June 27, 2014

International Trade

Incoming cargo at Puerto Cabello

• 22,000 tons of wheat from Canada to Molinos Nacionales (MONACA)
• 11,437 tons of cattle, chicken and margarine from JBS S/A.
• 10,000 tons of unprocessed soy oil from Argentina to CARGILL
• 578 tons of prefabricated buildings from China for Misión Vivienda
• 120 tons of frozen tuna from Importexal Corporation for Inversora Caejer
• 103 tons of boneless beef from Loma Bonita for Carnes El Pazo

24 ships remained at anchor, 10 of them bearing bulk food cargo (3 yellow corn, 1 white corn, 2 rice, 2 sugar, and 2 carrying soy). Five more vessels bear fertilizers, one bringing chemicals, two with general cargo, two with cattle, one carrying containers and 3 in ballast. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-mas-de-500-toneladas-de-materiales-para-Mision-Vivienda-2185448/2014/06/25/334963; http://www.notitarde.com/La-Costa/Llegaron-carne-pollo-y-margarina-al-puerto-local-2186099/2014/06/26/335127)

Logistics & Transport

Cargo operations at Puerto Cabello have dropped 70% this year

Ana María D'Andrea, head of the Foreign Trade Committee at the Carabobo Industrial Chamber reports cargo operations at Puerto Cabello have dropped 70% this year, compared to 2013. More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/regiones/articulo/84315/movimiento-de-carga-en-puerto-cabello-ha-cado-70-este-ao)

...and general port activity in Venezuela declined 8.2% between 2012 and 2013, as per a container movement ranking in Latin America and Caribbean ports prepared by the UN Economic Commission on Latin America (UNCTAD). At Puerto Cabello is shrank by 9.4% and La Guaira posted a 7.4% drop. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39931&idc=3; More in Spanish: El Universal; http://www.eluniversal.com/economia/140626/se-contrajo-en-82-la-actividad-portuaria-en-venezuela; El Nacional; http://www.el-nacional.com/)

Domestic airlines also grinding to a halt

Humberto Figuera, President of the national Airline Association (ALAV) warns that domestic LASER Airlines could cease operations within 30 days if authorities do not pay FOREX debt due it the company so that it can pay for required insurance. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140626/advierten-paralizacion-de-aerolineas-nacionales; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/alav-advierte-que-laser-podria-paalizar-operacion.aspx)

Oil & Energy

Net natural gas production rose 3.5% in 2013

PDVSA's 2013 report shows re-injection of natural gas into oil wells dropped by almost 100 million cubic feet and resulted in a net production of natural gas to 7.395 billion cubic feet daily, up from 7.327 billion cubic feet in 2012. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140627/produccion-neta-de-gas-natural-subio-35-durante-2013)

PDVSA got U$D 2.8 billion in credit from housing fund in 2013

State-run Petróleos de Venezuela (PDVSA) broadened its funding sources within the government. It also received cash from the Fund for Reconstruction, the fundraising unit for housing programs. Financial statements reveal that during FY2013, PDVSA received a U$D 2.8 billion credit from this fund and repaid it at the end of last year. (El Universal, http://www.eluniversal.com/economia/140626/pdvsa-receives-usd-28-billion-in-credit-from-housing-fund)

Commodities

Food consumption down for five months in a row

Consumer trends reflected in sales tabulated by the Venezuelan Chamber of Food Processing Industries (CAVIDEA) show a decrease of 5.98% in April-May. The index has slumped for five months in a row due to lower production caused by price regulations which do not allow the industry to meet production costs. (El Universal, http://www.eluniversal.com/economia/140626/venezuelan-food-consumption-down-five-months-in-a-row; More in Spanish: El Universal, http://www.eluniversal.com/economia/140626/consumo-de-alimentos-cae-por-quinto-mes-consecutivo; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/cavidea-caida-de-ventas-de-alimentos-se-mantie--1-.aspx)

NESTLÉ plant is now paralyzed 

Workers at the GERBER-NESTLE plant in Valencia are protesting because operations have been paralyzed for the past two weeks due to a lack of lids for jars in compotes and other products there. Rafael García, Secretary General of the plant's labor union says 200 jobs are at risk and production is down to 9000-10000 tons from the usual 14000 tons per year. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Yellow corn production paralyzed due to lack of seeds

Aquiles Hopkins, Vice President of the Agriculture Producers Confederation (FEDEAGRO) reports delays in yellow corn seed distribution have caused months old supply delay by state company AGROPATRIA, and is hurting corn flour production. He reports the deficit in supply is around 40¡%. More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/regiones/articulo/84317/paralizada-la-produccin-de-maz-amarillo-por-falta-de-semillas)

