August 06, 2013

Economics & Finance

PDVSA has injected U$D 189.25 billion into government "missions" since 2001, says company president Rafael Ramírez, who is also Minister for Energy and Mining. "We, the employees of the new Pdvsa, are truly proud to contribute this way to the nation's development," he said, adding that the so-called people's oil policies implemented have given rise to social-development allocations amounting to U$D 189.25 billion since 2001. Ramírez explained that U$D 64.97 billion has been allocated to the National Development Fund (FONDEN) since its creation in 2005. (El Universal, 08-03-2013; http://www.eluniversal.com/economia/130803/pdvsa-has-injected-usd-18925-billion-into-govt-missions-since-2001)

Inflation this year is expected to close at 46-48%, one of the highest rates globally, says economist Jesús Cacique. He adds that this rate is three times what the government estimated for the year and said gross domestic product (GDP) will result in 1% growth, well below the 6% government goal. (Veneconomy, 08-05-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=35737&idc=2)

Venezuela's economic model boils down to dependence on imports

It is the same old story for Venezuelans, told by one government after another: a promise that the country will reduce imports and boost domestic production. Yet none has managed to stay true to its word. During Hugo Chavez's government, all ministers and vice ministers in the area of Industry, from Luisa Romero to Ramón Rosales, Víctor Álvarez, María Cristina Iglesias, Jesse Chacón, Edmeé Betancourt and Ricardo Menéndez, have made this promise.

In the first years, a plan was designed to lower accounts with foreign suppliers by U$D 3 billion. Efforts included developing industrial parks, granting loans at preferential rates and implementing tax incentives for domestic production. Those moves were aimed at controlling foreign purchase of agricultural products, footwear, textiles and vehicle-assembly materials. (El Universal, 08-03-2013; http://www.eluniversal.com/economia/130803/venezuelas-economic-model-boils-down-to-dependence-on-imports)

Economy between a rock and a hard place

The Venezuelan economy faces two serious conditions at the same time. As inflation grows and undermines purchasing power, economic growth dwindles, thus threatening to knock down both production and employment. According to analysts, this is a complicated pathology because the treatment for one of the conditions aggravates the other. In the first six months this year, inflation skyrocketed by 25%. This should lead authorities to cut public spending in order to curb both demand and prices. At the same time, however, this could hit consumption and public investment –the two major engines in a weakening economy that grew only 0.7% in the first quarter as the private sector continues to fade away. (El Universal, 08-05-2013; http://www.eluniversal.com/economia/130805/venezuelan-economy-between-a-rock-and-a-hard-place)

BBC reports on Venezuelan way of life under high inflation 

"Only Syria's 36.4% and Iran's 40.8% were above Venezuela's projected yearly inflation this March, according to the latest data from the International Monetary Fund." The report says Venezuela is the only nation within this group that is not in the midst of civil war or subject to international sanctions by the UN or the European Union. On the contrary, Venezuela has the world’s largest proven oil reserves and the country received some U$D 85 billion annually from crude oil sales. Despite this, Venezuelans must face scarcities in basic items, and must maneuver constantly in order to face ever lowering purchasing power." More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/bbc--como-se-vive-en-venezuela-con-la-inflacion-po.aspx#ixzz2bBVfvFpw)

Tax revenue VEB 142.9 billion in seven months, growing the SENIAT (Tax Administration Service) contribution by 38% over the same period in 2012. The amount is 69.5% of the 2013 yearly goal of VEB 205.4 billion, according to the National Budget. More in Spanish: (El Universal; http://www.eluniversal.com/economia/130806/ingresos-tributarios-suman-bs-1429-millardos-en-siete-meses)

Commodities

Venezuela oil drops to U$D 104.90

Venezuela's weekly oil basket fell U$D 1.10 to U$D 104.90 as oil prices softened in international markets.
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 August 2 fell to U$D 104.90 from the previous week's U$D 106.00. (Latin American Herald Tribune, 08-04-13; http://www.laht.com/article.asp?ArticleId=917565&CategoryId=10717)

More expropriations: Government takes over silica plants, Great Wall vehicle assembly plant

The government has decreed the mandatory acquisition of SILICES DE VENEZUELA and CALCIOR (Calcinados de Oriente) and all their affiliated companies, as they are key to increasing glass production capacity in Monagas state. At has also decreed the expropriation of all assets in the GREAT WALL vehicle assembly operation, among them an assembly plant located in Guacara, Carabobo State. More in Spanish: (El Universal, http://www.eluniversal.com/economia/130806/gobierno-expropio-silices-de-venezuela-y-calcior; and El Universal, http://www.eluniversal.com/economia/130806/ejecutivo-expropio-a-la-ensambladora-de-vehiculos-great-wall)

