February 19, 2013

Economics & Finance

Public Stock Exchange considered as alternate FOREX supply

Unofficial economic sources report the government is considering the use of the Public Stock Exchange as a substitute for the now defunct FOREX Denominated Transaction System (SITME), and say the decision came after the new supreme FOREX authority analyzed the Exchange Authority´s (CADIVI) ability to manage increased demand. Although no decision has been made, an internal memo describes conditions for a new market. Nelson Merentes, Central Bank President has recently admitted that the exchange market is in an altered state and that authorities will not remain inactive in this situation. More in Spanish: (El Nacional, 02-19-2013; http://www.el-nacional.com/  and El Mundo, http://www.elmundo.com.ve/Noticias/Economia/Politicas-Publicas/Merentes--BCV-enfrentara-las-perturbaciones-del-me.aspx)

Income surplus for 2012 was VEB 57 billion in unused funding, deposited in parallel special funds operated by the National Treasury and now available to the government for further spending plans. The amount is the result of differences between authorized budget items and actual disbursements. More in Spanish: (El Universal, 02-19-2013; http://www.eluniversal.com/economia/130219/excedentes-de-2012-del-gobierno-suman-bs-57-millardos)

PDVSA accounting benefits from devaluation

José Luis Saboin, senior analyst at ECOANALÍTICA, points out that "all recent economic decisions favor PDVSA"; and César Aristimuño, of Aristimuño Herrera & Associates adds: "one of the key beneficiaries from devaluation is PDVSA as it improves the government's income in local currency, and partly reduces its' local currency indebtedness". PDVSA's indebtedness with the Central Bank is now down 31.7% as a result of devaluation; and it's dollar indebtedness has been reduced from U$D 38.4 billion to U$D 26.2 billion. PDVSA's financial debt is lower by U$D 1.9 billion on Bolivar denominated loans financed by the Central Bank. As a result, PDVSA should provide the government an additional VEB 84.5 in taxes and royalties. More in Spanish: (El Nacional, 02-19-2013; http://www.el-nacional.com/)

Commodities

PDVSA is a big lie, says Gustavo Coronel

According to senior oil analyst Gustavo Coronel: PDVSA claims to be sending to China an average of 34% more oil than the China say they are receiving. Sometimes, like in 2009, the differences have been as high as 72% less oil sent to China than PDVSA claims. This is a lie among the many lies coming out of PDVSA on a daily basis. They lie about their proven reserves, about their level of oil production, about the number of drilling rigs active in the country, about the production of natural gas, about the price they obtain for their oil, about the level of exports, about the refinery runs, about their imports of gasoline and diesel, about their contracts, about their many non-oil related activities such as house building, food imports or pig raising. The company under Rafael Ramirez is an immense lie. As such it has lost all international credibility. PDVSA bonds are no longer accepted by many brokers, due to the shaky financial situation of the company and the nation. (Las Armas del Coronel, 02-13-2013; http://lasarmasdecoronel.blogspot.com/2013/02/pdvsa-is-big-lie-pdvsa-es-una-gran.html)

International Trade

Soto Rojas denies mining contract with CITIC violates sovereignty

Fernando Soto-Rojas, chairman of the National Assembly's Committee on Energy and Petroleum, defended the contract between the Government and China's CITIC Group granting the latter Venezuela's gold, diamonds, coltan, tin, iron and bauxite deposits. "They have experience in that area. Nowadays, with technology, we can determine the presence of gold thousands of meters deep. Who knows what Guayana has 5000 meters underground? Here in Venezuela we only were able to evaluate 500 meters. " More in Spanish: (El Nacional, 02-18-2013; http://www.el-nacional.com/)

Politics

Chavez makes surprise return from Cuba

President Hugo Chavez made a surprise return from Cuba on Monday, more than two months after surgery for cancer that has jeopardized his 14-year rule. The middle-of-the-night homecoming by Chavez, 58, implies some medical improvement - at least enough to handle a flight of several hours - and will again fire up supporters with hope he could return to active rule. Yet there was no new information on the socialist leader's condition, nor images of his arrival, and aides say his condition remains "complex." Chavez could be returning to govern behind the scenes or could be hoping to ease political tensions in Venezuela and smooth a transition to Vice President Nicolas Maduro. (Reuters, 02-18-2013; http://www.reuters.com/article/2013/02/18/us-venezula-chavez-idUSBRE91H05F20130218; AVN, http://www.avn.info.ve/contenido/president-chavez-venezuela; Bloomberg, http://www.bloomberg.com/news/2013-02-18/chavez-says-he-s-back-in-venezuela-after-cuba-treatment.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=687857&CategoryId=10717; The Washington Post, http://www.washingtonpost.com/world/the_americas/hugo-chavez-returns-home-to-venezuela-after-more-than-2-months-of-cancer-treatment-in-cuba/2013/02/18/812b30a6-79b0-11e2-9c27-fdd594ea6286_story.html; CNN, http://edition.cnn.com/2013/02/18/world/americas/venezuela-chavez-return/index.html?iref=allsearch; Fox News, http://www.foxnews.com/world/2013/02/18/hugo-chavez-returns-home-to-venezuela-after-more-than-2-months-cancer-treatment/)

