December 22, 2016

International Trade

Venezuela reopens Colombia, Brazil border crossings

Thousands of Venezuelans crossed into Colombia to buy food and medicine after their government partially reopened the border following a messy crackdown on what it called currency hoarders. But while foot traffic was permitted, trucks carrying needed goods remained blocked. Venezuela also reopened its main border crossing with Brazil after talks between officials at the Brazilian embassy and Venezuela's foreign ministry, officials in Brasilia said in a statement. The crossing is open for pedestrians, but only within limited hours for vehicles. (AFP: https://www.yahoo.com/news/venezuela-reopens-border-crossing-colombia-215620846.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2427571&CategoryId=10717)

 

Colombia's Santos asks more collaboration from Venezuela against smuggling

Colombian President Juan Manuel Santos has basked Venezuelan authorities to collaborate more in the fight against smuggling on the common border, which was re-opened after eight days of shutdown ordered by the government of Nicolás Maduro.  “We need more collaboration from both parties to fight against smuggling, because this problem is not convenient for anyone,” President Santos asserted in a speech in the bordering city of Cúcuta, Colombia, where he met with regional authorities and representatives of several sectors. “Let’s strengthen the supervision in the trails that are still not under control,” added President Santos. He said that he had conveyed that message to his Venezuelan counterpart Maduro in a telephone conversation on Monday. (El Universal, http://www.eluniversal.com/noticias/daily-news/colombias-santos-asks-more-collaboration-from-venezuela-against-smuggling_632196)

 

Argentina says Venezuela will return to MERCOSUR when it complies with rules

Argentine Foreign Minister Susana Malcorra says Venezuela will return to MERCOSUR once it complies with all the organization’s rules. She said Venezuela “has ceased participating in MERCOSUR” and expects it will “comply with agreements and join in once more”. About dialogue between the Maduro regime and the opposition here, Malcorra said: “there is no formula that is not within Venezuelans”, since “there are no miracles from the outside”, nor any enemies abroad. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/internacionales/2016/diciembre/20/179559=susana-malcorra-senalo-que-venezuela-volvera-a-mercosur-cuando-cumpla-las-reglas)

 

Food, medicine and personal care products have arrived at La Guaira in 300 containers from Colombia. The shipment includes 238 containers bearing food, 38 with personal care products, and 24 with medicine, according to the local port authority. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34860)

 

Oil & Energy

Secrecy and confusion surround Venezuela’s latest oil deals

Venezuela’s newly created and military run oil and mining company CAMIMPEG has formed a joint venture with UK-based Southern Procurement Services (SPS) to reactivate shut-in wells in Lake Maracaibo in Zulia state. The deal has raised eyebrows, given its scale and the relative inexperience of the parties involved. A source with knowledge of developments and who has operations in the lake told NewsBase the well count could approach 1,500. Given their lack of experience, questions have been asked about whether the JV partners have the requisite personnel or capital to pull off the work. Indeed, the fact the companies have even been allowed to team up is startling. SPS and CAMIMPEG, which was created in February to protect petroleum installations belonging to state-run PDVSA, recently formed CAMIMPEG-SPS to “improve the oil and gas production process for PDVSA,” the JV tweeted last week. In the most recent of only three press releases available in the news section on its website, England-based SPS, which is part of the SCZ Group financial group, reported that it was engaged in activities to supply “electric submersible pumps” as part of trade initiatives. CAMIMPEG was also created in part to provide oilfield services to PDVSA, with a view to it replicating the activity of companies like SCHLUMBERGER, HALLIBURTON or WEATHERFORD. But President Nicolas Maduro is believed to have created the rookie company, which is run by the armed forces, to keep the military happy and loyal as Venezuela’s economy collapses. CAMIMPEG-SPS also recently signed a deal to acquire a fleet of vehicles that will be used to maintain a constant presence over PDVSA’s operating areas. Financing for both deals is likely to come from SCZ Group, which provides “special financing mechanism that allows customers to pay for purchases of oil products, petrochemical industries and basic industries,” according to statements on its website. The CAMIMPEG-SPS deal mirrors a similar agreement that was struck recently between PDVSA and US-based drilling contractor Horizontal Well Drillers (HWD). That deal saw the latter company make its debut in Venezuela, despite its lack of experience in hostile environments and insufficient cash flow to finance its activities without funding from another company. The deals with both CAMIMPEG-SPS and HWD come as hundreds of companies there with years of operating experience in Venezuela are struggling to get paid by PDVSA. Many have pared back their operations, while others have simply given up and exited the country. The secrecy and confusion surrounding the deals exemplify the state of Venezuela’s oil industry. (Oil Price: http://oilprice.com/Latest-Energy-News/World-News/Secrecy-And-Confusion-Surround-Venezuelas-Latest-Oil-Deals.html)