International Trade

Basic industries are now using a unified trading system

According to Industries Minister Ricardo Menéndez, the newly launched trading system established this week for the basic industries operating in the Guayana regional will seek to improve transparency in trading and eliminate ghost trade operators. "Income will be received in its entirety by the Central Bank", said Menendez, pointing out that this is part of the war on corruption and of the effort to guarantee adequate operations at CVG (Guayana Corporation) industries. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/crean-sistema-soberano-comercializaci%C3%B3n-empresas-b%C3%A1sicas; El Universal, http://www.eluniversal.com/economia/130806/empresas-basicas-venderan-productos-sin-descuentos)

Fuel will be sold again over the Colombian border, but at new prices

After almost two and a half months since gasoline and diesel sales to Colombia were suspended, both governments agreed to reopen fuel trade, although there will be an as yet not revealed price. Oil and Mining Minister Rafael Ramírez said sales would start again on August 15th to Colombia's three border states, for a total volume of around 5,660 barrels per day. More in Spanish: (El Universal; http://www.eluniversal.com/economia/130806/reactivaran-envio-de-gasolina-a-colombia-con-nuevo-precio)

Peru-Venezuela textile & clothing trade set to soar 
Textile and clothing trade between Peru and Venezuela is set to get a boost as a partial scope trade agreement, has entered into force from August 1, 2013. The agreement grants tariff preferences for imports of products originating in Peru and Venezuela, which makes it significant, especially for Peruvian small and medium enterprises (SMEs) engaged in textile and apparel manufacturing and export. In 2012, 58% of all Peruvian exports to Venezuela were textiles and clothing items, website Fibre2fashion reported. (ANDINA: http://www.andina.com.pe/Ingles/noticia-peruvenezuela-textile-clothing-trade-set-to-soar-468943.aspx)

Logistics & Transport

CADIVI met with airline representatives to review the status of FOREX allocation requests made by the various domestic and international airlines. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Politics

Maduro attacks opponents for proposing a Constitutional reform

President Nicolás Maduro attacked opposition members, who are proposing Constitutional reform, saying:"Once again, they want to eliminate the Constitution...they are proposing a helter-skelter Constituent Assembly...They do believe this is a game." He added: "If any sector ever uses the democratic mechanisms created by (late President Hugo) Chávez to convene a Constituent Assembly, then it would have to face the people defending the Constitution". (El Universal, 08-05-2013; http://www.eluniversal.com/nacional-y-politica/130805/maduro-dissenters-want-to-eliminate-the-constitution)

Nominations for regional elections begin Monday

On Monday, August 5th, the National Electoral Council will begin the process of registering register candidates for the election of city councilors and mayors next December 8th. The process will last five days, until August 9th. A total 2,792 posts are to be voted on December 8th: 335 mayors, 2455 aldermen; the Metropolitan Mayor of Caracas, and the District Mayor for Alto Apure. (AVN, 08-05-2013; http://www.avn.info.ve/contenido/nomination-regional-elections-starts-monday)

LATIN BUSINESS CHRONICLE: Assessing Maduro’s first 100 days 

Nicolás Maduro completed 100 days in office this week. After eking out a narrow and still contested victory in April’s elections, the new president has faced an emboldened opposition and challenges from within his own party in a very different environment from that under Chávez. Nevertheless, the new president has managed to consolidate his hold on power, says Diego Moya Ocampos of IHS Global Insights. However, given Venezuela’s grave economic situation, that hold is tenuous, and has forced Maduro to be more collaborative and pragmatic than his predecessor to hold his position. While the earliest days of his mandate were characterized by protests and “cacerolazos,” the anger on the street has abated, and now awaits a decision by the country’s Supreme Court that many investors and the political class believe will be in Maduro’s favor. Still, “it’s definitely a weak government,” says Moya, “and the weaker the government, the more the power of the armed forces.” “While Chávez’s word was final, Maduro needs to consult the Chavistas about everything and make sure everyone is satisfied with his decisions,” says Moya, who adds: “On the question of the economy, Maduro has been much more pragmatic and less ideological than Chávez”. The analyst attributes this partly to Maduro’s weaker government, but also to “paying the bill for the excesses of Chávez.” All this points to signs that Maduro is consolidating his hold on power, but that hold is tenuous, says Moya. In the shorter term, Moya says all parties concerned should be keeping a close eye on the December municipal elections as a referendum on Maduro’s performance so far. (Latin Business Chronicle; http://latinbusinesschronicle.com/app/article.aspx?id=6236)