Government is lacking funds to subsidize powdered milk

A ton of imported powdered milk costs more than U$D 5000 and the government absorbs U$D 1,200 of this amount to keep it regulated. Official imports by CASA have shrunk due to losses in operations, ad sales on the domestic market fell 50% from last year. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Economy & Finance

Government is divided on FOREX unification proposed by Ramírez

Unofficial sources report serious divisions have emerged within the government after Economic Affairs Vice President Rafael Ramírez announced that the foreign exchange rate will be unified. Reformers, headed by Ramírez, Central Bank President Nelson Merentes and Finance Minister General Rodolfo Marco Torres are reported to be convinced that policy changes should lead to a single foreign exchange rate around VEB 23-25/U$D, have said there should be a public debate on adjusting gasoline prices and are proposing working with the private sector to improve production, reduce scarcities and lower inflation. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Financial markets anticipate adjustments and, country risk drops

Venezuela's international borrowing rate has dropped dramatically, from 14% on February 20th to 8.8% today on market expectation of economic adjustments on the part of the Maduro regime after the firing of Planning Minister Jorge Giordani. Adjustments have now been expected for the past 17 months. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140625/el-mercado-apuesta-a-medidas-de-ajuste-y-cae-el-riesgo-pais)

FITCH projects high inflation and a drop in GDP

FITCH Ratings expects Venezuela's economy to suffer high inflation and recession this year. It believes GDP will drop 1% and inflation will remain above 50%. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140626/fitch-proyecta-elevada-inflacion-y-caida-del-pib; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/fitch-dice-que-la-economia-venezolana-se-contraera.aspx)

SICAD 2 meets only 20% of trade and service needs

Mauricio Tancredi, President of the National Trade and Service Council (CONSECOMERCIO) reports that the new SICAD 2 foreign exchange device has met only 20% of the needs within their area. He calls the system "slow, a device to access scarce currency". More in Spanish: (El Universal, http://www.eluniversal.com/economia/140627/sicad-2-solo-cubre-20-de-la-demanda-de-comercios)

SICAD 1 system excludes over half of companies seeking FOREX

Out of 6779 companies that have requested FOREX through the SICAD 1 system in 8 out of 15 auctions carried out to date this year, some 4619 were left out of the process. CADIVI reports 68% of requests have been rejected for failing to comply "with criteria established within the bidding process, did not meet their tax obligations for 2012 or have been suspended by the National Foreign Trade Center”. (El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/mas-de-la-mitad-de-las-empresas-que-acuden-al-sica.aspx#ixzz35pm3CQ7S)

U$D 2 billion in back debt repaid to private sector

FEDECÁMARAS President Jorge Roig reports that payment of 30% of the government's outstanding debt to the private sector is being paid but is insufficient. He says around U$D 2 billion out of a total of U$D 10 billion have been repaid,  but warned that a unified exchange rate is indispensable. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/gobierno-ha-cancelado--2-000-millones-de-la-deuda.aspx#ixzz35pmdPVDC; El Universal, http://www.eluniversal.com/economia/140627/fedecamaras-exige-medidas-ante-grave-situacion-economica)

Foreign direct investment here reportedly rose by U$D 7 billion or 119%, mainly in the oil sector, according to the 2014 World Investment Report by the United Nations Conference on Trade and Development (UNCTAD). (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39933&idc=2; More in Spanish: El Nacional; http://www.el-nacional.com/)

Politics

Hard-line leftists growing impatient with Venezuela's socialist administration, Maduro demands "loyalty"

President Nicolas Maduro is facing a new threat from an unlikely place: old-school leftists who accuse him of betraying the socialist legacy that carried him to power. Orthodox socialists are grumbling over liberalized currency reforms they say are counter to the revolution. The tensions came to a head when Maduro fired Planning Minister Jorge Giordani, a Marxist economist whose Spartan lifestyle and anti-capitalist doctrine earned him the nickname "the Monk." Maduro has responded to criticism by saying "endless loyalty" is the most important aspect in a revolution, and called for loyalty and discipline among its leaders. He also threatened dissident ministers with expulsion from the ranks of the ruling PSUV party. Dissident former ministers responded by saying that the real traitors to the revolution are those involved in corruption. International affairs specialist María Teresa Romero points out that "all this clarifies that division within government ranks is not so much between the military and pro-Cuban civilians, but the real polarization is between the ruling “troika” (Maduro, Cabello y Ramírez) and true communist believers who are more honest about financial and economic corruption". (Fox News, http://www.foxnews.com/world/2014/06/26/hard-line-leftists-growing-impatient-with-venezuela-socialist-administration/; El Universal, http://www.eluniversal.com/nacional-y-politica/140626/maduro-they-write-letters-to-hide-their-faults; and more in Spanish: Infolatam)