 

Two Die in Fire at Oil Complex in Western Venezuela

Two workers were killed and a third was injured in a fire at an oil complex in Valmore Rodriguez, a city in the western state of Zulia, state-owned Petroleos de Venezuela (PDVSA) said on Tuesday. The fire started at 7:50 pm Monday in a generator in the power generation section of the Lamargas-Lago Complex. Workers put out the fire and officials activated the emergency protocols and appointed a commission to investigate the accident, PDVSA said.
(Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2427586&CategoryId=10717; El Universal, http://www.eluniversal.com/noticias/daily-news/research-task-force-established-after-fire-oil-complex-north-venezuela_632062)

 

Venezuela to sell fuel on the border with Colombia in pesos

President Nicolás Maduro has announced that Venezuela will charge the gasoline sales on the border with Colombia in pesos. He added that a payment mechanism would be implemented to allow Colombians to pay for gasoline through their local banking system, including bank cards. Later on, other products sold on the border would be paid through this mechanism, according to state-run news agency AVN. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuela-sell-fuel-the-border-with-colombia-pesos_632297)

 

Commodities

FORD halting Venezuela production until April

FORD Motor Co halted auto production in Venezuela last week and will not resume it until April, a company executive said on Tuesday, in another blow to the crisis-wracked country's manufacturing sector.  "It is a measure to adjust production to demand in the country," Lyle Watters, FORD's president for South America, told reporters at an event in São Paulo, adding that the plant affected by the shutdown employs 2,000 workers. Watters said the production freeze would not affect FORD's consolidated results as operations in Venezuela are reported separately. Beginning in the first quarter of this year, Venezuela became the only wholly owned FORD unit with operating results that are excluded from the full company's income statement.  In January 2015, FORD took a charge related to its Venezuelan operations that cut fourth-quarter net profit by US$ 700 million. FORD is the only automaker still mass producing cars in Venezuela, even on a limited scale. Vehicle production in recession-hit Venezuela is less than 8 cars a day, as per figures provided by the national automakers organization CAVENEZ. FORD produced 2,253 units out of a paltry national total of 2,768 in the year through November. In mid-2015, FORD's major U.S. rival, GENERAL MOTORS stopped making vehicles in Venezuela altogether. GM had one plant in Venezuela. (Reuters: http://www.reuters.com/article/us-ford-motor-venezuela-idUSKBN149266)

 

Maduro regime raises prices over 200% for coffee, corn flour, and sugar

The Maduro regime’s price control agency, SUNDEE, has published new prices on sugar cane, corn flour, white and yellow corn, coffee grains, green coffee and sugar in all its forms. The price of pre-cooked corn flour was raised 236.3%, and remains beneath adjustments sought by private industry here. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/establecidos-nuevos-precios-para-caf%C3%A9-harina-ma%C3%ADz-y-az%C3%BAcar; El Universal, http://www.eluniversal.com/noticias/economia/ajustan-precios-harina-precocida-cafe-azucar_632289; El Nacional, http://www.el-nacional.com/noticias/economia/sundde-publico-lista-nuevos-precios-del-cafe-azucar-harina-maiz_72241 http://www.el-nacional.com/noticias/economia/gobierno-subio-2363-harina-maiz_72330)

 

Economy & Finance

FEDECAMARAS sees no economic improvement next year

The nation’s leading business organization, FEDECAMARAS, says there is “no improvement” in sight here next year. “For three years running we are ending in crisis and recession. The government’s refusal to implement corrections to rescue the nation is bordering on irresponsible”. “Excessive controls and a growing distance from democratic principles has brought about the destruction of the nation’s productive system”. FEDECAMARAS says companies are operating at 35% capacity, annual inflation is close to 500% and basic product scarcity is above 80%. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/economia/2016/diciembre/20/179602=fedecamaras-no-avizora-ninguna-mejoria-para-el-proximo-ano-en-el-pais)

 

Maduro says second currency shipment of 500 bolivar bills arrived, threatens to arrest bankers

