, the provincial government said on March 5. The plant’s capacity will almost match PetroChina’s 410,000 barrel-a-day Dalian refinery, the company’s biggest. The planned Jieyang venture highlights the expanding energy ties between Venezuela and China. (Bloomberg, 03-10-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aR37FuVxmG8s)

Strike ends at CVG VENALUM

After lengthy meetings, workers of state-run aluminum smelter CVG VENALUM Decided to end the strike that began March 1. However, workers expect to register the agreement with the Labor Inspectorate of the Bolívar state on Wednesday afternoon to authenticate the agreement related to the payment of Sunday's salary as a holiday on-duty, and wage adjustments, among other benefits. (El Universal, 03-09-2011; http://english.eluniversal.com/2011/03/09/strike-at-cvg-venalum-ends.shtml)

Venezuela closes 360 MW unit in Tacoa TPP after fire

Venezuela's state power corporation CORPOELEC shut down a 360 MW unit in its Tacoa thermoelectric power plant (TPP) yesterday due to a fire, which was immediately brought under control, CORPOELEC said. The accident will not affect the power supply to the metropolitan area of Caracas city, as the 360 MW were replaced by other power units. (ADP News, 03-10-2011; http://adpnews.info/?nid=b6a9a216987b5088)

PDVSA's Curazao (Isla) refinery halts four units temporarily

Four units of the Isla refinery, operated by Venezuelan state oil company Petróleos de Venezuela (PDVSA), suspended operations on Saturday due to steam supply problems, Reuters reported. Among the halted facilities are one distillation and two hydro treatment units, according to union leader Angelo Meir. The units are expected to remain closed for a week. Isla is a 335,000-barrel-per-day refinery on the Caribbean island of Curacao. PDVSA uses the refinery and the nearby Bullenbaai terminal to refine, store and ship Venezuelan oil to Asia. (ADP News, 03-10-2011; http://adpnews.info/?nid=2bfa98b1498c065e)

Logistics & Transport

Puerto Cabello may close down

According to Alexis Polanco, president of the National Workers Union, Carabobo section, "There will be a conflict here in the next months due to the terrible state the port of Puerto Cabello. If nothing is done to solve problems, the port will shut down". He pointed out that the situation within is not the same as two years ago. Destacó que el panorama dentro de las instalaciones no es el mismo de hace dos años. In his view the port started to decay drastically since the Government took over its management. Polanco said that when the port was taken over 30 loading and unloading cranes were operational, as opposed to just 8 at this time. The situation is not encouraging in the port which receives 70% of imported foodstuffs. Polanco says port authorities are military and have no experience managing ports. "What is happening is disastrous. There are no bathroooms or dining areas. Road conditions are terrible. Perimeter fences that separate the city from the port are have fallen down". More in Spanish. (Tal Cual, 03-11-2011; http://www.talcualdigital.com/ediciones/2011/03/11/default.asp)

Politics

Congress passes no laws and has no agenda two months after two months in session

Zero laws, zero agenda. This is the count two months after the swearing-in of the new National Assembly (AN). The brand-new Assembly incorporated opposition representatives after five years of voluntary absence and brought a new regulation on the interior and debate. The legal instrument, drafted by pro-government representatives, halved the number of monthly ordinary sessions. While congress standing committees have held some meetings to prepare a tentative agenda, thus far the meeting of the Advisory Committee, which sets the items in the agenda, has been postponed several times. Ending February was the last time when committees' chairs met with the heads of the parliament. No final work plan was released. (El Universal, 03-08-2011;

http://english.eluniversal.com/2011/03/08/congress-without-laws-or-agenda-two-months-after-the-beginning-of-sessions.shtml)

Venezuela and Brazil discuss strategic alliances

Brazil's ambassador in Venezuela, José Antonio Marcondes, said Wednesday that Venezuela and Brazil discussed further strategic alliances. "It is clear that between Venezuela and Brazil there is still much room to grow, to explore new opportunities for cooperation. Brazil is willing to share all their experiences of development with Venezuela," after meeting with the president of the National Assembly (AN), Fernando Soto Rojas. He said that Venezuela and Brazil carry out joint projects in housing, agriculture, energy, border development, banking, among others, adding that such agreements may increase. (AVN, 03-09-2011; http://www.avn.info.ve/node/47197)