Capriles says anyone demanding an accounting is called a traitor

Opposition leader Henrique Capriles slammed the government for labeling as "traitors" all those who demand an accounting on corruption: "U$D 25 billion disappeared and no one seems to be responsible. They stole all the funds for food, medicine and all that is necessary here and now that say anyone demanding an accounting is a traitor".  More in Spanish: (El Nacional; http://www.el-nacional.com/

Human Rights Watch asks UNASUR to confront abuses in Venezuela

Human Rights Watch has asked the Union of South American Nations (UNASUR) to “exhort the Venezuelan government to immediately face the serious human rights situation" in this country. It says that human rights units within the UN and the European Parliament have expressed their concern, UNASUR "has yet to speak out on the very serious abuses perpetrated by Venezuelan government agents". More in Spanish: (Infolatam)

Venezuela seeks place on the UN Security Council

Venezuela is working to secure votes necessary to take one of the two seats assigned to Latin America within the UN Security Council as Argentina's term ends this year. It has reportedly obtained backing from at least 40 out of the 129 necessary votes. More in Spanish: (El Universal, http://www.eluniversal.com/internacional/140627/venezuela-negocia-respaldos-para-el-consejo-de-seguridad)

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 24, 2014

Oil & Energy

As world oil prices rocket on Iraq strife, Venezuela oil price jumps above U$D 100

Venezuela's weekly oil basket rose above U$D 100 a barrel for the first time since the Fall of last year because of continuing crises in Ukraine and Iraq. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending June 20 was U$D 100.29, up U$D 2.18 from the previous week's U$D 98.05. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2341062&CategoryId=10717)

PDVSA profit surges as lower spending counters oil slide

Petroleos de Venezuela, S.A.’s annual net income rose more than three-fold as the state-owned oil producer spent less on social programs, reduced costs after currency devaluation and sold assets. Profit rose to U$D 15.8 billion last year from U$D 4.3 billion in 2012, according to a bond offering circular dated May 14, a copy of which was obtained by Bloomberg. So-called comprehensive net income was U$D 12.9 billion, up from U$D 5.1 billion. (Bloomberg, http://www.bloomberg.com/news/2014-06-20/pdvsa-profit-surges-as-lower-spending-counters-oil-slide.html)

Oil output down 10.5% in five years

Venezuela's Minister of Petroleum and President of state-run oil company PDVSA, Rafael Ramírez, has said Venezuela has the capacity to boost oil exports to the United States, but his statement is not in line with PDVSA's current capacity. Both PDVSA's production and global exports, particularly to the United States, have dropped over the last five years.
Venezuela's oil production in 2013 hit 2.89 million barrels per day (bpd), a slight decrease of 0.68% versus 2.91 million bpd reported in 2012. Nonetheless, production has been spiraling downward for five years, which translates into an accumulated drop of 10.66% (356,000 bpd). (El Universal, http://www.eluniversal.com/economia/140623/pdvsas-oil-output-down-105-in-five-years)

Commodities

U$D 4 billion debt to drug companies creates medicine lack in Venezuela

For Venezuelans with medical needs finding health care, or even a fully-stocked pharmacy, is nearly impossible. According to a new report by Spanish newspaper ABC, Venezuela owes U$D 4 billion to international pharmaceutical corporations, a debt that has left Venezuelans uncertain as to whether they will be able to find life-saving medical items like insulin and antibiotics. The debt has particularly devastated the country because it imports 60% of its drugs; the bad credit makes it nearly impossible for the state to buy more. State figures claim there is a 50% deficit in surgical materials and drugs at a national level. The paper notes that 20,000 patients currently await dialysis treatment, 41,000 AIDS patients are without care, and the lack of sanitary products has exacerbated the spread of disease. Medical treatment in Venezuela has degenerated to a state it has not seen in thirty years, due to unsanitary conditions and a lack of essential items, such as gauze and latex gloves. The situation has led to an extreme surge in the number of amputations at Venezuelan hospitals, as infected wounds cannot rapidly be treated, and the lack of gauze or surgical equipment has forced doctors to make alternative remedies. (Breitbart, http://www.breitbart.com/Big-Peace/2014/06/23/Venezuela-Running-out-of-Medicine-Thanks-to-4-Billion-Debt-to-Drug-Companies)

