International Trade
Cargo arrived at Puerto Cabello:
- 1,799 tons of milk, margarine and concentrated
cream from Argentina to the Corporación de Abastecimientos y Servicios
Agrícolas (CASA) government agency
- Another 684 tons of margarine from Brazil, also
for CASA.
- Over 900 tons of medicines from DHL México to its
local affiliate, and Abbott Laboratories sent another 220 tons of
medicines to its own local affiliate.
- Over 200 tons of apples from Chile to empresa
Limitada Importación y Exportación, consigned by Venezuela's Industrial
Bank.
More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-mas-de-dos-mil-toneladas-de-alimentos-2226713/2014/09/01/350322)
Food imports rose by more than 76%
The National Statistics
Institute (INE) reports animal and vegetable
product imports were up to US$ 2.936 billion January to May this year, 76,7%
increase from US$ $1.661 billion during the same time frame last year -
despite a 20% drop in total imports during the same period. Food products
share in the total import mix also rose - by 120% - from 8.85% to 19.54% of all
imports. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ine-registra-que-importaciones-de-alimentos-subier.aspx#ixzz3C9fM7otd)
Prosecutor General reports 232 people arrested for outbound
smuggling
Prosecutor General Luisa Ortega Díaz reports 232
people have been arrested since August 12th for alleged smuggling of food, fuel
and strategic material. She also says 49 people are subject to cautionary
measures for smuggling-related offenses. In addition, 10 civilians and 15
officials of the Bolivarian National Army will be brought to court. (El
Universal, http://www.eluniversal.com/nacional-y-politica/140829/attorney-general-232-people-arrested-for-smuggling)
Logistics & Transport
Puerto Cabello ranked 22nd among Latin American ports
América Economía magazine has ranked the Puerto
Cabello maritime terminal 22nd among the top 100 Latin American ports. More in
Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Puerto-Cabello-entre-los-mejores-puertos-de-Latinoamerica-2225669/2014/08/30/349792; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/puerto-cabello-entre-los-100-mejores-puertos-de-la.aspx)
Oil &
Energy
Andres Oppenheimer: Venezuela: From oil power to oil
importer
President Nicolás Maduro’s government plans to start
importing crude oil for the first time in order to blend it with Venezuela’s
own crude and keep the country’s overall production from falling further. It
turns out that Venezuela’s own production of light crudes has plummeted since
the late President Hugo Chávez took office in 1999, and the country desperately
needs light crudes to blend with its Orinoco Basin extra heavy crude oils.
Without such a blend, the Orinoco Basin’s extra heavy crude is too dense to be
transported through pipelines to Venezuelan ports and exported abroad. In 1999,
when Chávez took office, PDVSA had 51,000 employees and produced 63 barrels of
crude a day per employee. Fifteen years later, PDVSA had 140,000 employees, and
produced 20 barrels of crude a day per employee. Venezuela’s net oil exports
have plummeted from 3.1 million barrels a day in 1997 to 1.7 million barrels a
day in 2013, according to U.S. Energy Information Administration estimates.
(The Miami Herald, http://www.miamiherald.com/2014/08/30/4319013/andres-oppenheimer-venezuela-from.html#story_link=email_msg#storylink=cpy)
Venezuela's PDVSA puts exports of diluted crude for
October on hold
Traders report Venezuela's state-run oil company PDVSA
has put on hold plans to export diluted crude oil (DCO) in October
while it reviews rising production costs as a result of imports of pricey
naphtha that it uses to mix with extra heavy crude. The move comes as the
company scrambles to cut costs to partially solve its cash flow problems. One
of several sources who were told of the halt by the company said it might also
try to raise DCO prices to better offset import costs. (Reuters,
http://www.reuters.com/article/2014/08/29/oil-venezuela-exports-idUSL1N0QZ2HR20140829; El
Universal, http://www.eluniversal.com/economia/140830/pdvsa-suspends-export-of-diluted-crude-oil-in-october)
PDVSA’s debt to the Central Bank (BCV) exceeds its
exports estimated to hit US$80 billion by
the end of this year. According to official figures published by the BCV, by
July 27, PDVSAs debt had increased 156% to US$ 82 billion, at the Bs.6.30:$
official rate. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40841&idc=4)
Gasoline smuggled to Colombia causes US$ 2.2 billion
yearly loss to Venezuela
Smuggling of over 45,000 barrels of gasoline to
Colombia causes the Venezuelan government to lose some US$ 2.2 billion per
year, according to Asdrubal Chávez, PDVSA's President for Refining and
Petrochemicals. He said the largest portion of illegal trade in gasoline takes
place in Apure, Táchira, Zulia and Amazonas states. More in Spanish: (AVN; http://www.avn.info.ve/contenido/contrabando-gasolina-colombia-genera-2200-millones-p%C3%A9rdidas-anuales-al-pa%C3%ADs)
Venezuela oil price bounces slightly off 3 year slump
Venezuela's weekly oil basket bounced off its lowest
level since 2011 as US oil markets went into their final weekend of the summer.