Media group shuts down after owner’s arrest

The Venezuelan media group 6to Poder has announced that it was suspending its activities due to financial problems caused by the freezing of its bank accounts after the arrest several days ago of owner and publisher Leocenis Garcia. “Today, a dark chapter in the history of freedom of the press and of information is being written in Venezuela. With much regret, I have to report ... the cessation of all operations of the 6to Poder group,” director Alberto Rodriguez told a press conference. Rodriguez accused the Venezuelan government of bankrupting the group “in a formal way” by freezing its bank accounts and that of Garcia, after he was arrested on July 30 and accused of money laundering a few days later. The group consists of the weekly 6to Poder, business daily El Comercio, the 6to Poder Web page, the magazine Usex, the survey firm 6to Poder Datos and 6to Poder radio. (LATIN AMERICA HERALD TRIBUNE: http://laht.com/article.asp?ArticleId=920202&CategoryId=10717=)

Venezuela not invited to Paraguay's Presidential inauguration

Venezuela is the only country that has not been sent an invitation to the inauguration ceremony of Paraguayan president-elect Horacio Cartes on Aug 15 because it no longer has a diplomatic representation in Asuncion, and in reciprocity Paraguay closed its offices in Caracas, says Paraguay's Ambassador Federico Gonzalez, head of the Presidential transition committee. Nicolas Maduro was Hugo Chavez foreign minister in June 2012 and was declared ‘persona non grata’ following video showing him instigating the Paraguayan armed forces to take to the streets in support of the removed Fernando Lugo. "If Maduro was to come it would present a very serious security problem, a real challenge because there are many local groups that are still furious with him and would openly, aggressively repudiate his presence," said Paraguayan security forces sources. (BERNAMA: http://www.bernama.com.my/bernama/v7/wn/newsworld.php?id=968372)

Santos denies having any documents related to Maduro's birth

Colombian President Juan Manuel Santo has rejected accusations that he is hampering an investigation into the true nationality of President Nicolás Maduro, who is said to have been born in Colombia.
Santos told Spanish newspaper ABC, "it is absolutely not true that I have those documents (Maduro's birth records)." Under such circumstances, Santos explained, "I could not have obstructed anything." (El Universal, 08-05-2013; http://www.eluniversal.com/nacional-y-politica/130805/santos-denies-having-any-documents-related-to-maduros-birth)

Cabello met with Iran's President

Iran's new President Hassan Rohani, has met with Diosdado Cabello, President of Venezuela's National Assembly, who travelled to Teheran to represent Venezuela at Rohani's inauguration. Cabello said he "conveyed to President Rohani out government's intention to deepen and consolidate political, trade and cultural relations." More in Spanish: (El Nacional; http://www.el-nacional.com/)


The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group. 

June 19th, 2012

Economics & Finance

Market value will not be considered in expropriations, according to the new law on just valuation in cases of expropriation just enacted by President Chavez under the Enabling Law. Article 2 in the law reads "just valuation will be set by using the latest purchase value of the property as the basis for calculation, as indicated by the officially registered deed". More in Spanish: (El Universal, 06-19-2012; http://www.eluniversal.com/economia/120619/valor-de-mercado-no-se-contempla-en-caso-de-expropiaciones)

New arbitration suit against Venezuela

The International Center for Investment Disputes has taken up a new lawsuit against Venezuela brought by Saint-Gobain Performance Plastics Europe, after local assets were expropriated by the government in 2010 when President Chavez ordered the takeover of a bauxite producing subsidiary of NORPRO held in association with France´s Saint Gobain. More in Spanish: (El Universal, 06-19-2012; http://www.eluniversal.com/economia/120619/interponen-demanda-de-arbitraje-en-el-ciadi-contra-venezuela)

Funds approved for SIDETUR nationalization

President Chavez has approved two special credits to close nationalization of Siderúrgica del Turbio (SIDETUR), a manufacturer and distributor of steel products. The company was taken over in November 2010 after Chavez argued that it was strategic because the company accounted for 40% of domestically produced structural steel. One of the credits is for U$D 21 million from the National Development Fund (FONDEN) and another VEB 298 million will be provided by government owned banks. More in Spanish: (AVN, 06-19-2012; http://www.avn.info.ve/contenido/chávez-aprobó-recursos-para-concluir-nacionalización-sidetur)