President Nicolás Maduro says a second aircraft bearing 12 million 500 bolivar bills arrived here on Tuesday. Central Bank vice president José Khan confirmed that a Russian aircraft bearing 11 million 500 bolivar bills has arrived. He added that 3 currency shipments have arrived: The first one on Friday, with 76 million 50 bolivar bills; a second load on December 18^th, with 13.5 million 500 bolivar notes; and then this third shipment. Maduro also says that local bankers who “sabotage” services will be arrested. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/diciembre/20/179616=presidente-maduro-anuncio-el-arribo-al-pais-del-segundo-lote-con-billetes-de-500-bolivares)

 

Why Venezuela should default

Venezuela continues to pay foreign bondholders despite an economic crisis that would have stymied other sovereign borrowers long ago. Although reallocating funds from debt service to the importation of much-needed food and medicine is tempting, the government fears that subsequent lawsuits could leave less money for imports. Venezuela already faces the typical costs of sovereign default, such as the loss of access to international credit markets and a decline in foreign direct investment, even though it remains up to date on its debt service. With a default seemingly inevitable, the country must eventually confront any other consequences, which are unlikely to include the dreaded seizure of Venezuelan oil tankers at sea. Venezuelan oil exports cannot be immediately seized. Instead, a legal cat-and-mouse game would ensue upon default. If creditors try to confiscate tankers of oil, Venezuela will ensure that, contractually, that oil is the property of the buyer before it leaves Venezuela. If creditors go after the money paid for that oil, Venezuela will reroute that money through China to evade them. Venezuela could also sell more oil through joint ventures and to China to further complicate matters for plaintiffs. Litigation would surely take a long time. Considering Venezuela’s dire economic situation, a United States court is unlikely to grant any immediate preliminary relief to hedge funds ahead of a lengthy proceeding on the merits. In the meantime, Venezuela would save around US$ 10 billion in annual debt service, an amount sufficient to restock empty supermarket shelves by funding an estimated 50% increase in imports. By alleviating shortages, these funds would give the current government, or a future government, some breathing room to enact economic reforms that would spur growth and assure long-term viability, reforms that have so far proved politically elusive. Venezuela may eventually have to pay what it owes, but that will be easier than overpaying now. Despite the government’s extraordinary efforts, creditors are not being treated fairly. While short-term creditors are paid in full, long-term creditors may not be paid at all. Every time the country pledges assets as collateral or sells the rights to natural resources, it subordinates and dilutes the claims of typically unsecured long-term creditors. Now is the worst time to sell Venezuela’s natural resources, considering the uncertain political and economic environment. Once the country stabilizes, the government can offer a restructuring that includes a maturity extension and deferral of interest payments in return for warrants that pay when oil prices rise, allowing bondholders to share in the upside. Incentives for litigation for hedge funds would be few if the restructuring were fair. Both the country and its creditors would be better off in this scenario than in a continued fire sale of Venezuela’s remaining assets. (The New York Times Op-Ed: http://www.nytimes.com/2016/12/21/opinion/why-venezuela-should-default.html?_r=0)

 

What do investors need to understand about Venezuela’s economy?

President Nicolás Maduro says that to combat smuggling and currency manipulation, the 100-bolívar note must be retired. He is correct when he claims the bill is popular with those who violate the country’s price and currency controls, but it's also popular with everyone else: its value fluctuates between two and four U.S. cents at the widely used black market currency exchanges, but it is the largest-denomination bill currently in circulation, and using lower-denomination bills is almost impossibly burdensome. To make using cash easier, new bills of up to 20,000 bolivars will be printed. What is wholly without logic is the original timeline for this plan. When it was first announced, the government said that the use of the 100-bolívar bills would be prohibited in three days, and that there would be a ten-day period for the six billion notes already in circulation to be traded in for new coins. It also said it would only allow bills being held in Venezuela to be traded in, and it even closed the borders with Colombia and Brazil to prevent currency smuggling, effectively confiscating the wealth of all holders of the bill abroad. The implementation of this scheme was never even remotely feasible, and this weekend government has extended the deadline, as well as the border closings, until January 2. Immediately before this plan was announced, it seemed like the situation in Venezuela could barely get worse: the country is undergoing a major currency crisis, it has the both the world’s highest inflation and the world’s deepest recession, it is seeing serious shortages of basic goods, including food, and there is a looming constitutional dispute that threatens the long-term viability of the government. (Forbes: http://www.forbes.com/sites/nathanielparishflannery/2016/12/21/what-do-investors-need-to-understand-about-venezuelas-economic-crisis/#101d38c27ace)

 

ODEBRECHT acknowledges it paid US$ 98 million in bribes in Venezuela alone.