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 29 was US$ 91.77, up US$ 0.88 from the previous
week's US$ 90.89. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2350202&CategoryId=10717)
Commodities
Fitful supplies causes lines in Venezuelan food
retailers
The government has decided to implement
fingerprint-reading machines in order to reduce lines of clients at the doors
of stores to buy products of the basic food basket. The move intends to monitor
consumption levels, instead of tackling the real cause for long lines in
supermarkets - regulated prices which translate into product resale and
shortages.
Product shortages here are also caused by poor domestic production as a result of a limited supply of FOREX to import essential supplies and raw material to produce food, personal care and cleaning products.
Luis Rodríguez, President of the National Association of Supermarkets (ANSA), explains that product distribution has changed: food retailers now receive a different item every day and people need to buy groceries on a daily basis, "because flour is available one day, cooking oil is sold another day, then the soap, and so on. Therefore, lines are never-ending, because demand focuses on the products of the basic basket," he reports. (El Universal, http://www.eluniversal.com/economia/140901/fitful-supply-causes-lines-in-venezuelan-food-retailers)
Product shortages here are also caused by poor domestic production as a result of a limited supply of FOREX to import essential supplies and raw material to produce food, personal care and cleaning products.
Luis Rodríguez, President of the National Association of Supermarkets (ANSA), explains that product distribution has changed: food retailers now receive a different item every day and people need to buy groceries on a daily basis, "because flour is available one day, cooking oil is sold another day, then the soap, and so on. Therefore, lines are never-ending, because demand focuses on the products of the basic basket," he reports. (El Universal, http://www.eluniversal.com/economia/140901/fitful-supply-causes-lines-in-venezuelan-food-retailers)
Economy
& Finance
ECOANALÍTICA terms Venezuela's economic situation
"alarming"
The most recent report by the ECOANALÍTICA think tank
terms Venezuela's economic situation "alarming",
and "more serious than a traditional
recession". It points out that the nation faces an aggressive cutback
in FOREX allocations and an environment that is "hostile to the private sector". More in Spanish: (El Nacional;
http://www.el-nacional.com/)
Suits against Venezuela currently underway at ICSID could
bring on US$ 24 billion indemnity payments
The World Bank's International Center for Settlement
of Investment Disputes (ICSID) is currently processing 28 cases against
Venezuela, and total decisions involved could strongly impact national
finances. A study by Scotia Bank indicates that cases against Venezuela brought
by EXXON MOBIL, CONOCO PHILLIPS and GOLD RESERVE upon expropriation could come
due very shortly. Scotia estimates these three cases could cost the nation US$
16 billion and total outstanding cases could raise the amount to US$ 24
billion. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140902/juicios-en-ciadi-obligarian-a-cancelar-24-millardos
BANCTRUST is predicting 35% scarcity in 2015
BANCTRUST estimates scarcity here during 2015 at an
average 35%, 2 percentage points higher than at present. It believes inflation
will reach 73% this year, and says PDVSA remains in a very unfavorable
financial position since it must sell its export dollars to the Central Bank at
VEB 6.3/US$1. More in Spanish: (El Nacional; http://www.el-nacional.com/)
Economic indicators are also scarce in Venezuela
Prices climb daily in
Venezuela, economic activity grinds to a halt and staples are scarce, but
nothing can be measured and officially proven since the Central Bank started
cutting back on statistics. Experts analysts
speak of a "political intention"
in the manipulation of statistics and warn that "credibility is being destroyed", recalling the ghosts of
Argentina - where alteration led to parallel private statistics in order to
estimate the real situation. Data on inflation - the responsibility of the
Central Bank and the National Statistics Institute - has been withheld for the
past 50 days since inflation hit 61% in May.
No explanation has been given despite protests from economists,
political parties and the press. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/analisis-afp---en-venezuela-escasean-los-indices-m.aspx#ixzz3C3vK35Yf)
Tumbling oil prices deepen economic turbulence in
Venezuela
Investors are raising their risk perception and
reducing the amount of Venezuelan bonds in their portfolios, while the
Venezuelan government puts off the implementation of economic measures and oil
prices decline. SÍNTESIS FINANCIERA, a local economic think tank explains: "A series of unfortunate events is harming
Venezuela's country risk perception in the markets. The price of Venezuelan
bonds recorded serious declines last week as the market was disappointed at the
lack of economic decisions and a deeper fall in oil prices".