ALBA aims at mediation in Libya

Member states of the Bolivarian Alliance for the Peoples of Our America (ALBA) began taking steps to create a mediation team to try to end violence in Libya and enable the African country to find a peaceful solution to the political crisis it endures three weeks ago. Ecuadorian deputy foreign minister Kintto Lucas said the statement according to a report from AFP. He also affirmed that the Bolivarian bloc “is proposing some trips and contacts” to start creating the peace commission, initiative raised by Venezuelan President Hugo Chavez. (AVN, 03-10-2011;

http://www.avn.info.ve/node/47310)

At the UN, Venezuela ratifies support for creation of Palestinian State

Venezuela ratified at the United Nations (UN) in Vienna its support for the creation of a Palestine State and the right to self-determination of its people, the Venezuelan government reported on Tuesday. The Venezuelan delegation expressed its position in an international meeting to address the Palestinian issue, particularly the situation of political prisoners and the Israeli detention centers, according to a statement issued by the Venezuelan government, DPA reported. (El Universal, 03-09-2011;

http://english.eluniversal.com/2011/03/09/venezuela-reiterates-at-un-support-to-the-creation-of-palestinian-state.shtml)

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.

January 20th, 2011

Economics, & Finance

Cadivi increased the allocation of dollars to food sector in 2010 by 20.9%

During 2010 the Comisión de Administración de Divisas (Cadivi) authorized 5658.2 million dollars for food companies. Of the total, the allocation for ordinary imports was U.S. $ 4,120 million, representing an increase of 20.9% over the previous year. Food items purchased in 2010 with preferential dollars were wheat, corn, malt, not roasted, whole milk powder, infant formula, hatching eggs, soybean oil, crude palm oil, animal fats or vegetable oils among others. (Descifrado; 01-20-2011; http://www.descifrado.com/index.php?id=10&no_cache=1&showUid=49403)

Venezuela, Turkey endorse energy and cooperation accords

Venezuelan authorities and a Turkish delegation agreed to endorse cooperation accords in energy, informed Minister of People´s Power for Energy and Oil, Rafael Ramirez.

Ramirez made the statement on Wednesday during a meeting held with Turkish Minister of Energy and Natural Resources Taner Yildiz to endorse different cooperation accords in energy and housing matters, among others.

The Republic of Turkey is highly industrialized and has a strategic geopolitical location between Europe and Asia, so Ramirez expressed there is a possibility to cooperate in the entire energy chain. (AVN, 01-19-2011; http://www.avn.info.ve/node/39008)

Ankara wants Venezuela's oil

Ankara is interested in tapping into the Orinoco oil belt off the coast of Venezuela, the country's energy minister said from Caracas. Turkish Energy Minister Taner Yildiz arrived in Caracas to meet with his Venezuelan counterpart Rafael Ramirez to discuss potential investments in the country's Orinoco Belt. Oil deposits in Venezuela are the some of largest outside the Middle East. Most of the Orinoco oil belt remains undeveloped and the region produces at least 600,000 barrels of oil per day currently. (UPI, 01-20-2011; http://www.upi.com/Science_News/Resource-Wars/2011/01/20/Ankara-wants-Venezuelas-oil/UPI-91311295535350/)

Venezuela among the countries with least economic freedom

Venezuelan economy is among the most "restricted" in the world, according to the 2011 Index of Economic Freedom from the conservative think-tank Heritage Foundation and The Wall Street Journal. The study reports that Venezuela's economic freedom score was 37.6 and ranked 175 out of 179 countries for which data are available. Only Eritrea, Cuba, Zimbabwe and North Korea have more restricted economies, according to the index. The study found that compared with last year's results, Venezuela fell one spot in the ranking. (El Universal, 01-20-2011; http://english.eluniversal.com/2011/01/20/en_eco_esp_venezuela-among-the_20A5013931.shtml)