Joint ventures to be considered public sector companies

Although the government insists it promotes new joint venture forms the new law on public assets just signed by President Chavez states in article 4 that "companies in which the Republic or other entities referred to herein hold 50% or more" will be considered public sector entities. As a consequence, joint ventures undertaken with the national government, states, municipalities and public entities are now part of the public sector. More in Spanish: (El Universal, 06-19-2012; http://www.eluniversal.com/economia/120619/empresas-mixtas-son-calificadas-como-entes-del-sector-publico)

Incentives for "socialist enterprises"

Under a new law just enacted by President Chavez to "promote and regulate new forms of joint association by the State and community and private initiative, the government will take part in many companies that will have special incentives and must help change "the metabolism of capital" to get away from "market logic" in order to substitute imports and promote non traditional exports. The government will hold at least 40% stock in these "new forms of association". More in Spanish: (El Universal, 06-19-2012; http://www.eluniversal.com/economia/120619/ofrecen-incentivos-para-crear-empresas-socialistas)

Giordani admits lower oil prices can hamper growth

In an interview on state television, Planning and Finance Minister Jorge Giordani admitted lower oil prices can hamper growth: "Of course it matters, because this is an economy that is very dependent on that natural resource". He also guaranteed that falling prices would not lower investment in the social area. More in Spanish: (El Mundo, 06-19-2012, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-admite-que-caida-de-precios-del-crudo-pu.aspx#)

Five main obstacles to the private sector

According to FEDECAMARAS President Jorge Botti, the five main problems now facing local business are:

1.- Allocation of foreign exchange. 2.- Acquisition of inputs and raw materials. 3.- Port bureaucracy. 4.- Excess controls. 5.- Expropriations and nationalizations. More in Spanish: (El Mundo, 06-18-2012; http://www.elmundo.com.ve/noticias/economia/empresas/los-cinco-principales-obstaculos-del-sector-privad.aspx#)

Commodities

Why Venezuela won’t pass Saudi Arabia as the world’s biggest oil power anytime soon

Venezuela has 18% of the world’s proven oil reserves, according to BP’s 2012 Statistical Review of World Energy, out this week. That’s more than Saudi Arabia (16%) and Canada (11%). So does this mean Venezuela is now the world’s biggest oil power?  No — far from it. As Steve LeVine points out in Foreign Policy, there’s a huge difference between having gargantuan oil reserves underground and actually pumping out that oil. Saudi Arabia still exports more oil to the rest of the world than anyone else, sending out 10.1 million barrels per day in April. Venezuela pumped out only 2.1 million barrels of oil per day. Even if the country doubles production in the next decade, as President Hugo Chavez has planned, Venezuela will still lag well behind the Saudis. (The Washington Post; 06-15-2012; http://www.washingtonpost.com/blogs/ezra-klein/post/why-venezuela-wont-pass-saudi-arabia-as-the-worlds-biggest-oil-power-anytime-soon/2012/06/15/gJQAxJ2EfV_blog.html)

Venezuela’s export barrel continued its downward trend for the sixth consecutive week when it averaged U$D 92.06/bbl. last week, down U$D 1.99/bbl., in a market concerned over the global economic outlook, as confirmed by the government last Friday. In the last six weeks, the Venezuelan export barrel has lost U$D 21.97/bbl. The average in June is U$D 93.39/bbl. and the average-to-year is U$D 109.51/bbl. after it posted an average U$D 101.06/bbl. in 2011. (Veneconomy, 06-17-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30929&idc=4)

REUTERS analysts say nationalized oil can deliver output growth in an essay on operations in Saudi Arabia, Russia, Argentina and Venezuela. The essay points out that although Venezuela boasts the biggest oil reserves in the world, after 13 years of Chavez in power and the nationalization of almost all the nation's oil assets, critics say PDVSA is languishing under tight control by officials, with production slowly declining. International energy organizations including OPEC routinely give lower estimates for Venezuela's crude production, and the jury is out on a PDVSA output success story. (Reuters, 06-15-2012; http://www.reuters.com/article/2012/06/15/oil-nationalisations-idUSL5E8HF6MI20120615)

Northeast Pipeline predicted to transport the first 300 million cubic feet at year end, according to President Chavez during a satellite contact to inspect progress in construction of Northeast Pipeline G / J Jose Francisco Bermudez, Sucre state, which is the longest in South America, because it has an area of 740 miles over water and land. More in Spanish: (PDVSA, 06-15-2012; http://www.pdvsa.com/)

International Trade

Nicaragua gets 89% of its oil from Venezuela, for a total U$D 383 million per year, according to the Nicaraguan Central Bank. More in Spanish: (El Universal, 06, 18-2012; http://www.eluniversal.com/economia/120618/383-millones-suman-compras-de-crudo-de-nicaragua-a-venezuela)