Brazilian construction giant ODEBRECHT has signed the largest anticorruption settlement in history Wednesday with authorities on three continents, following a two-year investigation that landed its chief executive and dozens of other powerful figures in prison. The deal represents a landmark in Brazil’s so-called Operation Car Wash, which has unearthed what is widely seen as the most sprawling graft scheme ever exposed and triggered a political crisis that led to the impeachment of President Dilma Rousseff. ODEBRECHT paid nearly US$ 800 million in bribes related to more than 100 projects in 12 countries, including Angola, Venezuela and Mexico, as per U.S. court documents. Court documents indicate ODEBRECHT paid out US$ 98 million in bribes in Venezuela alone. ODEBRECHT doesn’t dispute any of the allegations and says it is cooperating with authorities. (The Wall Street Journal: http://www.wsj.com/articles/odebrecht-to-pay-2-6-billion-to-settle-bribery-claims-1482325309)

 

U.S. charges Florida men with laundering money for Venezuelan officials

A Florida construction equipment exporter's owners were arrested on Wednesday on charges they illegally transferred over US$ 100 million from businesses largely in Venezuela to U.S. and foreign bank accounts belonging to Venezuelan government officials and others. Luis Diaz Jr., 74, and his son, Luis Javier Diaz, 49, were charged in a criminal complaint filed in Manhattan federal court with conspiring to commit money laundering and operate an unlicensed money transmitting business. Both men, who run Miami Equipment & Export Co, according to their firm's website, were arrested in Miami, said a spokesman for Manhattan U.S. Attorney Preet Bharara. The case came amid U.S. Justice Department investigations that have focused on individuals tied to the Venezuelan government and their suspected roles in various bribery and drug-trafficking s schemes. As per the complaint, the family's company, beginning in 2010, facilitated hundreds of hundreds of transmissions of funds into the United States on behalf of an unnamed large consortium of Venezuelan construction companies. At the consortium's request, they also transmitted money to unnamed Venezuelan government officials, including one who oversaw the award of certain contracts on which the Venezuelan companies bid, the complaint alleged. the complaint said. During the period in question, a Portuguese shell company controlled by the individual linked to Venezuelan officials received at least US$ 17 million, the complaint said. The case is U.S. v. Diaz, et al, U.S. District Court, Southern District of New York, No. 16-mj-8150. (Reuters: http://www.reuters.com/article/venezuela-usa-crime-idUSL1N1EG1OB)

 

Politics and International Affairs

Unrest continues as protests reach Caracas and the Miraflores Presidential palace

Protests are nothing new in Venezuela and the country suffered months of unrest in 2014. This latest cycle of protests however began after President Nicolas Maduro announced he was withdrawing the country’s highest denomination banknote “in 72 hours.” The President later recanted, when he realized he had no new bills to replace the money with, promising to let the Bs 100 circulate until at least January 2nd, but to no avail: savage protests rocked the nation, resulting in 450 businesses looted and 405 arrested, according to figures offered by the Interior Ministry and the Fedecamaras private-sector guild. In a east Caracas, a crowd trying to buy price-controlled foodstuffs received buckshot instead, while a group of opposition lawmakers led a protest asking for the resignation of President Nicolas Maduro right outside the Miraflores Presidential Palace. This is Venezuela, after one week of continuous, deadly protests that have so far left seven dead. Opposition party leaders along with scores of ordinary citizens announced the beginning of “a new stage” of civil disobedience, during which they will occupy the streets to demand the resignation of President Nicolas Maduro. Three political parties – Voluntad Popular (VP), Alianza Bravo Pueblo (ABP) and Vente Venezuela – called for people to come join the protest and invited other parties of the MUD opposition alliance to take part in “the struggle” for a “beautiful Venezuela.” “We’re demonstrating across the country... We’re not calling for anything that violates the constitution,” David Smolansky, mayor of the Caracas municipality of El Hatillo, told reporters. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2427530&CategoryId=10717; http://www.laht.com/article.asp?ArticleId=2427600&CategoryId=10717)

 