Economy & Finance

Economic reform fades away as government weakens

The Venezuelan government is fully aware of the imbalances it must tackle in a comprehensive adjustment plan, yet President Nicolás Maduro is delaying the implementation of reforms in fear that the political effect will only hasten a drop in his popularity, but will also increase popular perception that he has lost control over the economy. The gravity of the situation has been revealed by former planning minister Jorge Giordani, as the economy shows signs of being on the brink of stagflation. (El Universal, http://www.eluniversal.com/economia/140623/adoption-of-economic-moves-fades-away-as-govt-weakens)

69% of those polled do not believe the economic model is successful and consequently, that the economy is going well, according to the latest poll carried out by Alfredo Keller and Associates between May 9 and May 24. According to the results, 60% has a negative opinion of Nicolás Maduro’s government and 67% think the country’s situation is negative. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39871&idc=1; El Universal, http://www.eluniversal.com/economia/140623/sixty-nine-percent-do-not-believe-in-successful-economic-model)

Politics

Capriles charges that Giordani's letter proves government corruption

Opposition leader Henrique Capriles Radonski has charged the public letter by former Planning Minister Jorge Giordani is evidence of official corruption. Capriles says: "Admitting access to and use of vast resources to secure the reelection (of the then president, Hugo Chávez) in 2012 reflects the serious moral decay of those leading our nation. Some non-governmental organizations have highlighted this in their papers. According to Transparencia Venezuela (Transparency Venezuela), our country ranks second to last in terms of corruption perception, only followed by Haiti." At the same time, Opposition party Un Nuevo Tiempo (UNT) is asking that Jorge Giordani appear before the National Assembly and explain his charges that Nicolás Maduro is not who rules the country and that there other power centers. (El Universal, http://www.eluniversal.com/nacional-y-politica/140623/capriles-giordanis-letter-is-evidence-of-government-corruption; and Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39885&idc=2).

HRW denounces at the UN human rights abuses by Venezuela

Human Rights Watch (HRW) has expressed to the United Nations Human Rights Council (UNHRC) its deep concerns over the serious human rights situation in Venezuela, describing it as "the most alarming" the country has experiences in years. The non-governmental organization said that after an anti-government protest held on February 12, 2014, law enforcement officers have hit people brutally, used firearms, pellets, and tear gas disproportionately against unarmed demonstrators. (El Universal, http://www.eluniversal.com/nacional-y-politica/140623/hrw-denounces-at-the-un-human-rights-abuses-by-venezuela)

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

April 30, 2013

Economics & Finance

Maduro facing an economy in distress

President Nicolás Maduro is facing an economy requiring urgent care and an economic scenario in critical condition. Soaring inflation and rising shortages are two of the most pressing problems. Maduro will also have to deal with a stagnating foreign currency-allocation system, considerable fiscal deficit and significant debt, regardless of sustained oil revenues. The energy crisis is another major issue that must be immediately addressed. Despite Maduro's charges of "sabotage" during the electoral campaign the truth is that power-generation deficiencies abound and lack of maintenance remains a harsh reality. (El Universal, 04-27-2013; http://www.eluniversal.com/economia/130427/maduro-receives-an-economy-in-distress)

Central Bank to trade banking reserves for housing bonds

The Central Bank has approved a directive that allows for trading mandatory reserves within the banking system for certificates issued by the Simón Bolívar Reconstruction Fund for 2013, in order to finance official housing projects. Banks are required by law to 17 out of every 100 bolivars deposited, but they may now use these funds to acquire the special government papers. More in Spanish: (El Universal, 04-29-2013; http://www.eluniversal.com/economia/130429/bcv-emite-normas-sobre-el-encaje-legal)

Giordani reported clinging to power

In his first official act President Nicolás Maduro separated the Finance and Planning Ministries, but his decree empowered the former joint Ministry to take up to 180 days to make the transfers effective. High official sources report that hard line ideologue Jorge Giordani is entrenched in his former post and office, applying the technicality to its full extent and setting off alarms within the team of incoming Finance Minister Nelson Merentes, who would have to wait 6 months in order to take full charge of a stagnating economy. More in Spanish: (El Comercio, http://elcomercioweb.com/web/investigacion/giordani-se-niega-a-soltar-el-coroto/)

Commodities

PETROBRAS says no more contacts with Pdvsa over refinery

Brazilian state-owned oil company PETROBRAS reported on Monday that no further contacts have been made with its Venezuelan counterpart Petróleos de Venezuela (PDVSA), since the extension expired on the original term of a partnership agreement to build a crude oil refinery in Brazil. A senior executive officer of the Brazilian oil company told Reuters that political instability in Venezuela might have driven its Venezuelan partner away from the talks on the construction of Abreu e Lima refinery, in Pernambuco, where Pdvsa was expected to have a 40% interest. (El Universal, 04-29-2013; http://www.eluniversal.com/economia/130429/petrobras-points-to-no-more-contacts-with-pdvsa-over-refinery)