Politics

Chavez's government plan to be central point of his election campaign

The government plan presented by president Hugo Chavez during his nomination to run for reelection is to become the central point of his campaign, according to Foreign Minister Nicolás Maduro, who is also a member of the national directorate of the United Socialist Party of Venezuela (PSUV)" (AVN; 06-18-2012; http://www.avn.info.ve/node/117936)

January 31th, 2012

Economics & Finance

Chavez again threatens to nationalize banks over agriculture loans to farmers

President Hugo Chavez threatened to take over the country’s banks if they don’t hand over 40 billion bolivars (U$D 9.31 billion) for agriculture loans this year. Chavez, speaking on state television yesterday, cited Banesco Banco Universal, BBVA Banco Provincial and Mercantil Banco Universal for giving loans to industrial producers and not to small farmers. The government plans to create a fund called Ezequiel Zamora to assign the loans directly, while borrowers pay the banks, Chavez said. The president will use special legislative powers granted to him by the congress to create the fund, he said. (Bloomberg, 01-30-2012; http://www.bloomberg.com/news/2012-01-30/chavez-threatens-to-seize-banks-to-guarantee-agricultural-loans.html)

Chavez: Venezuela won’t accept rulings by World Bank’s international arbitration body

Venezuela’s government will ignore future decisions by a World Bank-affiliated arbitration body involving any business disputes in the South American country, President Hugo Chavez said Friday. Venezuela formally began its withdrawal from the Washington-based International Center for Settlement of Investment Disputes this week. (The Washington Post, 01-28-2012; http://www.washingtonpost.com/business/industries/chavez-venezuela-wont-accept-rulings-by-world-banks-international-arbitration-body/2012/01/27/gIQAp9LSWQ_story.html)

Venezuela receives shipment of gold, says it has withdrawn U$D 9 billion from foreign banks

Venezuela repatriated a final shipment of gold from foreign banks Monday, saying the country has withdrawn a total of U$D 9 billion in its gold reserves and moved it to the country’s Central Bank. The shipment of 14 metric tons (15 tons) brought the total amount of gold shipped to Venezuela since November to 160 metric tons (176 tons), Central Bank President Nelson Merentes said. Merentes did not say from where the shipment had arrived, nor in which foreign banks Venezuela still has gold. While some economists have questioned the move, Chavez has said having the gold in Venezuela will help protect the oil-exporting country from economic troubles in the U.S. and Europe. (Washington Post, 01-30-2012; http://www.washingtonpost.com/business/venezuela-receives-shipment-of-gold-says-it-has-withdrawn-9-billion-from-foreign-banks/2012/01/30/gIQAIRIWdQ_story.html)

Commodities

Over 550,000 agriculture units received financing in 2011 in Venezuela

A total of 554,293 agricultural units received State credits in 2011. That is an increase of 200% compared to 2010, highlighted this Sunday president Hugo Chavez, during his weekly TV and radio show "Alo, Presidente."

President Chavez recalled that governmental program Mission AgroVenezuela, launched on January 25 2011, was the first "grand mission" created to boost the socio-productive development of the country. Almost 700,000 agricultural production units registered, almost all of them have been inspected already.

In reference to financing, the head of State said that "of the whole units that have been included in the financing system, we have granted credits to 81%: 554,293." (AVN, 29-01-2012; http://www.avn.info.ve/contenido/over-550000-agriculture-units-received-financing-2011-venezuela)

PDVSA debt up 40%, even at higher oil prices

Venezuelan oil prices rose in 2011, but it did not translate into much higher oil revenues given the performance of oil exports. Balance of payments figures provided by the Central Bank of Venezuela (BCV) show that with oil prices at U$D 101.04, oil revenues amounted to U$D 89.9 billion, with export volume at 2.51 million barrels per day, according to state-run oil holding Petróleos de Venezuela (PDVSA) as of June 30, 2011. (El Universal, 01-28-2012; http://www.eluniversal.com/economia/120128/even-with-higher-oil-prices-pdvsas-debt-is-up-40)

Venezuela’s export barrel averaged U$D 107.58/bbl., this week, down from U$D 108.04/bbl. posted last week, according to the Ministry of Oil and Mining. The average for the year is U$D 108.23/bbl as compared to an average U$D 101.04/bbl. last year. (Veneconomy, 01-30-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29190&idc=4)