OAS Calls for 'Restoration of Institutional Order' in Venezuela

The General Secretariat of the Organization of American States (OAS) expresses its solidarity and unconditional support for the people of Venezuela in relation to the recent wave of violence, looting, and desperation sparked by the monetary measures adopted by the government that restrict the circulation of cash and as a corollary prevent the purchase of the most basic needs. At the same time, the General Secretariat calls for calm and the reestablishment of civic coexistence. The situation has led to serious incidents of public disorder in at least 12 states, with reports of demonstrations, disturbances, and/or looting in 27 cities. Added to this is the alarming and ongoing situation of the denial of civil and political rights, institutional rupture and social and humanitarian crisis. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2427490&CategoryId=10717)

 

Venezuela unsafe for Americans and its own

The situation continues to go from bad to worse in Venezuela, so much so that the U.S. State Department has warned Americans that its dangerous to live in or even visit that country. The State Department’s Security Advisory Council last week sent the following message via Twitter: “Travel Warning: If the security climate worsens, U.S. citizens should be aware that they are responsible for making arrangements for their exit from Venezuela.” The advisory also said Americans should not travel here because crime and social instability have exploded. The State Department also emphasizes that the political and security situation in Venezuela is unpredictable, a moment-to-moment exercise. In the past, Venezuelan authorities have arrested U.S. citizens with no evidence that they committed crimes. These red alerts are no surprise. The economic crisis has created a situation of precariousness and anguish among the population — and among the hundreds of thousands of Venezuelans who live in exile in South Florida. Today, Venezuela is a place of mass despair. Street protests occur at any time and without warning. They can be peaceful or turn violent. The homicide rate has also skyrocketed, highlighting the social turmoil and the inability of the authorities to stop criminal activity. As for Americans, the State Department has already indicated that traveling to Venezuela is dangerous. And the warning should be taken seriously. Venezuela is a country on the edge. (The Miami Herald: http://www.miamiherald.com/opinion/editorials/article122130799.html#storylink=cpy)

September 29, 2015

International Trade

 

62,300 tons of basic foods have been imported, government imports do not meet Q4 demand

According to Port Authority reports, the Venezuelan government has imported around 62,300 tons of food during August and September, but this does not cover consumer needs for the last quarter of 2015. BOLIPUERTOS reports over 2,100 containers laden with beef, chicken, milk, cooking oil, butter, margarine, coffee, rice, wheat, white and yellow corn, plus 16,000 heads of cattle have arrived from Canada, Mexico, Argentina, Nicaragua, Colombia and Brazil, Yet Nutrition Minister General Carlos Osorio has reported that 11,484 tons were distributed in 1,202 open market operations nationwide last Saturday, which means imports can only supply 5.4 of such operations. Aquiles Hopkins, Vice President of FEDEAGRO, says rice imports can only supply 16% of consumer needs in Q4 2015. He adds that 65,640 tons of wheat were imported, but 77,000 tons per month are required to meet market demand. In addition, Venezuela used to export coffee, domestic production is down to 30% and the product cannot be found in stores. As to beef imports, they cover only 4.2% of normal monthly consumption. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

348 tons of parts for vehicles for FORD Venezuela have arrived at Puerto Cabello

(Notitarde; http://www.notitarde.com/La-Costa/Ford-de-Venezuela-importo-mas-de-300-toneladas-de-autopartes-2510685/2015/09/24/645573/)

 

Health Ministry reports 150 containers of medical and surgical supplies from China and Cuba, have arrived at the port of La Guaira. A total 500 million units are expected through the end of the year, to supply the public health system. More in Spanish:  (Agencia Venezolana de Noticias; http://www.avn.info.ve/node/322071; El Nacional; http://www.el-nacional.com/)

 

 

Oil & Energy

 

Kuwait downplays OPEC meeting suggested by Venezuela

Kuwait's oil minister Ali al-Omair rejected the idea of a meeting between the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC nations, as requested by Venezuela. Since independent producers have no obligation to drop their output, any such meeting would make no sense, the minister said. "The problem is that there is no commitment by non-OPEC countries on what to offer to stabilize prices. It (Venezuela) has requested OPEC members to reduce the output while others keep on pumping and then we lose our market share," he elaborated. (El Universal, http://www.eluniversal.com/economia/150928/kuwait-downplays-opec-meeting-suggested-by-venezuela)

 