Opposition leader Capriles welcomes Chávez back in Venezuela

Opposition leader Henrique Capriles welcomed President Hugo Chávez, and said he hoped that Chávez's return brings "common sense" to his government. (El Universal, 02-18-2013; http://www.eluniversal.com/nacional-y-politica/130218/opposition-leader-capriles-welcomes-chavez-back-in-venezuela)

Students chained to Cuban embassy end protest

Emyly Vera, a spokesperson for the university students who demonstrated near the Cuban Embassy to Caracas for five days, announced the end of the protest after the Government reported the return of President Hugo Chávez.

"We asked for his return. We said that if he was able to rule, he had to do it in his own country and not abroad," she added. Vera pointed out that although the demonstration is over, "the battle is not." (El Universal, 02-18-2013; http://www.eluniversal.com/nacional-y-politica/130218/students-chained-to-cuban-embassy-end-protest-in-venezuela)

US says elections should be called if Chavez cannot rule

Unidentified US government sources are saying "if he (Chavez) cannot carry out the duties of his office, the Constitution calls for the election of a new President". The source, who asked not to be identified, added "we note his return and repeat our best wishes on his illness". More in Spanish: (El Nacional, 02-19-2013; http://www.el-nacional.com/; El Universal, http://www.eluniversal.com/nacional-y-politica/130219/eeuu-plantea-elecciones-si-chavez-no-puede-gobernar)

Government party says swearing in will take place when he is "good and well"

The ruling party is not saying when or where Hugo Chavez will be sworn in as President for the 2013-19 terms. Anzoátegui Governor Aristóbulo Istúriz avoided recent questions on the matter, said the party has not discussed it, and simply said swearing in will take place whenever Chavez is "good and well". More in Spanish: (El Nacional, 02-19-2013; http://www.el-nacional.com/)

Venezuela targets better relation with the US, but no rush

Foreign Minister Elías Jaua says Venezuela seeks "good relations" with the United States and ratified that President Hugo Chávez's Government has been taking steps to improve US-Venezuela bilateral relations. However, he stressed that Venezuela is by no means "desperate" to reach said goal. "We look forward to having good relations with the US, but we are by no means desperate to do so. We have learned and demonstrated that it is possible to live with dignity without having a US ambassador in Venezuela," the foreign minister stated. (El Universal, 02-19-2013; http://www.eluniversal.com/nacional-y-politica/130218/venezuela-targets-better-relation-with-the-us-without-rush)

Fidel Castro applauds President Chávez's return to Venezuela

Former Cuban leader Fidel Castro applauded Chávez's come back after more than two months in hospital in Havana, saying: "I am very pleased that you have been able to get back to the piece of land of the Americas that you love so much, and to that fraternal people, who has given you so much support. A long and distressing wait, your amazing physical resilience and the total dedication of the medical team (...) were necessary to obtain such a goal". (El Universal, 02-18-2013; http://www.eluniversal.com/nacional-y-politica/130218/fidel-castro-welcomes-president-hugo-chavezs-return-to-venezuela)


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.

December 16th, 2010

Economics, Trade & Business

Venezuela Plans Financial Transactions Tax

Venezuela’s Finance Ministry is preparing a law to introduce a tax on financial transactions that would be enacted through decree powers requested by President Hugo Chavez. The tax, which would apply to all bank transactions, aims to head off a drop in government revenue expected next year. (Bloomberg, 12-16-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a6HG6spQKlzg)

Venezuela to increase VAT due to lower contributions from income tax and PDVSA revenues

The financial needs of the Venezuelan government have increased despite high oil prices. Therefore, it has decided to increase the Value-Added Tax rate to offset lower oil incomes and a decline in income tax collection due to the economic downturn. Last Monday, President Hugo Chávez Frías announced that the government would revise the VAT due to the state of emergency in the Venezuelan territory. He said that through the collection of taxes his administration would set up a fund to assist the population hit by rainfalls. However, before the emergency declared in several Venezuelan states due to heavy rains, the government had suggested that it required more funds for the next fiscal year. (El Universal, 12-15-2010; http://english.eluniversal.com/2010/12/15/en_eco_esp_venezuela-to-increas_15A4858611.shtml)