SIDOR says it will produce 3.7 tons of liquid steel during 2012. Carlos D’Oliveira, President of the state owned company made the announcement in a press release. More in Spanish: (Agencia Venezolana de Noticias, 01-31-2012; http://www.avn.info.ve/contenido/durante-2012-sidor-producirá-37-millones-toneladas-acero-líquido)

Gold production plummets at VENRUS and RUSORO

Both companies have survived due to sales to the Central Bank (BCV). VENRUS did not process a single gram of gold in January 2012, as the La Camorra gold processing plant has been paralyzed since November. If it sells an expected 250 ounces this week it will use up inventories. RUSORO produced 1000 ounces approximately in January 2012, but the reduction is dramatic considering it averaged 6,000 ounces per month production during 2011. More in Spanish: (El Universal, 01-31-2012; http://www.eluniversal.com/economia/120131/en-picada-produccion-aurifera-de-venrus-y-rusoro)

International Trade

Imports from Colombia said to double

Even as the governments of Venezuela and Colombia have not concluded negotiations on a partial trade agreement, ECOANALITIC is projecting imports from Colombia could double this year. A report by the firm says Colombia’s export volume to the local market should total U$D 4.5 billion in 2012, this would double imports in 2011, according to the Venezuela-Colombia Economic Integration Chamber. More in Spanish: (El Universal, 01-31-2012; http://www.eluniversal.com/economia/120131/estiman-que-se-duplicaran-compras-a-colombia)

Byelorussia admits irregularities in Venezuela

Caracas and Minsk traded over U$D 2 billion in 2011, but irregularities have been reports. Byelorussian President, Aleksandr Lukashenko, admitted that "complaints and law violations were brought to light in Venezuela". (El Universal, 01-28-2012; http://www.eluniversal.com/nacional-y-politica/120128/byelorussia-admits-irregularities-in-venezuela)

Politics

Elias Jaua appointed to Agriculture and Lands Ministry

President Hugo Chavez has appointed Vice President Elias Jaua to take command of the Agriculture and Lands Ministry. He said that outgoing minister, Juan Carlos Loyo, will leave his functions to follow a medical treatment.

Also, he said that strategies will be reinforced so as to give more strength to agricultural production. (AVN, 29-01-2012; http://www.avn.info.ve/contenido/elias-jaua-appointed-agriculture-and-lands-ministry)

Mexican Ambassador and wife kidnapped, held 4 hours, assailants not captured

Mexico’s  Ambassador to Venezuela, Carlos Pujalte, and his wife were kidnapped Sunday night and freed Monday morning after a large amount of dollars were paid to captors, according to unofficial sources. The Mexican Embassy reports both the Ambassador and his wife are in good health, has asked the Venezuelan Government for an extensive investigation, and has offered to assist local authorities. The criminals remain at large. More in Spanish: (Tal Cual, 01-31-2012; http://www.talcualdigital.com/index.html)

Venezuela’s new chance

In 13 years of ruling Venezuela, Hugo Chavez has often benefited from his opposition. His first election victory reflected disgust with a complacent and corrupt political order; in his early years, the remnants of that elite played into his hands by boycotting elections while trying to oust him through non-democratic means. In the last presidential election, in 2006, Mr. Chavez faced a respectable but uncharismatic opponent with a history in the old order. He won handily, then forced challenger Manuel Rosales into exile.

Six years later Mr. Chavez’s Venezuela is a wretched mess of inflation, food shortages, rampant drug trafficking and one of the world’s highest murder rates. Yet in the opposition, a promising new political generation has emerged whose leaders look a lot like their counterparts in Brazil, Chile or Mexico. They are populist but pragmatic; internationally schooled yet focused on the problems of the poor; and committed to peaceful change. With another presidential election less than nine months away, they are offering Venezuela a path toward rejoining the democratic world. (The Washington Post, 01-30-2012; http://www.washingtonpost.com/opinions/venezuelas-new-chance/2012/01/25/gIQA2kOxaQ_story.html)

Spanish Government told to stand up for expropriated nationals

Ana Oramas, a congresswoman in the Spanish Parliament has requested an appearance by that nation’s Foreign Ministry in order to provide information on “the lack of physical and legal guarantees suffered by Spanish citizens in Venezuela. The parliamentary delegation from the Canary Islands asked the Government to disclose what it is doing on behalf of Spanish citizens whose property has been expropriated in Venezuela. More in Spanish: (Tal Cual, 01-31-2012; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/economia/120131/solicitan-aclarar-expropiaciones-realizadas-a-los-espanoles;  El Nacional; http://www.el-nacional.com/)





