December 16, 2014

International Trade

 

Cargo that has arrived at Puerto Cabello:

• Over 1,000 tons of black beans from China for state agency Corporación de Abastecimientos y Servicios Agrícolas (CASA)
• Over 27,000 tons of fireworks from Liuyang Ressing Fireworks for Distribuidora Triki-Traki
• Over 200 tons of fabric roll from Multi Trade Export for Agata
• Other arrivals include clothing and footwear, as well as toiletries, cordless phones, accessories for vehicles and motorcycles

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-mas-de-mil-toneladas-de-caraotas-2305648/2014/12/14/442257/)

 

Venezuela restricts nighttime border crossings to combat smuggling

Venezuela will further restrict nighttime border crossings to try to stop the widespread smuggling of fuel and food that have contributed to shortages of basic goods in the country's reeling economy. The government has announced it will restrict crossings at Venezuela's land, maritime and air borders with Brazil and Guyana between 10 p.m. and 5 a.m. In addition, delivery trucks must stay off the roads in Venezuelan border towns between 6 p.m. and 5 a.m. as part of a crackdown on contraband. The government had previously ordered the night closure of the country's border with Colombia, where heavily subsidized Venezuelan goods often end up. (Reuters, http://www.reuters.com/article/2014/12/15/us-venezuela-borders-idUSKBN0JT1WM20141215; El Universal, http://www.eluniversal.com/nacional-y-politica/141215/venezuela-restrains-access-on-all-its-borders-at-night)

 

 

Logistics & Transport

 

Construction of the third bridge over the Orinoco River, located between Bolívar and Guárico states, is currently at 67%, says Surface Transport and Public Works Minister Haiman El Troudi. He pointed out the main south tower of the bridge, 225 meters high and 90 meters deep, has been concluded. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42270&idc=3)

 

Low supply and frequency of flights hits sale of air tickets

After several attempts to bring international flights back to normal, figures show a steady decline in sales here throughout 2014. Venezuelan authorities have held several meetings with representatives from international airlines to find stability in the market. However, to date, unavailability of plane tickets continues, high prices in bolivars persist, and sale of tickets in foreign currency by some airlines is still a requirement. The sale of air tickets in January-November plummeted 41% from 2013. Meanwhile, tickets for national flights have slowed 15% in 2013-2014. (El Universal, http://www.eluniversal.com/economia/141215/low-supply-frequency-of-flights-hits-sale-of-air-tickets)

 

 

Oil & Energy

 

Venezuelan crude oil is down to US$ 57,53, and its average price for 2014 is US$ 90.50, which is a 7.7% drop from last year. More in Spanish: (Dinero, http://www.dinero.com.ve/din/destacados/crudo-venezolano-baj-5753#sthash.kH2r4plb.dpuf)

 

Low oil prices continue to hurt Venezuela

The Venezuelan economy continues its downward spiral as 2015 approaches. Faced with rising domestic expenses that it can no longer meet through dollar income from oil exports alone, Caracas has accelerated measures to increase its money supply since 2012. The central bank has also printed more bolivars to keep up with spending obligations. Caracas will continue making increasingly desperate adjustments to its economic policy throughout 2015, all carried out in the hopes of forestalling social unrest or eventual decisions that could result in regime change. The government could move to devalue the bolivar or cut public spending in 2015. State oil company Petroleos de Venezuela and the Venezuelan government will also likely continue their attempts to restructure US$ 12.5 billion in debt payments that are due in 2016 and 2017 with the goal of reducing its debt burden and likelihood of default. Measures such as selling large sums of gold from the central bank reserves or even defaulting on foreign creditors to continue satisfying domestic constituents would indicate increasing desperation from the government. (Stratfor, http://www.stratfor.com/sample/analysis/low-oil-prices-continue-hurt-venezuela)

 

Venezuela wants to expand oil diplomacy despite falling prices

President Nicolas Maduro has told his leftist allies from Latin America that he wants to expand the PETROCARIBE program of providing oil at preferential terms, even as falling oil prices add more stress to the Venezuelan economy. Speaking in Cuba at a summit of the leftist ALBA bloc of nine countries from Latin America and the Caribbean, Maduro did not mention the impact of a 46% decline in oil prices since June. Instead, the leader of the OPEC country spoke of expanding the 18-nation PETROCARIBE, even as PETROCARIBE has struggled to keep up supplies. Shipments fell 11% in 2013 to the lowest level since 2007, forcing beneficiaries to turn to other sources. (Reuters: http://www.reuters.com/article/2014/12/14/us-cuba-venezuela-summit-idUSKBN0JS0RS20141214)