VenEconomy: A train of opportunities that the Bolivarian revolution missed 

Without a doubt, the handling of oil affairs in Venezuela will go down in history as one of the most notorious failures of the revolution of the so-called "socialism of the 21st century." It’s not only that state-owned oil company PDVSA has become inefficient, since a new management could have made it efficient again. Much more important is that the development of the Orinoco Belt is no longer profitable, as neither is gas production overseas. Major projects that are history today. There are no excuses for having let slip away a golden era in terms of high oil revenues, without taking advantage of those resources to promote the development and progress of Venezuela, to promote research and technology, while ensuring good healthcare, education and housing systems for all Venezuelans. Much less when those resources were squandered in a desire to impose in the country and extend across the region a political project that has proven obsolete and unsuccessful at global level, and to enrich a few national and regional elites supporting the said project. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2397182&CategoryId=10717)

 

A "Regional Confederation of Oil Goods and Services” was created in Bogota to share experiences that help boost the oil sector. It is made up of the Venezuelan Oil Chamber, the Argentinean Chamber of Suppliers of the Oil-Energy Industry (CAPIPE), the Colombian Chamber of Oil Goods and Services (CAMPETROL), and the Mexican Association of Oil Service Companies (AMESPAC). (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45616&idc=4)

 

 

Commodities

 

Closure of the Colombian border complicates production of detergents and medicines, claimed Fedecámaras’ Chief Francisco Martínez, who added they were resisting “the best they can” over the declaration of state of emergency in several districts. He explained the products that passed through the border earlier must now be transported either by sea or by air which increases operation costs and times. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45625&idc=3)

 

 

Economy & Finance

 

BARCLAYS: Venezuela economic crisis to only get worse

Venezuela is suffering the deepest economic crisis in its history with output expected to contract 9.1 percent this year, Barclays wrote in a note to clients. The economic contraction will likely reach 16.5% between 2014 and 2016, while inflation over that period will exceed 1,000%. “It is impossible to understand why the government is not reacting to this reality, why it has not taken measures to alleviate the economic distortions that are destroying the real income of Venezuelans,” Barclays said. President Nicolas Maduro will not likely announce any changes in economic policy before congressional elections Dec. 6, the bank said. With support for the ruling Socialist party at around 19%, the country is politically divided as it also battles low prices for oil, which accounts for 95% government export revenue. “A weak president who will have lost an election in the middle of a very strong economic crisis will not be able to take any fiscal measures,” Barclays said. “The probability of a political transition in Venezuela seems to be much higher than what the market has been pricing.” Instead of taking fiscal measures, the government is selling all its liquid assets to maintain an “extremely inefficient” exchange rate system and pay the external debt, Barclays said, adding that it would likely have enough money to pay its foreign debt at least through the first quarter of next year with a moderate increase in oil prices and further cut in imports. “All the main political actors appear to be thinking only of the near term, and there is no clarity about what they will do after the elections, leaving a very uncertain scenario for 2016,” the bank said. (Bloomberg, http://www.bloomberg.com/news/articles/2015-09-25/venezuela-economic-crisis-to-only-get-worse-barclays-says)

 

CREDIT SUISSE: Venezuela - The biggest loser

"Venezuela’s dreadful macroeconomic conditions are unlikely to improve following the legislative elections on 6 December, in our view. Venezuela has the worst outlook for economic activity, the highest projected inflation and the largest fiscal deficit in our Emerging Markets coverage universe in 2015 and 2016. Specifically, we now expect real GDP to contract 5.9% this year and 4.0% in 2016. We have also revised our inflation forecasts significantly higher to roughly 180% by year-end 2015 and nearly 215% by the end of next year. We do not expect the government address these massive distortions in a meaningful way before or after the upcoming elections. Meanwhile, lower oil prices and the ongoing depletion of the public sector’s foreign assets suggest substantial risk of default over the next 12 to 24 months, according to our estimates." (CREDIT SUISSE: Click here to view document (9 pages, 663KB))

 

General Marco Torres reports he met with investment bankers in New York

General Rodolfo Marco Torres, Venezuela's Vice President for Economic Affairs and Minister of Finance reports he met with investment bank representatives in New York and repeated the nation's commitment to honor international debt. He adds they were invited to invest in Venezuela's oil sector. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/marco-torres-se-reunio-con-bancos-de-inversion-en-.aspx#ixzz3n7TGEEvM; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/marco-torres-se-reunio-con-bancos-de-inversion-en-.aspx)

 