The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

December 30th, 2011

Economics & Finance

BOFA-MERRILL LYNCH says Venezuela issues most debt in Latin America

The Chavez Administration has resorted to borrowing abroad to increase the government's cash flow to boost the economy. In its latest report on Venezuela, Bank of America Merrill Lynch states that this year the country issued US dollar denominated bonds for U$D 7.2 billion, which is 46% of all debt placed by the major economies of Latin America.  The financial institution forecasts that in 20012 Venezuela will continue to be Latin America’s largest issuer of foreign debt to cover its fiscal deficit, due to the policy of increased spending in the midst of an election year. (El Universal, 12-29-2011; http://www.eluniversal.com/economia/111229/venezuela-is-the-country-that-issues-most-debt-in-latin-america)

FITCH projects expanded credit and liquidity in the Venezuelan banking system

In a report analyzing tendencies within the Andean region’s banking system FITCH says Venezuela will continue increasing credit. “FITCH expects that the overall portfolio will continue to expand in real terms during 2012 as the expansive fiscal policy supports economic growth". More in Spanish: (El Universal; 12-29-2011; http://www.eluniversal.com/economia/111229/fitch-proyecta-expansion-del-credito-y-amplia-liquidez-en-la-banca)

Government held banks increase financing to Government up to 106%

The Finance Ministry is relying more on state controlled banks as a source for public spending. The Ministry sells bonds and Treasury bills on a weekly basis to these banks in order to increase cash availability. The Bank Superintendent reports that bond and bill portfolios increased by 106% from November 2010 to November 2011, from VB 24.388 billion to VB 50.255 billion. The main activity of government held banks is to purchase financial instruments from the Ministry. More in Spanish: (El Universal, 12-30-2011; http://www.eluniversal.com/economia/111230/banca-publica-eleva-106-financiamiento-al-gobierno)

Chavez creates Advisory Council on arbitration, expropriations

President Hugo Chavez created councils to advise the government on international arbitration cases and the expropriation of assets here. Chavez, who has seized assets from 1,045 companies since coming to power in 1999 according to Venezuelan manufacturing association CONINDUSTRIA, will receive a monthly report from the boards, according to two decrees published in the Official Gazette. (Bloomberg, 12-27-2911; http://www.bloomberg.com/news/2011-12-27/chavez-creates-advisory-councils-on-arbitration-expropriations.html)

Chavez claims 2011 GDP will be close to U$D 300 billion

According to President Chavez, 2011 GDP will be close to U$D 300 billion, up from less than U$D 100 billion a decade ago. He also claims per capita GDP is over U$D 10,000, up from U$D 4,000 during the same period. More in Spanish: (AVN, 12-29-2011; http://www.avn.info.ve/contenido/pib-cerrará-este-año-cerca-300-mil-millones and http://www.avn.info.ve/contenido/chávez-pib-cápita-supera-10000-dólares-al-cierre-2011)

Commodities

PDVSA's accounts receivable mount to U$D 10.7 billion

Energy agreements are hitting the finances of the Venezuelan oil industry. Financial statements from the state-run oil company Petróleos de Venezuela, S.A. (PDVSA) for the first half of 2011 show that the accounts receivable stood at U$D 10.7 billion. The report underlines that such accounts are related to PDVSA's oil supply agreements with other nations. But these obligations have soared up from U$D 7.4 billion at the end of the second half of 2010. (El Universal, 12-28-2011; http://www.eluniversal.com/economia/111228/pdvsas-accounts-receivable-amount-to-usd-107-billion)

Chavez: Venezuela will be world’s top oil exporter

Venezuela, which has the world’s largest certified reserves of petroleum, will become the top oil exporter within the next 10 years, says President Hugo Chavez. He has recently said: “We will reach (exports of) around 10 million barrels (per day) in the next decade”. The Andean nation was the globe’s No. 1 oil exporter from 1925 to “nearly 1970” and remains among the leaders, “but the Arabs – Saudi Arabia, Iraq, Iran (sic) – surpassed us,” Chavez said. (Latin American Herald Tribune, 12-28-2011; http://www.laht.com/article.asp?ArticleId=456802&CategoryId=10717)

Shortages of basic food items hits consumption in 2011

Poor food supply hit Venezuela throughout 2011. AS in previous years, Venezuelans had to spend more time and money to buy the basic basket of foodstuffs. Products with controlled prices were the most seriously affected. Essential food items such as powdered milk, edible oil and beef were hard to find during most of the year. Other items such as coffee, precooked corn flour and margarine were scarce during the second half of 2011. According to economic research firm DATANÁLISIS, the shortage index ended this year at 24.8%, according to their latest survey, compared to 8% in January this year. (El Universal, 12-28-2011; http://www.eluniversal.com/economia/111228/shortage-of-basic-food-items-hits-consumption-in-2011)