 

CITGO says CONOCO probe may ‘freak out’ potential buyers

ConocoPhillips’s bid for a court order to probe Venezuela’s effort to sell CITGO Petroleum Corp. might scare off any potential investors, CITGO’s lawyer said in urging a judge to reject the request. “I’m not representing one way or the other there’s a sale,” John Zavitsanos, the lawyer, said at a hearing in state court in Houston today. “But if there is, this is going to spook off any potential buyer” because they’d “be totally freaked out about being brought into” the court case. ConocoPhillips claims Venezuela’s state-owned oil company Petroleos de Venezuela is trying to sell CITGO, its primary U.S. holding, as part of a plan to hide the proceeds and avoid paying compensation for assets that were nationalized by former President Hugo Chavez in 2007. (Bloomberg, http://www.bloomberg.com/news/2014-12-15/citgo-says-conoco-probe-may-freak-out-potential-buyers.html)

 

 

Commodities

 

Cargill's top prop trader leaves commodities firm

Cargill's head of proprietary trading for emerging and developed markets, Alejandro Russo, left the US commodities giant on December 1. Two market sources who monitor the country's bonds said Cargill was understood to have sold off more than US$ 200 million of bonds issued by Venezuela, and state-owned oil company PDVSA, since Russo's departure. (Reuters, http://www.reuters.com/article/2014/12/15/moves-cargill-ltd-idUSL6N0TZ3UB20141215)

 

 

Economy & Finance

 

Maduro says that economic adjustments are necessary

President Nicolás Maduro says that "a number of necessary adjustments to economic balance" will be made in 2015 in order to come out of the crisis. He says he will work full time on economic recovery, and leave political and social affairs to others. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/maduro--hay-que-hacer-ajustes-de-equilibrios-neces.aspx#ixzz3M3bwJdoe; El Universal, http://www.eluniversal.com/nacional-y-politica/141216/maduro-delegara-agenda-politica-y-se-centrara-en-tema-economico)

 

No official data on inflation for the past 3 months

September 9th was the last time Venezuela's Central Bank updated its consumer price index on its web page, with August data. Neither has it updated the scarcity index, the GDP or the balance of payments. Last Friday it did not publish oil prices for the first time in 50 years. Rather than reassure, the lack of statistics is increasing negative expectations. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Venezuela has US$ 21 billion in reserves and owes US$ 21 billion, but Maduro says default is not the strategy

According to a Bloomberg report, Venezuela's FOREX reserves can only cover two years debt service. The government and state owned PDVSA owe US$ 21 billion in bond payments through the end of 2016, and amount that equals total reserves. This explains why market experts say a default is almost certain, probably before a year is up. On the other hand, President Nicolás Maduro continues to deny any possibility that Venezuela will default: "There is no possibility of declaring a default, unless we decide to interrupt payments as a strategy for development - and that is not the strategy", he says. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/mercados/bloomberg--venezuela-tiene--21-000-millones-y-debe.aspx#ixzz3LxkxTYvg; http://www.elmundo.com.ve/noticias/economia/mercados/video---gobierno-descarta-un-default-en-venezuela.aspx#ixzz3LxliCB3s)

 

Maduro in 'no rush' to hike world's cheapest gasoline

Nicolas Maduro says there is "no rush" to hike the world's cheapest gasoline prices, suggesting the increasingly unpopular president has shied away from implementing the risky domestic reform in the near future amid an economic crisis.  "I've considered, as head of state, that the moment has not arrived," he says. "The moment will come, maybe in 2015, there's no rush, we're not going to throw more gasoline on the fire that already exists with speculation and induced inflation."  (Reuters, http://www.reuters.com/article/2014/12/14/us-venezuela-gasoline-idUSKBN0JS0MG20141214; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42274&idc=4; El Universal, http://www.eluniversal.com/economia/141215/president-maduro-2015-budget-does-not-rely-on-gasoline)

 