GRUMA vows to continue operating in Venezuela

According to GRUMA representatives, even though its facilities here are in the hands of government appointed receivers, the Mexican producer keeps on running the companies. They say "business remains as usual since expropriation". In its economic report for Q1 2013, GRUMA notes it was "stripped" of control over its subsidiaries Molinos Nacionales (MONACA) and Derivados de Maíz Seleccionado (DEMASECA). As a consequence it had to stop consolidating such assets together with those of the group in order to meet global accounting standards. (El Universal, 04-29-2013; http://www.eluniversal.com/economia/130429/gruma-vows-to-continue-operating-in-venezuela; El Impulso, 04-27-2013; http://elimpulso.com/articulo/mayor-empresa-productora-de-harina-de-maiz-emprende-retirada-en-venezuela#.UX7B57WTglS; CNN Expansión, http://cnnespanol.cnn.com/2013/04/26/gruma-emprende-su-retirada-de-venezuela/?iref=allsearch)

General Justo Noguera has been appointed new President of the Guayana Development Corporation, replacing Colonel Rafael Gil. He was previously chairman of the committee for control and follow up within basic industries and developed a positive relationship with labor representatives at SIDOR, ALCASA, VENALUM and CARBONORCA. More in Spanish: (El Mundo: http://www.elmundo.com.ve/Noticias/Economia/Empresas/Justo-Noguera-sera-el-nuevo-presidente-de-la-CVG.aspx)

International Trade

Maduro pledges continued alliance with Cuba

Cuba and Venezuela signed cooperation accords on Saturday for 51 projects as President Nicolas Maduro, on his first trip to the island since his election, pledged to maintain the close alliance forged by his late predecessor, Hugo Chavez. Maduro said they would jointly spend U$D 2 billion this year on "social development," but it was not clear if he was discussing the 51 projects, few details of which were disclosed, or other works. His visit appeared aimed in part at allaying Cuban worries about post-Chavez relations with the nation that is Cuba's biggest ally and benefactor. Venezuelan oil and money help keep the communist-ruled island's troubled economy afloat and the governments have about 30 joint ventures, most of them in Venezuela. (Reuters, 04-28-2013; http://www.reuters.com/article/2013/04/28/cuba-venezuela-maduro-idUSL2N0DF03T20130428; AVN, 04-27-2013; http://www.avn.info.ve/contenido/cuba-venezuela-sign-new-bilateral-agreements; El Universal, http://www.eluniversal.com/economia/130429/castro-maduro-pact-helps-shore-up-cubas-economic-plan; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=763027&CategoryId=10717)

Sixteen presidents to attend PETROCARIBE summit

A total sixteen heads of state and government will take part on the next Petrocaribe Summit, expected to be held on 4 May in Margarita island, says president Nicolas Maduro. (AVN, 04-29-2013; http://www.avn.info.ve/contenido/sixteen-presidents-attend-petrocaribe-summit)

Logistics & Transport

La Guaira port operations reported down 60% due to FOREX restrictions

Eduardo Quintana, Vice President of the Vargas State Chamber of Commerce estimates port operations at La Guaira have dropped 60% since "there is no easy and feasible way to acquire FOREX at the official 6.30 rate". He says customs agents and port operators are being hit by a paralyzed port system. He says government currency controls have smothered anything that might make private imports possible, and the only arrivals are for official activities; and reports companies are starting to cut down around 50% of their personnel. More in Spanish: (El Comercio; http://elcomercioweb.com/web/investigacion/operaciones-portuarias-caen-un-60-por-falta-de-dolares/)

Politics

Venezuela to audit votes without the opposition, Court challenge to follow

Venezuela's electoral body has said the audit of votes cast in the presidential election will start on 6 May. But it will not carry out the full recount demanded by opposition candidate Henrique Capriles, who appears to have lost narrowly to President Nicolas Maduro on 14 April. Capriles called the audit a fake, accusing the electoral council (CNE) of following the government's orders. CNE president Tibisay Lucena said Capriles' demands were "unfeasible". The opposition leader reacted angrily to her announcement on national television: "Again they think Venezuelans are fools! Without [comparing] the vote tallies, the audit is a fake!". He also wrote that it was "impossible that Mrs. Lucena would say anything against the order she was given" by the governing party. On Sunday, Capriles repeated that he would use "all the available instances" to fight Maduro's victory. He had already vowed to challenge it in the Supreme Court seeking to annul the election and allow Venezuelans to go back to the polls. (BBC; http://www.bbc.co.uk/news/world-latin-america-22333705)