Purchasing power and consumer credit plunge in Venezuela

Based on economic figures at the end of 2010, consumption in Venezuela has declined, thus curbing credit card financing and car loans. In 2010, credit card loans amounted to VEB 26.66 billion (USD 6.20 billion), according to data provided by the Venezuelan Superintendence of Banks. After inflation, this represents a 2 percent fall compared to 2009. Meanwhile, car loans decline is 22 percent, after inflation. (El Universal, 01-19-2011; http://english.eluniversal.com/2011/01/19/en_eco_esp_purchasing-power-and_19A5008533.shtml)

Venezuelan govn't may regulate private firms' profits

A newly created Superintendence of Costs and Prices seeks to control the profits of private companies, said Noel Álvarez, the president of the Venezuelan Federation of Trade and Industry Chambers (Fedecámaras), Venezuela's main business association. "It appears that the only goal of this agency is to control corporate profits and prices of goods and services," the business leader added. According to Álvarez, no additional economic controls will boost supply and curb inflation. "As long as actions are taken to discourage supply, as is the case now, there will be less variety of products. In turn, waning supply will result in increased prices of goods and services," he said. (El Universal, 01-19-2011; http://english.eluniversal.com/2011/01/19/en_eco_esp_venezuelan-govnt-ma_19A5008331.shtml)

Venezuelan plantains for the Russians

Russian banana tycoon Vladimir Kejman and the Venezuelan Food Corporation (CVAL, after its initials in Spanish) plan to create a joint venture to manage over half the plantain plants in Venezuela (20,000 hectares), announced the Russian daily Kommersant today. This explains the government interest in the lands at the South of the Lake. (Veneconomy, 01-18-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24546&idc=3)

Pdvsa repays debt to central bank with US dollar-denominated bonds

State-run oil company Petróleos de Venezuela (Pdvsa) will raise USD 3.15 billion in dollar-denominated bonds to pay an outstanding debt with the Central Bank of Venezuela (BCV) and the country's pension funds. The bonds are due to mature in 2017 and carry an annual coupon of 8.5 percent. The Central Bank of Venezuela received USD 2.4 billion and the pension funds USD 750 million, through a "private placement." (El Universal, 01-18-2011; http://english.eluniversal.com/2011/01/18/en_eco_esp_pdvsa-repays-debt-to_18A5003093.shtml)

Commodities

Venezuelan govn't plans to adopt measures in the agri-food sector

Tumbling domestic production could lead Venezuela's Executive Office to take steps to address both the consequences of heavy rains in the agricultural regions of the country and the effects of devaluation on the prices of food items, commodities and inputs. Sources said that government authorities have been discussing the possibility of implementing subsidies for agricultural products and food items or authorizing price adjustments for certain consumer goods. (El Universal, 01-19-2011; http://english.eluniversal.com/2011/01/19/en_eco_esp_venezuelan-govnt-pl_19A5008855.shtml)

Venezuela sees new Orinoco oil output this year

Venezuela hopes for extra output of 50,000 barrels per day from new projects in the vast Orinoco extra heavy crude oil belt during 2011, Energy Minister Rafael Ramirez said on Wednesday. The South American OPEC member has signed deals with foreign companies for Orinoco development projects slated eventually to add 2.1 million bpd of new production and bring some $80 billion in investment. (Reuters, 01-19-2011; http://af.reuters.com/article/energyOilNews/idAFN1923612220110119)

Venezuela oil production level in December 2010 flat year on year

Venezuela's oil production at the end of December 2010 stood at 2.26 million barrels per day (bpd) according to the monthly report of the Organization of the Petroleum Exporting Countries (OPEC), which is based on secondary sources. The figure is almost equivalent to the output recorded in December 2009, when OPEC reported that Venezuela's oil production amounted to 2.27 million bpd. According to the report, Venezuela's output in December 2010 averaged 36,000 bpd more than in November, when Venezuela's output was 2.23 million bpd. (El Universal, 01-18-2011; http://english.eluniversal.com/2011/01/18/en_eco_art_venezuela-oil-produc_18A5002371.shtml)