Venezuela bonds fall below 40 cents as Maduro affirms subsidies

Venezuelan bonds dropped to a 16-year low as President Nicolas Maduro said he has no plans to curb fuel subsidies while not ruling out the possibility of default. The government’s benchmark bonds due in 2027 fell 8.5% to 37.74 cents on the dollar, the lowest on a closing basis since 1998, as of 2:07 p.m. in New York. The extra yield investors demand to hold Venezuela’s overseas notes instead of Treasuries rose the most in the world. Swaps contracts protecting bond investors from non-payment imply a 97% chance of default in the next 12 months, according to CMA data. (Bloomberg, http://www.bloomberg.com/news/2014-12-15/venezuelan-bonds-fall-to-16-year-low-as-maduro-affirms-subsidies.html)

 

 

Politics and International Affairs

 

Venezuela to face US sanctions over violence against protesters

The US is poised to impose sanctions on Venezuela over the sometimes-violent suppression of anti-government protests which racked the country earlier this year. The US Congress passed a bill this week to punish officials involved in the February-to-May clashes, which resulted in 43 deaths, including victims on both sides of the divide. White House aides said Barack Obama – who had been hesitant to take action during the height of the unrest – was now ready to sign the bill into law. “We have not and will not remain silent in the face of Venezuelan government actions that violate human rights and fundamental freedoms and deviate from well-established democratic norms,” Josh Earnest, the White House press secretary, told a news conference on Thursday. The bill will deny visas and freeze the US assets of current and former Venezuelan officials who ordered “significant acts of violence or serious human rights abuses against persons associated with the anti-government protests”. President Nicolas Maduro responded with defiance, describing the proposed US measure as insolent. “They can stick the sanctions in their ears or wherever else they’ll fit,” he said in a televised speech. “If the crazy path of sanctions is imposed, President Obama, I think you’re going to come out looking very bad.” (The Guardian, http://www.theguardian.com/world/2014/dec/12/amid-violence-against-protesters-venezuela-to-face-us-sanctions)

 

Regime organized a march against United States sanctions

Thousands of government supporters in Venezuela have marched through the streets of Caracas to denounce the recent approval of sanctions by the US. Wearing predominantly red, the protesters called on the United States to respect Venezuela. President Nicolas Maduro addressed his supporters at the end of the march and accused the US of trying to intervene in his country's domestic affairs. Addressing thousands of his supporters in Caracas, Maduro denounced the American government as "arrogant imperialist Yankees". He said Venezuela and other countries should set up "a committee of legal experts to investigate all the human rights violations and crimes against humanity carried out by the United States, which have bombed Libya, Iraq and Syria". Correspondents say sanctions could lead to a worsening of relations between the US and Venezuela. (BBC News, http://www.bbc.com/news/world-latin-america-30490393)

 

ALBA Summit in Cuba condemns US sanctions against Venezuela

Cuban President Raúl Castro closed the Summit of the Bolivarian Alliance for the Peoples of Our America (ALBA) by condemning the sanctions the United States imposed on Venezuela, in the context of the 10th anniversary of the bloc, created by late President Hugo Chávez and Fidel Castro. The 11 ALBA Heads of State agreed to "strongly condemn the approval by the United States Congress of sanctions against the Bolivarian Republic of Venezuela," in a statement read by President Nicolás Maduro. (El Universal, http://www.eluniversal.com/nacional-y-politica/141215/alba-summit-in-cuba-condemns-us-sanctions-against-venezuela)

 

Spain terms Maduro's statements on Aznar "unacceptable"

Spanish Foreign Minister José Manuel García Margallo says statements by Venezuelan President Nicolás Maduro, saying former Prime Minister José María Aznar was responsible for the death of 1.2 million Iraquis, are "absolututely and clearly unacceptable". More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Another “conspirator” to be charged

The Venezuelan Prosecutor General’s Office has subpoenaed student leader Gaby Arellano to be formally charged with “conspiracy” on December 26. This is the same charge the Public Ministry brought against María Corina Machado last December 3. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42273&idc=1)

 

Voluntad Popular was admitted as a full member of the Socialist International (SI), announced its Chief George Papandreou, during its recent Annual Council held in Geneva. Also, on Saturday, the SI unanimously passed a resolution in which they urged the Venezuelan government to release Leopoldo López and all other political prisoners. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42271&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/141215/socialist-international-supports-release-of-venezuelan-opposition-lead)