Venezuela Central Bank Said to Boost Sitme Bond Sales

Venezuela’s central bank plans to step up sales of dollar-denominated bonds it holds to become the main provider of foreign currency to importers next year, a government official said. Banco Central de Venezuela will sell as much as $40 million a day of government and state oil company bonds to supply the Sitme currency market for at least the first three months of the year, said the official, who asked not to be identified because he isn’t authorized to speak publicly. The government in June ordered commercial banks to sell their dollar-denominated bonds to supply Sitme. (Bloomberg, 12-14-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aHQZ7kAO5SwE)

Study to certify Coltan reserves (industrial name for columbite–tantalite) requires a $32 million investment, according to a proposal under consideration by the government. The information was part of a presentation at the Venezuelan Central University’s (UCV) School of Engineering Research Symposium at the beginning of December, with the title Mining Potential at the El Parguaza Zone, located to the west of Bolívar state. (Veneconomy, 12-16-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=24349&idc=3)

Venezuelan Urea diverted from Corn to Coca farming

It is a long way from the cornfields of Guárico, in central Venezuela, to the cocaine labs of Colombia. But Venezuelan farmers and the drug cartels are linked in a curious way -- to the detriment of the farmer. Urea, a nitrogen-rich fertilizer vital to crops from corn to tomatoes, is also used to fertilize the coca plants that provide the raw material for cocaine. A thriving black market that diverts the fertilizer from legal crops to coca has reduced agricultural production, contributing to Venezuela's increasing dependence on imported food. (Miami Herald, 12-13-2010; http://www.miamiherald.com/2010/12/13/1972175/coca-pushing-out-corn-in-a-black.html)

Mercosur discord eased by Paraguay deal on Venezuela

Latin America's Mercosur trade pact is going through a rare period of constructive cordiality after member countries reached agreements to solve two intractable problems -- discord over Venezuela's membership and an Argentine-Paraguay row over river transport that threatened to scuttle the group's next summit. Paraguayan ratification for Venezuelan membership, delayed over many years, became a near certainty after a congressional deal that had been delayed due to domestic politics. (UPI, 12-15-2010; http://www.upi.com/Science_News/Resource-Wars/2010/12/15/Mercosur-discord-eased-by-Paraguay-deal-on-Venezuela/UPI-22041292418025/)

Politics

Chavez seeks power to rule by decree for 1 year

Venezuelan President Hugo Chavez asked congress Tuesday to grant him special powers to enact laws by decree for one year, just before a new legislature takes office with a larger contingent of opposition lawmakers. The measure, which quickly received initial approval from the overwhelming majority of pro-Chavez lawmakers, would give the president the authority to bypass the National Assembly for the fourth time since he was first elected almost 12 years ago. (Miami Herald, 12-14-2010; http://www.miamiherald.com/2010/12/14/1973120/chavez-seeks-decree-powers-for.html)

How will Chavez decree rule impact Venezuela?

Venezuelan President Hugo Chavez is taking decree powers for a year in a move he says is needed to deal with disastrous floods but opponents denounce as a calculated blow to democracy. What are the possible consequences for South America's biggest oil producer and its flamboyant socialist leader two years ahead of the next presidential election? (Reuters, 12-16-2010; http://www.reuters.com/article/idUSN1515206120101216)

Amendment to telecommunications law endorsed in first session

The National Assembly (AN) passed on Wednesday in a first session the amendment to the Telecommunications Organic Law with dissenting political Podemos party voting against. According to Deputy Ismael García, for Podemos party, the reform "violates and puts in the hands of the president and of Conatel (National Telecommunications Commission) in a discretionary manner the regulation of the radio spectrum." García warned that the biggest problem in the reform is that "it is targeted at those media which are not in line with the State and government policy." (El Universal, 12-15-2010; http://english.eluniversal.com/2010/12/15/en_pol_esp_amendment-to-telecom_15A4859331.shtml)

Petroleum & Energy

Venezuelan crude oil production dropped in November 2010, compared to the same period last year. According to figures published by the OPEC, last month, Venezuela produced an average 2.2 million barrels of crude per day, down 3% from November 2009. (Veneconomy, 12-14-2010; http://www.veneconomy.com/site/index.asp?idt=24303&idc=4&NPag=2&Start=15&aaD=2010&ids=44&Var_Send=1&mmD=12&ddD=14&mmH=12&ddH=16&aaH=2010&Send=Buscar)

Brazil: Pdvsa is likely to walk out of refinery project

After nearly five years of disagreements, Brazilian oil company Petrobras admitted that state-run oil company Petróleos de Venezuela is likely to desist from participating in a project to build the Abreu e Lima refinery in the Brazilian state of Pernambuco. Petrobras has already started works but has not received funds from Venezuela, which is expected to invest USD 4.47 billion in the project. (El Universal, 12-14-2010; http://english.eluniversal.com/2010/12/14/en_eco_art_brazil:-pdvsa-is-lik_14A4854251.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.