Electoral officer: the election audit should dispel doubts

The National Electoral Council's sole independent member Vicente Díaz believes the electoral race was "unfair and anti-democratic," and therefore the Venezuelans questioning the results should be given the opportunity to conduct an audit. "We, as National Electoral Council, failed to ensure balance in this election (...) It is not the directors (of CNE) who have to be certain about the results, but voters, the country," Díaz said. (El Universal, 04-29-2013; http://www.eluniversal.com/nacional-y-politica/130429/electoral-officer-the-election-audit-should-dispel-doubts)

Vote gap between Capriles and Maduro down to 1,49 %

The Elections Board has divulged votes by Venezuelans abroad, which have tallied 53,845 (93.13%) for Capriles and 3919  (6.77%) for Maduro, thus bringing the gap between the two candidates to 1.49%. 21 polling stations abroad remain yet to be counted. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/elecciones-2013/130429/diferencia-entre-maduro-y-capriles-se-redujo-a-149)

Government and opposition trade accusations but hold off on escalating conflict

A postelection crisis appears to be setting into a slow boil in Venezuela, with the government and opposition trading bitter accusations but holding back for the moment from moves that would escalate into direct conflict. The government is threatening to jail opposition leader Henrique Capriles on charges of masterminding postelection violence but has given no indication it has any immediate intention of acting against him. Capriles, meanwhile, is boycotting an audit of the vote and plans to challenge his narrow loss in court. He is almost certain to lose in the government-controlled court system, but hasn’t hinted that he will call his followers to the streets anytime soon. (The Washington Post, 04-26-2013; http://www.washingtonpost.com/world/the_americas/venezuelas-government-opposition-trade-accusations-but-hold-off-on-escalating-conflict/2013/04/26/3e51139a-aeda-11e2-b59e-adb43da03a8a_story.html)

A ‘hard hand’ in Venezuela

Any doubt that Nicolas Maduro is taking his cues from Cuba should have been dispelled by events over the weekend. As Maduro huddled with the Castro brothers in Havana and recommitted Venezuela to the heavy subsidies that keep the Cuban economy afloat, his functionaries back in Caracas made two announcements: first, that a promised audit of the questionable election that ratified him as the successor to Hugo Chavez would be perfunctory, excluding the materials that the opposition says would show evidence of fraud; and second, that a 35-year-old U.S. filmmaker arrested last week on ludicrous accusations of espionage had been criminally charged. Timothy Tracy, a Hollywood-based documentary maker who spent several months interviewing Chavez militants and opposition students before he was abruptly arrested at the airport last Wednesday. Maduro and the regime’s propaganda apparatus are nevertheless portraying him as a sinister secret agent who was financing “violent groups” to provoke “a civil war.” That claimed Interior and Justice Minister General Miguel Rodriguez “would lead to the intervention of a foreign power to bring order to the country.” The real danger in Venezuela is that Maduro will follow up with a full-scale crackdown on the opposition. Government spokesmen have taken to calling Henrique Capriles, who challenged Maduro in the presidential election and demanded an audit of the results, a “fascist murderer”; the prisons minister said she has a cell waiting for him. On Saturday, authorities arrested a retired general, Antonio Rivero, who is known for his denunciations of Cuban infiltration of the Venezuelan military. Maduro keeps promising he will soon apply “mano dura,” or a hard hand — a phrase that has been a favorite of Latin strongmen. He and his Cuban tutors will likely watch to see if there is any substantial response from the Obama administration or other South American governments to the seizing of Mr. Tracy. If there is not, don’t be surprised to see Venezuela’s jails filled by Mr. Capriles and other political prisoners. (The Washington Post; http://www.washingtonpost.com/opinions/a-hard-hand-in-venezuela/2013/04/29/96d0e5ee-b0ed-11e2-bbf2-a6f9e9d79e19_story.html)

Capriles: Miranda is the only Venezuelan state that has not received funds

Miranda state governor Henrique Capriles Radonski has charged his state is the only one in the country that has not received central government funding a mandated by the Constitution. "There is an order being enforced, which is not to provide the mandated allocation to Miranda state," the governor complained, and strongly demanded the national government to make the funds available - saying his political and personal position should not be turned against the people of Miranda. He called the move a crime and called Maduro a coward for his actions. (El Universal, 04-29-2014; http://www.eluniversal.com/nacional-y-politica/130429/capriles-miranda-is-the-only-venezuelan-state-that-has-not-received-fu and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/130430/capriles-le-dice-cobarde-a-maduro-por-retener-situado)

Spain would mediate in Venezuela, if asked, says Spanish Foreign Minister José Manuel García Margallo. More in Spanish: (El Universal, 04-30-2013; http://www.eluniversal.com/nacional-y-politica/130430/espana-se-ofrece-para-mediar-ante-tension-venezolana)

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.