Venezuela PDVSA's US$5 billion loan from China only to be available by year-end

A US$5 billion loan that Venezuelan state oil company PDVSA negotiated with China will be available by year-end, but the funds will go directly to contractors rather than into company coffers, a senior PDVSA source told Reuters. President Nicolas Maduro announced the loan during a trip to Beijing in September, saying the funds would be put toward boosting oil production. "The money will begin flowing at the end of this year," said the source, who asked not to be identified. "(It) will be paid directly to the companies that execute the projects." (Reuters, http://www.reuters.com/article/2015/09/25/venezuela-china-idUSL1N11V2E520150925)

 

Harvard’s Hausmann calls Chinese loans to Venezuela a ‘disgrace’

The billions of dollars China loans to Venezuela in exchange for oil are a “disgrace” and used for corrupt purposes that go undisclosed to the general public, says Harvard professor Ricardo Hausmann. Venezuela has tapped China for more than US$ 45 billion over the last decade and is increasingly reliant on the world’s second-biggest economy for cash because of its unwillingness to comply with the requirements of the International Monetary Fund, Hausmann wrote. Those loans have become more important than ever as the nation’s international reserves tumbled with oil prices to a near 12-year low. “The Chinese have not required that Venezuela do anything to increase the likelihood that it regains creditworthiness,” wrote Hausmann, a former Venezuelan planning minister. “They merely demand more oil as collateral. Whatever the IMF’s faults,” China Development Bank “is a disgrace.” (Bloomberg, http://www.bloomberg.com/news/articles/2015-09-28/harvard-s-hausmann-calls-chinese-loans-to-venezuela-a-disgrace--if47489t)

 

BANCTRUST reports companies and individuals rely on credit to face inflation here

A report by BancTrust indicates private companies and individuals are using bank credits to meet inflation costs. It shows the massive explosion in monetary liquidity and high inflation have strongly impacted credit in the financial sector, specially use of credit cards. Official data confirms an 148.2% increase in commercial credit in August 2015, as compared to August 2014. Credits in agriculture rose by 102.1% at the same time. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Venezuela's Ambassador to Cuba advocates economic adjustment in Venezuela

Alí Rodríguez Araque, a former Chávez Minister of Finance and Petroleum and Venezuela's current to Cuba, says it is necessary to adjust and reorient the domestic economy in view of the plunge in oil prices. The expert maintains that the shrinking revenues "are fairly above 30%," which imposes economic adjustment right now. "Now, we have to make an adjustment downwards," Araque said. He suggested a cut in public spending and setting priorities in order. Rodríguez argues that "such rearrangement" of the local economy "must be made and this begins with the public budget, which is the first component of income distribution in Venezuela." "I think that further adjustments are coming," he added. "Let's forget that Venezuela will have a strong momentum in the field of industry and other sectors," he insisted. "Since 1936, we have had an overvalued bolivar. All the currencies in the world devalued at that time." (El Universal, http://www.eluniversal.com/economia/150928/ali-rodriguez-advocates-economic-adjustment-in-venezuela)

 

Planning Vice President claims 2016 budget will meet social goals

Ricardo Martínez, Vice President for Planning, claims Venezuela's draft 2016 budget anticipates allocating the necessary resources to maintain social investment in education, health, housing, transportation, roads, sports and recreation. He says despite lower resources, the key "is greater efficiency and greater experience" More in Spanish: (AVN; http://www.avn.info.ve/node/322132; El Universal, http://www.eluniversal.com/economia/150929/estiman-mantener-metas-sociales-con-menos-recursos; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/menendez--presupuesto-nacional-para-2016-mantendri.aspx)

 

 

Politics and International Affairs

 