 

Machado: Venezuelan opposition is stronger now

Venezuelan opposition leader María Corina Machado does not think that the opposition has been unable to capitalize on the country economic deadlock. "I cannot see any evidence according to which the opposition has not gotten stronger in all this process. To the contrary, surveys, even those of pollsters close to the government, confirm it. The support inherited by (Venezuela's President Nicolás) Maduro has vanished, not only as a result of the economic debacle caused by them, but to a greater extent because of how the opposition has channeled the expectations of those eager for a change in Venezuela," says Machado. (El Universal, http://www.eluniversal.com/nacional-y-politica/141215/machado-venezuelan-opposition-is-stronger-now)

 

Oil-poor and on the brink of default: Is change imminent in Venezuela?, by Carl Meacham

On Morgan Stanley cut its 2015 forecast, predicting that prices could average as low as $53 per barrel in 2015. Venezuela in particular faces interesting challenges with this price drop, as its national income dwindles and its economy slowly grinds to a halt. These economic challenges are not necessarily new ones for Venezuela—but unprecedented (and unpredicted) fall of oil prices could throw a wrench in the gears. The administration of Venezuelan president Nicolás Maduro has seem largely focused on keeping the country afloat—and little more—but even that becomes more difficult as oil prices continue to drop. The resulting heavy cut in export revenue may force President Maduro to continue economic reforms that will likely receive a lukewarm reception, at best, from a population accustomed to extensive social welfare programs enabled by the country’s vast oil wealth. Conclusions: The country’s economy will likely keep spiraling downward. Scarcity and inflation will continue to drag down standards of living throughout the country—and default is more likely than ever as oil prices continue to plummet. The economy is tanking, dissatisfaction is on the rise, and there’s a long road until the next presidential elections in 2019. So while the form of change remains to be determined, it seems that conditions for political overhaul could be falling into place. (CSIS, http://csis.org/publication/oil-poor-and-brink-default-change-imminent-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.

January 21, 2014

Economics & Finance

Venezuela puts off economic adjustments amid FOREX crisis

The speech by President Nicolás Maduro last week - rather than set forth urgent economic decisions - simply announced more controls within an economy that is speeding toward further centralization.
Maduro announced a law banning profits above 30%, changes in some ministries, desincorporation of the Foreign Exchange Administration Commission (Cadivi), and promised not to devaluate the Bolivar - and set fiscal and exchange problems that require adjustment. Economic research firm ECOANALÍTICA says: "It was a speech that hardly referred to the exchange issue. Once again, the fiscal, monetary, financial imbalances impacting the economy have been put aside; this includes the recognition of many obstacles –mostly bureaucratic– which currently hurt production and distribution of goods, and, therefore, economic performance." (El Universal, 01-20-2014; http://www.eluniversal.com/economia/140120/venezuela-puts-off-economic-adjustments-under-forex-crisis)

BARCLAY's: Shift to SICAD can reduce fiscal deficit by only 2 GDP points, decisions "too little, too late".

According to BARCLAY's Capital shifting some activities formerly handled by the CADIVI Exchange Board to the SICAD auction system at a higher exchange rate can only lower Venezuela's projected fiscal deficit - estimated at 16% GDP by 2% GDP. Keeping the 6.3 official exchange rate will make it more difficult to increase government income to a point where the deficit is impacted. "Up to now, the government has insisted on importing food and other basic commodities, such as medicines, at the official rate... Rather than face a strong adjustment that could reduce economic imbalances, uncertainty has increased by decisions which, in principle, seem insufficient and also too late." More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/migracion-al-sicad-bajaria-deficit-en-dos-puntos-d.aspx#ixzz2r1uhZc9y)

Delay in allocating FOREX is hurting distribution, says Small and Medium Business head Erich Hartkopf. because it affects payments to suppliers abroad. He also says it is yet to see “how the Fair Price Law is going to be implemented” since each sector is different." (Veneconomy, 01-20-2014; http://www.veneconomy.com/site/index.asp?ids=44&idt=37683&idc=3)