FAO reports food inflation lower in region, persists in Venezuela

According to the UN’s FAO general inflation remained stable in Latin America for the fourth consecutive month in November, as foodstuffs slowed slightly from the previous month. Annual foodstuff inflation in Latin America fell from 8.4% in October to 8.2% in November. The same reports says the annual food prices inflation increased by a percentage point in Chile, Panamá, Perú, Uruguay and Venezuela. More in Spanish: (El Universal, 12-30-2011; http://www.eluniversal.com/economia/111230/inflacion-en-alimentos-baja-en-la-region-pero-persiste-en-venezuela)

International Trade

Venezuela buying more weapons from Russia

Russia has approved credit worth U$D 4 billion to Venezuela to reinforce its military mainly in weapons. "Without the Russian readiness it would have been impossible for us to reach the training level and equipment we have now," says President Hugo Chavez, and adds that Venezuela will continue receiving air, land and sea defense equipment from Russia next year. According to Ígor Korotchenko, director of the Center that analyzes international weapons traffic, (TsAMTO), Venezuela took first place as a buyer of Russian army weaponry during 2011. Russian press agency RIA NOVOSTI reports that this year Venezuela boughtT-72B1 combat vehicles, BMP-3M infantry combat vehicles, BTR-80ª armored vehicles, artillery, missile launchers, anti-aircraft systems and other equipment. (Bernama, 12-29-2011; http://www.bernama.com/bernama/v5/newsworld.php?id=637108 and more in Spanish: El Universal, 12-30-2011; http://www.eluniversal.com/nacional-y-politica/111230/en-2011-venezuela-encabezo-compras-de-armas-rusas)

Chavez says Chinese banks to extend U$D 8 billion in financing

President Hugo Chavez said that Chinese banks will provide U$D 8 billion worth of loans next month for development projects, adding to the more than U$D 30 billion in financing since 2007 that is being repaid in oil. The Industrial & Commercial Bank of China will lend Venezuela U$D 4 billion, while the China Development Bank Corp. will loan another U$D 4 billion, renewing a bilateral investment fund, Chavez said today on state television. Bilateral trade between China and Venezuela will be about U$D 17 billion in 2011 and may reach U$D 20 billion next year, and Venezuela has increased its imports of household appliances from Qingdao Haier Co. and heavy machinery from XCMG Construction Machinery Co. using the credit line. (Business Week, 12-27-2011; http://www.businessweek.com/news/2011-12-27/chavez-says-chinese-banks-to-extend-8-billion-in-financing.html)

Politics

Chavez muses on US Latin America cancer plot, US calls comments “horrific”

President Hugo Chavez has questioned whether the US has developed a secret technology to give cancer to left-wing leaders in Latin America. Treated for cancer this year, Chavez spoke a day after news that Argentina's president had the disease. Fernando Lugo of Paraguay, Dilma Rousseff of Brazil and her predecessor Lula have also had cancer. Chavez said this was "very strange" but stressed that he was thinking aloud rather than making "rash accusations". "Would it be strange if they had developed the technology to induce cancer and nobody knew about it?, Chavez asked in a televised speech to soldiers at an army base. He said the Central Intelligence Agency was behind chemical experiments in Guatemala in the 1940s and that it’s possible that in year to come a plot will be uncovered that shows the U.S. spread cancer as a political weapon against its critics. State Department spokeswoman Victoria Nuland called the comments "horrific and reprehensible", and said they were not worthy of further response. (BBC News, http://www.bbc.co.uk/news/world-latin-america-16349845; http://www.bbc.co.uk/news/world-latin-america-1635906; Bloomberg, 12-28-2911; http://www.bloomberg.com/news/2011-12-28/chavez-u-s-may-be-behind-s-america-leaders-cancer.html; and Reuters, http://www.reuters.com/article/2011/12/29/us-venezuela-usa-cancer-idUSTRE7BR14I20111229)

Iranian president to visit Venezuela, Cuba

Iranian President Mahmoud Ahmadinejad is to visit Venezuela and Cuba as part of a four-nation Latin America tour in the second week of January 2012, an official said Wednesday. Ahmadinejad will also visit Nicaragua and Ecuador on the trip, his international affairs director, Mohammad Reza Forghani, told the official news agency IRNA. (AFP, 12-28-2011; http://news.yahoo.com/iranian-president-visit-venezuela-cuba-131516559.html)

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.