Guyana and Venezuela restore ambassadors despite border row

UN Secretary General Ban Ki-moon mediated a Sunday meeting in New York between Guyanese President David Granger and Venezuela's Nicolas Maduro, who agreed to restore their respective ambassadors despite a continuing border dispute. After the meeting, Maduro said that Venezuela would restore its ambassador to Georgetown "immediately" and accept Guyana's nominee. He described his meeting with President Granger as "complex, tense, difficult". President Granger thanked UN Secretary-General Ban Ki-moon for mediating at the meeting, which he said "afforded both sides the opportunity to explain their individual positions". Granger denounced Venezuelan "aggressions" at the UN General Assembly, and asked the organization to reach a final solution to the border dispute: "We want to put an end to Venezuelan aggression. We want to develop our country, all of our country, under international law"..."We believe this process (good offices) has come to an end", but did not back off his announcement that Guyana will seek a solution with the International Court of Justice. Guyana Defense Force Commander Brig. Gen. Mark Phillips Guyana has 1,000 troops ready for deployment to border with Venezuela in case of aggression by Caracas amid the territorial dispute over Essequibo region and the Cuyuni River. (BBC News, http://www.bbc.com/news/world-latin-america-34378631; Reuters, http://www.reuters.com/article/2015/09/28/venezuela-guyana-idUSL1N11Y01920150928; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2397276&CategoryId=10718; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45629&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/150928/united-nations-to-mediate-in-venezuelas-essequibo-claim; http://www.eluniversal.com/nacional-y-politica/150927/un-committee-to-visit-venezuela-to-assess-claim-over-the-essequibo; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2397199&CategoryId=10717; and more in Spanish, http://www.eluniversal.com/nacional-y-politica/150929/guyana-denuncia-agresiones-de-venezuela-y-pide-a-onu-un-arreglo-defini)

 

Venezuela to allow return of deported Colombians

Following a meeting between President Nicolas Maduro and UNASUR Secretary-General Ernesto Samper, Venezuela agreed to allow the deported Colombians back as long as they agreed to "legalize their status". Last week, Maduro and his Colombian counterpart, Juan Manuel Santos, met in the Ecuadorean capital Quito and agreed on a "normalization of ties". However, the border has remained closed and President Maduro says it will take months to "create a border of peace". Since Venezuela declared a state of emergency in three border states, an estimated 22,000 Colombians have left the area on top of the 1,700 who were expelled. (BBC News, http://www.bbc.com/news/world-latin-america-34389806; Reuters, http://www.reuters.com/article/2015/09/28/us-venezuela-colombia-idUSKCN0RS2L020150928; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2397269&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/150928/unasur-agrees-to-regularize-status-of-deported-colombians)

 

IACHR denounces "humanitarian crisis" of Colombian deportees

The Inter-American Court of Human Rights (IACHR) has denounced a "humanitarian crisis" hitting Colombian deportees and people who returned to Colombia from Venezuela. "The IACHR saw for itself the humanitarian crisis that is affecting the deportees and people who returned out of fear and because of the grave situation in which they found themselves in Venezuela," the IACHR said in a press release. "The IACHR received troubling reports about the way in which the deportations from Venezuela were carried out, suggesting that those individuals suffered multiple human rights violations and were subjected to collective expulsion," the IACHR reported. (El Universal, http://www.eluniversal.com/nacional-y-politica/150928/iachr-denounces-humanitarian-crisis-of-colombian-deportees)

 

Maduro calls for transformation of economic systems to spur development

President Nicolas Maduro has called for “a resounding transformation of economic systems” as a condition for the implementation of the United Nation’s new development agenda. He made his proposal in a speech to the UN General Assembly during the 2015 Sustainable Development Summit. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2397206&CategoryId=10717)

 

UNASUR readies observers for parliamentary elections here on December 6th

Wilfredo Penco, Vice President of Uruguay's National Elections Council says the observers group being organized by the Union of South American Nations (UNASUR) will have 4 representatives from each of the election authorities in the 12 member nations. He says they await the signing of agreements between representatives of Venezuela's National Elections Council and the UNASUR pro tem presidency, which is Uruguay. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Grenades used against police checkpoints, opposition demands explanations

There have been five attacks with grenades against police checkpoints or stations in the last 48 hours. The most recent ones occurred on Sunday; first, in Las Mercedes where eight Baruta policemen and four civilians were wounded and then one against a police station in San Juan de Los Morros in Guárico. There was also a shoot-out against a National Police’s (PNB) patrol car in Sucre in Miranda state. Opposition leader and Miranda state Governor Henrique Capriles has demanded an explanation from the Maduro regime: "There were 5 similar attacks that show us that violence in Venezuela is growing and that national security has escaped the national government's control....We hope this is not part of a political plan to injure the December 6th elections. He added: "One has to ask the Defense Minister why there are grenades on the street. Grenades should be under the exclusive control of the Armed Forces. This gentleman must explain why grenades are in the hands of individuals. General Padrino must explain to Venezuelans." (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45628&idc=1; and more in Spanish: El Nacional, http://www.el-nacional.com/politica/Capriles-rechazo-ataques-modulos-policiales_0_710329059.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.