Government took over 1284 companies between 2002 and 2013

Government expansion over the past few years was fueled by expropriations. 1284 companies were taken over by authorities between 2002 and 2013, according to data from Venezuela's National Council of Industries (CONINDUSTRIA). Data shows 40.5% of all expropriations were in construction, and 32.3% in the industrial sector. The remaining expropriations took place in oil services, commerce and services. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140121/gobierno-intervino-1284-empresas-entre-2002-y-2013)

Oil & Energy

Crude oil sales to US are down 35% since 2007

Total crude oil sales from Venezuela to the USA are dropping steadily, according to information from the US Department of Energy. 2013 oil exports to the US were some 750,000 BPD, which is a 35% drop since 2007. Sales to the US are cash on delivery and most of them go to PDVSA owned CITGO, and are 30% of all Venezuelan oil shipments. The drop in sales to the US comes with a 0.71% drop in Venezuela's oil production and a growing relationship with countries such as China and India, which are receiving priority attention from Venezuelan authorities. More in Spanish: (El Universal; http://www.eluniversal.com/economia/140121/venta-de-crudo-a-eeuu-se-acerco-a-los-750-mil-bd-en-2013)

Venezuela oil price slips

Venezuela's weekly oil basket stayed below the country's desired U$D 100 a barrel floor and continued its fall for a fourth straight week. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending January 17 was U$D 94.19, down U$D 0.15 from the previous week's U$D 94.34. (Latin American Herald Tribune, 01-18-2014; http://www.laht.com/article.asp?ArticleId=1497082&CategoryId=10717)

Petroleum Chamber awaiting PDVSA's schedule of payments to suppliers

Venezuela's private oil services sector hopes that 2014 expansion plans by state-run oil holding Petróleos de Venezuela (PDVSA) will energize operations. Top of their agenda is the financial situation of PDVSA's suppliers of goods and services. "We understand that PDVSA is determined to settle payments to providers. Priorities were set and that has been partially addressed. Obviously, though, all providers of goods and services await predictability, as there is a void as to when payments will be received," says Alfredo Hernández Raffalli, president of the Venezuelan Petroleum Chamber. (El Universal, 01-20-2014; http://www.eluniversal.com/economia/140120/petroleum-chamber-expects-pdvsa-to-schedule-payments)

Lower oil tax share in Venezuela's 2013 revenues

Venezuela's oil income tax revenue dropped through September 2013 as other income tax income rose by 7.3% in real terms due to lowered oil tax income tax, and 6.7% higher sales taxes, according to the yearly report by the UN Economic Committee for Latin America and the Caribbean (ECLAC). More in Spanish:  (El Universal, http://www.eluniversal.com/economia/140121/baja-en-aporte-de-islr-petrolero-redujo-la-recaudacion)

Commodities

Chemical industry owes suppliers U$D 500 million due to lack of FOREX

The key problem for Venezuela's chemical industry are past due debts with foreign suppliers since the middle of 2013, according to Juan Pablo Olalquiaga, president of the national Chemical and Petrochemical Industry Association, who says total debt is around U$D 500 million that are around 280 past due. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/industria-quimica-en-deuda-con-proveedores-por-fal.aspx#ixzz2r1xZLgX7)

Agriculture and Lands Ministry announced an aggressive plan to boost national production this year. Minister Yván Gil says some of the macro-economic measures to raise production include reviewing prices for both producers and consumers, access to loans at 13% preferential rates, and waiving income taxes. (Veneconomy, 01-17-2014; http://www.veneconomy.com/site/index.asp?ids=44&idt=37667&idc=3)

Venezuela out of… bread???

“We’re fresh out of that, sir/ma’am” is the current stereotype reply consumers get at least two in three attempts to get goods and products at grocery stores, supermarkets and/or hardware stores nationwide. Bakeries are running out of bread as a sensation of helplessness and disappointment due to a high uncertainty is getting unbearable every time, because bread is a symbolic icon of food. (Latin American Herald Tribune, 01-20-2014; http://www.laht.com/article.asp?ArticleId=1503239&CategoryId=10717)

International Trade

Venezuela moves toward the Cuban foreign trade system

The key attribute of Cuba's economy is total international trade centralization by the military who control 70% of trade through corporations that operate as small autonomous fiefdoms within a rigid state bureaucracy.
By setting up the National Foreign Trade Corporation (VENECOM), Venezuelan government can now import and supply goods and inputs needed by public and private companies for production, without private sector participation - much as takes place in Cuba. (El Universal, 01-20-2014; http://www.eluniversal.com/economia/140120/venezuela-embraces-the-cuban-state-trade-model)