As of Monday, August 25, the trend continued, and bonds issued by Venezuela and state-run oil giant Petróleos de Venezuela (PDVSA) kept on falling. David Alayón, director of Kapital Consultores, explains that benchmark bond Venezuela Global 27 stood at 86.60% of its value on July 29, and by August 25, it ended at 77.84% of its value, which means an 8.8-point fall. (El Universal, http://www.eluniversal.com/economia/140830/tumbling-oil-prices-deepen-economic-turbulence-in-venezuela)
As of Monday, August 25, the trend continued, and bonds issued by Venezuela and state-run oil giant Petróleos de Venezuela (PDVSA) kept on falling. David Alayón, director of Kapital Consultores, explains that benchmark bond Venezuela Global 27 stood at 86.60% of its value on July 29, and by August 25, it ended at 77.84% of its value, which means an 8.8-point fall. (El Universal, http://www.eluniversal.com/economia/140830/tumbling-oil-prices-deepen-economic-turbulence-in-venezuela)
Liquidity and FOREX scarcity trigger the parallel
exchange market
On March 23rd, the government launched SICAD 2 (second
Ancillary Foreign Currency Administration System) in an attempt to restrain the
constant surge of the parallel dollar, used to set prices for a broad range of
products and ultimately boosting inflation. Although the initiative appeared
initially successful, the greenback is now back on an upward trend, making the
imbalance in currency exchange policies even worse. Through SICAD 2, both
companies and individuals may purchase FOREX at a price ranging from VEB 49 to
VEB 51 per US dollar. At the time the system was launched, the gap between the
parallel dollar and the Sicad 2 exchange rate sat at 60% and gradually fell to
40%, but by the end of this week it made its way back up to 64%. (El
Universal, http://www.eluniversal.com/economia/140830/liquidity-and-lack-of-dollars-trigger-the-parallel-exchange-market)
Politics
Maduro once again announces an imminent government
shakeup
President Nicolás Maduro has
asked his supporters to be "on the
alert" today for a number of decisions on the economy, "renewing and shaking up the government
and governing methods, as well as priorities". He says he expects the
full support of the Socialist Party and the people for decisions he first
announced he would take 96 days ago. Another 15 days have gone by since he
announced that the entire Cabinet had tendered its resignation. He reportedly
has before him a full plan prepared by Vice President Jorge Arreaza, Industries
Minister Ricardo Menéndez, and Orlando Borrego, a former advisor to "Che" Guevara. Some reports indicate
Rafael Ramírez will withdraw from the Ministry of Oil and Energy, and PDVSA, in
order to replace Jorge Arreaza as Vice President. Diosdado Cabello and Elías
Jaua are also mentioned as possible replacements for Arreaza, who might become
Foreign Minister. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140902/maduro-pide-apoyo-al-pueblo-para-medidas-que-anuncia-hoy; and Infolatam)
Venezuela has spent US$ 250 million to lobby the US
Venezuela has used three legal ways available in the
United States to lobby and influence decision making, and paid out US$
20,722,646. In 1999-2014, state-run oil holding PDVSA and its US subsidiary, CITGO
Petroleum, invested US$ 4,433,933 and US$ 5,483,993 respectively, in lobbying
the US Congress, for a total of US$ 9,917,986, according to Openscrets.org, a
political liability center, and Sunlight Foundation. Both organizations track
and break down data on the US legislature. (El Universal, http://www.eluniversal.com/nacional-y-politica/140830/venezuela-has-spent-usd-250-million-to-lobby-in-the-united-states)
Venezuelan capital in free fall, on par with war zones
Caracas is only one of four cities in the world, and
the only one in the Americas, to have experienced an abysmal decline in its
quality of life over the past five years. The only cities that have experienced
worse drops in “livability” are those mired in armed conflict: Kiev, Ukraine;
Tripoli, Libya; and Damascus, Syria. This is according to information provided
by the Intelligence Unit of the Economist in their latest Global Liveability
Ranking and Report published in August. The study evaluated 30 factors related
to stability, health, education, infrastructure, culture, and environment in
140 cities around the world. The capital of Venezuela, which ranked 126 of 140,
is the only city in the Americas to have experienced such a drastic decline
across the relevant indicators since 2009. In the last five years, Caracas has
seen a 6.4% drop in its quality of life, on par with the five point decline of
Cairo, Egypt. (Panampost, http://panampost.com/elisa-vasquez/2014/08/25/caracas-a-livable-city-new-index-says-not-on-your-life/)
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.