April 26, 2013

Economics & Finance

Treasury needs an additional U$D 53 billion, says ECOANALITICA

A recent report by the ECOANALITICA research firm shows that the government needs U$D 53 billion, in addition to oil and tax income, in order to meet its current obligations. The firm estimates the gap can be covered through further indebtedness and by using money available in parallel funds, such as the National Development Fund, which is managed by the national treasury, but it warns that buffer funds that are outside the formal budget dropped by 35.3% last year. More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/economia/130426/calculan-que-el-fisco-necesita-53-millardos-adicionales)

Only U$D 638 million available for imports so far this year, 50% drop in imports estimated

Companies in Venezuela are being hit by a severe scarcity of FOREX badly needed for importing raw materials, spare parts, and finished products essential to the domestic supply chain. So far this year only U$D 638 million have been provided to the private sector through the Foreign Currency Administration Commission (CADIVI), as well as the former Transaction System for Foreign Currency Denominated Securities (SITME), and its substitute Ancillary Foreign Currency Administration System (SICAD). The meager supply of FOREX has meant lower stocks and more shortages nationwide. The National Trade and Services Council (CONSECOMERCIO) estimates there has been a 50% drop in imports during Q1 2013, based on data from national ports. There are only 10,000 companies registered within the exchange control system, this is 1.2% of all companies operating nationwide. (El Universal, 04-25-2013; http://www.eluniversal.com/economia/130425/only-usd-638-million-sold-under-alternative-mechanisms-this-year; and more in Spanish: http://www.eluniversal.com/economia/130426/consecomercio-estima-caida-de-50-en-las-importaciones; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/consecomercio-falta-de-divisas-tiene-paralizado-al.aspx)

New central bank's head to face inflation and nose-diving reserves

Former Trade Minister Edmée Betancourt is slated to become the next president of the Central Bank of Venezuela (BCV) upon being nominated to the National Assembly by President Nicolás Maduro. The Bank has become an appendage of the President's Office which prints bills to finance state-owned companies, fosters the unlimited growth of currency to provide the sense of a booming economy, and transfers the nation's international reserves to the National Development Fund (FONDEN) -which is managed by the president.
Under these conditions, Betancourt's doesn't seem likely to encourage a reform aimed at reversing practices. As a result investment banks such as Barclays Capital have reported to their clients that Betancourt's nomination is not a good signal for the economy. (El Universal, 04-24-2013; http://www.eluniversal.com/economia/130424/new-central-banks-head-to-face-inflation-and-nose-diving-reserves)

S&P revises outlook on Venezuela’s PDVSA to negative

Standard & Poor’s Ratings Services revised its outlook on Petroleos de Venezuela S.A. (PDVSA) to negative from stable. At the same time, the agency affirmed its ‘B+’ foreign and local currency ratings on PDVSA.
In accordance with the agency’s criteria on government-related entities and assuming no changes in the current likelihood of extraordinary support from the government, the outlook revision on PDVSA reflects the fact that a potential downgrade of Venezuela would lead to a similar rating action on the company. This is due to the agency’s assessment that there is an almost certain likelihood that the government would provide timely and extraordinary support to PDVSA, in case of financial distress. (Latin American Herald Tribune, 04-23-2013; http://www.laht.com/article.asp?ArticleId=756553&CategoryId=10717)

... as well as on CORPOELEC

Standard & Poor’s Ratings Services revised its outlook on Corporacion Electrica Nacional S.A. (CORPOELEC) to negative from stable. At the same time, the agency affirmed its ‘B’ corporate credit rating on the company. The outlook revision follows the April 19 outlook revision on Venezuela (B+/Negative/B). (Latin American Herald Tribune, 04-23-2013; http://www.laht.com/article.asp?ArticleId=757627&CategoryId=10717)

Devaluation hits multinational companies quarterly profits, as at least seven major firms in different areas have listed Venezuela and its weakened currency as the cause for losses or reduced earnings. More in Spanish: (El Mundo, 04-26-2013; http://www.elmundo.com.ve/Noticias/Economia/Empresas/Devaluacion-afecta-ganancias-trimestrales-de-empre.aspx)