ALBA and PETROCARIBE imperiled by Venezuela's economic crisis

The Bolivarian Alliance (ALBA) and PETROCARIBE have been the spearhead for Venezuela's foreign policy. Yet analysts believe that ALBA and PETROCARIBE's future is uncertain given the current economic crisis of Venezuela. Although President Nicolás Maduro says Venezuela will keep up sale of crude oil under the established preferential conditions, the reality is that the current situation of the country is likely to change this. (El Universal, 01-20-2014; http://www.eluniversal.com/economia/140120/alba-in-jeopardy-due-to-venezuelas-economic-crisis)

Logistics & Transport

Government to pay 50% of Air Italy debt with jet fuel

Pedro González Díaz, president of Venezuela's Civil Aviation Institute (INAC), and Air Italy representatives have agreed on new terms to settle the FOREX Board (CADIVI) debt to international airlines. The parties agreed on a 50% payment in jet fuel. Another 25% will be paid with bonds and the remaining 25% with US dollars in cash. (El Universal, 01-20-2014; http://www.eluniversal.com/economia/140120/venezuelan-govt-to-pay-50-of-debt-to-air-italy-with-jet-fuel)

Politics

Government takes aim at TV soap operas

President Nicolas Maduro will urge representatives of Venezuela's television stations on Monday to change what he calls a culture of violence glamorized by the media. Voters routinely cite violent crime as their top concern. In the latest case to put pressure on the government, gunmen shot dead a former Miss Venezuela and her ex-husband in front of their young daughter. Maduro, has now accused TV stations - especially popular soap operas, or "telenovelas" - of glamorizing guns, drugs and gangsters. "We are going to build a culture of peace," he said last week, summoning representatives of local terrestrial and cable channels to the Miraflores presidential palace on Monday. (Reuters, 01-20-2014; http://www.reuters.com/article/2014/01/20/us-venezuela-media-idUSBREA0J13C20140120)

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.

May 25th, 2012

Economics & Finance

Consumption soars 5.7% and US dollar shortage intensifies

After a huge dose of public spending, including wage hikes and increased subsidies, the Government has once again elevated private consumption, which has soared to 5.7% in the first quarter 2012. The problem is that higher demand forces authorities to increase and speed up the authorizations of US dollars within an economy that is highly dependent on imported products and finished goods. In order to meet demand, imports have climbed 48.5%. (El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/consumption-soars-57-and-shortage-of-us-dollars-intensifies)

GDP numbers point to deteriorated manufacturing sector

Figures for the first quarter of 2012 released by the Central Bank (BCV) confirm that the manufacturing sector is "quite deteriorated," according to Carlos Larrazábal, head of the National Industry Federation (CONINDUSTRIA). He said statistics for over 300 industries are very discouraging as they show growth of only 0.7% during the first quarter this year, as opposed a reported overall growth by 5.6% year to date. Food and agribusiness dropped by 6.9% and has been falling for four consecutive quarters. Overall Central Bank information shows that agriculture, industry, mining and oil have dropped 10 percentage points within national GDP in the 1998-2011 periods, during the Chavez Administration. They steadily fell from 42.4% to 32.1% over all these years, with the exception of 2003. (El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/gdp-numbers-point-to-deteriorated-manufacturing-sector; and more in Spanish: El Nacional; http://www.el-nacional.com/; Tal Cual; http://www.talcualdigital.com/index.html; El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/afirman-que-para-recuperar-la-industria-debe-cesar-el-cerco)

Private construction has dropped 10.6% over nine consecutive quarters, said Venezuelan Construction Chamber chief Gilbert Dao. The Central Bank (BCV) itself admits the few supplies obtained are being absorbed by official housing programs. (Veneconomy, 05-21-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30589&idc=3)

Private sector holds over U$D 143 billion abroad, despite exchange controls

Central Bank figures on balance of payments reveal that between the first quarter 2003 and the first quarter this year private sector deposits abroad have grown 248% from U$D 41.268 billion to U$D 143.638 billion, despite exchange controls. One of the means used to send capital abroad is the instrument devised by the Government itself to obtain financing and reduce liquidity domestically: these are the dollar denominated bonds issued by PDVSA and the Finance Ministry, which companies and individuals purchase and sell abroad in order to obtain hard currency. More in Spanish: (El Universal, 05-25-2012; http://www.eluniversal.com/economia/120525/sector-privado-tiene-depositos-por-143-millardos-en-el-exterior)