Venezuela faces uncertainty over oil find

Venezuelan President Hugo Chavez said the country's hydrocarbon reserves surpass those of Saudi Arabia but left open the possibility of an early commercial exploitation of the resource. A spate of nationalizations has turned investor institutions away from Venezuela, the only oil-producing major country to have reported a shrinking economy for the second consecutive year. Chavez told the newly installed National Assembly Venezuela's oil reserves totaled 217 billion barrels of oil equivalent, exceeding Saudi Arabia's and making them the largest in the world. (UPI, 01-18-2011; http://www.upi.com/Science_News/Resource-Wars/2011/01/18/Venezuela-faces-uncertainty-over-oil-find/UPI-24061295390986/)

SIDOR union leaders deeply divided over the latest work stoppage

According to a report in Correo del Caroni, SIDOR steel & iron company trade union (SUTISS) called an embarrassing work stoppage protesting non-payment of remaining benefits. Company directors confirmed that the differences in payment will be paid out before January 26 when the cash flow situation has improved. There are conflicts within the union for the stoppage which was called by SUTISS president, Jose Luis Hernandez without prior consultation of other board members. The liquid iron department came to a complete standstill losing 18,000 tonnes in a two-day strike. (VHeadline, 01-19-2011; http://www.vheadline.com/readnews.asp?id=100337)

Unions at state aluminium producer, CVG Venalum, took over the administrative building to protest their bad working conditions and to demand the head of the plant be fired. They vow they will continue their protest until Basic Industries Minister José “Chino” Khan and President Chávez heed their demands. (Veneconomy, 01-19-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24563&idc=3)

Politics

Opposition deputy: Venezuela's entry into Mercosur depends on return to CAN

Henry Ramos Allup, a Venezuelan deputy to the Venezuelan chapter of the Latin American Parliament (Parlatino), said that if Venezuela does not return to the Andean Community of Nations (CAN) it will not enter the Common Market of the South (Mercosur). (El Universal, 01-18-2011; http://english.eluniversal.com/2011/01/18/en_pol_art_opposition-deputy:-v_18A5003411.shtml)

Work set to begin on Venezuela-Cuba undersea cable

A specialized ship has arrived in Venezuela carrying enough fiber-optic cable to connect the South American country to Cuba, and will soon begin laying the cable along the sea floor to establish a link expected to dramatically improve telephone and Internet service for Cubans. The French-flagged ship Ile de Batz was anchored on the Venezuelan coast and will begin rolling out the cable across the Caribbean Sea in the coming days, said Jose Ignacio Quintero, a manager for Paris-based Alcatel-Lucent SA, which is carrying out the project. (AP, 01-19-2011; http://news.yahoo.com/s/ap/20110119/ap_on_bi_ge/lt_venezuela_cuba_communications_2)

Venezuela, Ecuador mull ALBA development fund

Venezuela and Ecuador are proposing to strengthen economic ties through the creation of a joint development fund under the aegis of a leftist regional economic bloc, Venezuela's top diplomat said Monday. Foreign Minister Nicolas Maduro said the South American countries are looking to define the fund's objectives within the framework of the Bolivarian Alternative for the Nations of Our America, or ALBA, which Venezuela and Cuba started as a socialist-oriented trade alliance in 2004.Maduro said the fund would be used to finance ALBA goals, including strengthening regional trade. He did not give other details such as how much money would be committed or how the fund would work. (AP, 01-17-2011; http://finance.yahoo.com/news/Venezuela-Ecuador-mull-ALBA-apf-786646.html?x=0&.v=1)

Venezuela, Haiti with the highest political risk in the region

Aon Corporation, a global provider of risk management services, released a Political Risk Map that ranked Venezuela as one of the 11 countries with the highest political risk in the world. Venezuela's level of risk was only matched by Haiti, a country that is mired in a serious social, economical and political crisis. According to AON, Venezuela has a high risk in all the variables analyzed in the study, including war and political violence, sovereign default risk, and foreign exchange transfer problems. In addition to this, Venezuela and Colombia are the only countries in the hemisphere that have war risks. (El Universal, 01-20-2011; http://english.eluniversal.com/2011/01/20/en_pol_esp_venezuela,-haiti-wit_20A5014815.shtml)

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.