Draft antitrust bill sets more ways to expropriate

The National Assembly is speeding up an Antitrust Law which aims to establish that goods used to produce essential products could be declared of public utility, and it provides for additional mechanisms for expropriation. (El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/venezuelan-antitrust-bill-establishes-more-ways-to-expropriate)

Reserves lower due to drop in gold prices

As gold prices continue to drop so do reserves held by Venezuela's Central Bank, which holds 11,76 million troy ounces as 73% of its international reserves. More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/oro-cae-por-debajo-de-la-ultima-valoracion-hecha-a-las-reservas)

Commodities

PDVSA loses U$D 21 billion in  China financing schemes

The recent amendment to the financing agreement between China and Venezuela, approved Tuesday by the National Assembly, calls for PDVSA to increase crude oil shipments to China to 530,000 BPD (barrels per day) at discounted prices - which means the national oil company will receive U$D 21 billion less per year for exports. Venezuela has two agreements with China, both paid for in oil. One is the "Great Volume Fund", a U$D 20 billion loan by China, of which 10 billion yuan are exclusively earmarked for imports from China. This credit is repaid by exporting 300,000 BPD. The new amendment raised the figure to 530,000 BPD. More in Spanish: (El Nacional, 05-25-2012; http://www.el-nacional.com/)

Crude oil prices under U$D 90 for the first time in six months due to an increase in US reserves to their highest level since 1990, due mainly to fears on Greece's possible exit from the euro and the situation with Iran. More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/precio-del-crudo-cae-por-debajo-de-90-por-primera-vez-en-6-meses)

PDVSA royalty contribution down 76% in January, according to the Central Bank monthly report. Analysts claim that one of the elements that bears upon this calculation is the oil barrel reference price used in royalty transfers. More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/76-bajo-el-aporte-de-pdvsa-por-regalias-en-enero)

International Trade

Loopholes detected  in Venezuela-Colombia trade agreement

Asdrubal Oliveros, of the ECOANALITICA research firm says the recent trade agreement by Venezuela and Colombia is "significant progress" in bilateral relations, but, that it continues to have "loopholes" in matters concerning transportation, investment protection and dispute resolution that were previously covered by the Andean Community. More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/estiman-que-hay-lagunas-en-el-acuerdo-comercial-con-colombia)

585 trade operations have been made using the Sucre (Single System of Regional Compensation, in Spanish) for U$D 208 million in the first four months of this year, according to Central Bank (BCV) first Vice President and chief of the Sucre Regional Monetary Council Eudomar Tovar today. (Veneconomy, 05-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30604&idc=2)

Logistics & Transport

Port system "collapsing" due to massive imports

Carlos Larrazábal, head of the National Industry Federation, says the situation at Venezuelan ports has become "extremely serious" since the Government took over control and launched a large scale import policy. "The problem is due to the larger volume of imports. We imported U$D 13 billion during the first quarter and are headed toward U$D 50 billion in imports, an unheard of figure for an economy this size". State agencies such as CASA and PDVAL use Puerto Cabello - the nation's main port - for permanent storage. Refrigerated containers bringing in food from South American nations have been stored at Cartagena (Colombia), Colón (Panamá) and Kingston (Jamaica). More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/empresarios-reportan-colapso-en-los-puertos-nacionales; El Nacional; http://www.el-nacional.com/)

Serious delays reported at Puerto Cabello

31 vessels were reported in the Puerto Cabello harbor this Monday, bearing bulk, containers and assorted cargo. 23 ships remained in the bay, waiting to dock, according to sources close to the Puerto Cabello Port Authority. The situation is critical as Puerto Cabello is not equipped to manage the overload and Carabobo State Legislator Neidy Rosal says it takes up to two weeks to offload cargo that should normally be processed in 24 to 72 hours, mainly due to electricity outages which encumber all procedures. More in Spanish: (El Carabobeño, 05-22-2012; http://www.el-carabobeno.com/litoral/articulo/34647/comunidad-martima-reporta-31-buques-en-la-baha-portea; http://www.el-carabobeno.com/impreso/articulo/18163/-baha-portea-alberga-25-buques--fondeados-con-varias-cargas; Notitarde; http://www.notitarde.com/notitarde/plantillas/notitarde/inota.aspx?idart=1647229&idcat=9849&tipo=2;)

Freightage to Venezuela 60% more expensive

Antonio Landaeta, President of FEDECAMARAS in Carabobo State says that due to the saturation at Puerto Cabello freightage to Venezuela costs 60% more than shipping to countries like Colombia or Chile. He says higher costs are due to delays in offloading cargo. 22 of the ships awaiting to discharge cargo at Puerto Cabello are grain carriers and their offloading is slow since there are only three or four docks equipped to service grain shipments that take longer to offload than containers. More in Spanish: (Tal Cual, 05-24-2012; http://www.talcualdigital.com/index.html and El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/denuncian-retrasos-en-el-puerto-de-puerto-cabello)

Multinational companies holding Venezuela inventories in Panama

According to Panamanian business sources, warehouses in the Colón Free Zone in Panama are increasingly storing more merchandise destined to Venezuela due to decisions by multinational companies to lower inventories held locally here due to the risk of expropriation. This seems to be particularly the case with pharmaceutical and personal care products. More in Spanish: (El Nacional, 05-24-2012; http://www.el-nacional.com/)

Politics

Chavez reappears, leads cabinet meeting

President Hugo Chavez reappeared on Tuesday in a live television broadcast, the first time he has been seen in public view since returning from cancer treatment in Cuba almost two weeks ago. Chavez spoke in a strong voice and did not appear tired during the broadcast, which lasted more than two hours. He made no reference to his health, of which few details are known. (Reuters, 05-22-2012; http://www.reuters.com/article/2012/05/23/venezuela-chavez-idUSL1E8GN0BO20120523; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-reappears-on-television-leading-cabinet-meeting-following-cancer-treatment/2012/05/22/gIQAdt28iU_story.html)

Colombian and Venezuelan armies militarize the border

Colombia and Venezuela have militarized both sides of the border in order to persecute members of the Colombian Revolutionary Armed Forces (FARC) who last Monday killed 12 Colombian troops. The Colombia-Venezuela Northwest border was taken over by security forces from both countries in an attempt to lay siege to the members of the FARC Front 59 that is based in Venezuela, according to Colombian authorities. (El Universal, 05-23-2012; http://www.eluniversal.com/nacional-y-politica/120523/colombian-and-venezuelan-armies-militarize-the-border)

Venezuela sent Syria 35,000 tons of diesel oil

A Venezuelan ship loaded with 35,000 tons of diesel oil has arrived to port in Syria, according to that nation's Oil Minister Sufian Alao. Syrians have been facing fuel scarcities for months due to international sanctions that have led Western oil companies to interrupt supplies to this country. More in Spanish: (El Mundo, 05-24-2012, http://www.elmundo.com.ve/noticias/economia/energia/barco-venezolano-con-35-000-toneladas-de-diesel-ll.aspx)

....and rejects US State Department human rights report

A Department of State reports points out Cuba and Venezuela as countries where respect for human rights concerns the United States. The "Human Rights Practices 2011" report says the Chavez regime has continued using the judiciary to "intimidate and persecute political, union and business leaders, and civil society". The Chavez government called the report an "unacceptable interference into internal affairs".  More in Spanish: (AVN, 05-25-2012; http://www.avn.info.ve/contenido/venezuela-rechaza-informe-ddhh-presentando-departamento-estado-estados-unidos  and El Universal; http://www.eluniversal.com/internacional/120525/critican-situacion-de-derechos-humanos-en-cuba-y-venezuela)

Romney calls Chavez, Castro a "great danger"

Republican candidate Mitt Romney terms the Castro regime in Cuba and Venezuelan President Hugo Chavez a "great danger" to the United States and the world and says the United States should pay more attention to Latin America. According to the GOP presidential candidate Chavez and Castro "are a great danger to the United States and to people around the world... we must promote our values, free enterprise, democracy". More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/internacional/120524/romney-tilda-a-chavez-y-a-castro-de-peligrosos-para-estados-unidos)

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.