Maduro announces Special ALBA-MERCOSUR productive investment economic areas

At a meeting yesterday, President Nicolás Maduro announced the government would establish special economic areas in several parts of the country in order to foster domestic production and exports. More in Spanish: (VTV, 04-26-2013; http://www.vtv.gob.ve/articulos/2013/04/25/presidente-maduro-anuncia-zonas-especiales-de-inversion-productiva-alba-mercosur-472.html; AVN; http://www.avn.info.ve/contenido/maduro-debemos-avanzar-hacia-expansi%C3%B3n-fuerzas-productivas-del-pa%C3%ADs)

Government will create a national fund for FOREX savings

President Maduro also announced his government is moving toward creating a national fund for savings in foreign currency, under special conditions to attract investment and seek capital repatriation. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/ejecutivo-crear%C3%A1-fondo-nacional-ahorros-divisas; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maduro-plan-de-inyeccion-de-divisas-comenzara-el-2.aspx)

Commodities

Govt plans to bolster energy industrialization

Newly appointed Electricity Minister Jesse Chacon says the Government will bolster industrialization within the nation's electric sector aiming to manufacture tools and supplies to meet the domestic demand and even export to foreign markets. He added that the midterm goal is to "manufacture in Venezuela the supplies which will be used in the electrical sector and, beyond that, export them to ALBA (Bolivarian Alliance for the Peoples of Our America) and Mercosur (Common Market of the South)." (AVN, 04-25-2013; http://www.avn.info.ve/contenido/bolivarian-govt-bolster-energy-industrialization; El Universal, http://www.eluniversal.com/economia/130425/venezuelan-government-orders-intervention-of-electricity-utility)

... minister pledges to stabilize electric sector within 100 days, or resign

Chacón also undertook a plan to stabilize the national electric system within 100 days, and said he will resign if he cannot meet the goal.  The plan includes maintenance and strategies to lower demand for electricity. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/ministro-chac%C3%B3n-se-compromete-estabilizar-sector-el%C3%A9ctrico-100-d%C3%ADas; El Universal, http://www.eluniversal.com/economia/130426/deciden-intervenir-y-determinar-responsabilidades-en-corpoelec)

Logistics & Transport

Former workers threaten to paralyze port operations

Former workers at the now defunct National Ports Institute have threatened to block entrances to the nation's main port - Puerto Cabello - if they are not paid at least 20% of what they are currently owed, after they congregated at the entrance of the administration building for Bolivarian Ports (BOLIPUERTOS), unsuccessfully expecting to receive their checks. More in Spanish: (Notitarde, 04-26-2013; http://www.notitarde.com/La-Costa/Ex-trabajadores-del-extinto-INP-amenazan-con-parar-el-puerto/2013/04/25/181651; El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/57713/ex-trabajadores-del-inp-amenazaron--con-paralizar-el-puerto-si-no-les-pagan)

Politics

Elections Board steadfastly refuses to allow access to voting registers in audit

To this date the National Elections Board - with the sole exception of independent member Vicente Díaz - has refused requests by opposition election experts to review voting registers and check for duplicate fingerprints, a key part of the audit on 46% unaudited polling centers, as demanded by presidential candidate Henrique Capriles Radonski and the opposition Democratic Unity Conference. The pro-government majority within the Board insists that the system's reliability can be proven by simply matching numbers in poll minutes, voting tickets and the number of voters who signed the registers - but not review each voter. More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/nacional-y-politica/130426/cne-mantiene-decision-de-verificacion-sin-acceso-a-cuadernos)

Opposition says it will formally contest the election, seek new vote

Opposition leader Henrique Capriles Radonski has announced that he and the National Democratic Conference (MUD) will contest presidential elections held on April 14th. He says: "We will contest the elections and comply with all legal steps, because in the end this will be known worldwide and what would come out of all this is a new election". He also said they would not take part in a fake audit: "We will not take part if there is no checking of voting registers in order to verify fingerprints and signatures, because that would be taking part in a sham and we will not accept it." Capriles said they will take the case to the Supreme Court as part of the required procedures, and that "if Venezuelan justice does not provide an answer we will take this internationally. What has happened here will go all around the world". More in Spanish: (El Nacional, 04-26-2013; http://www.el-nacional.com/)

Maduro declares there was no fraud, claiming "this is the same system used to elect members of the National Assembly and Governors." More in Spanish: (El Nacional, 04-26-2013; http://www.el-nacional.com/)

Machado says "Some in UNASUR feel cheated by the Elections Board"

National Assembly member María Corina Machado says the opposition has been in touch "with all legislatures in Latin America, Europe, and the World Inter Parliamentary Union, and all have roundly condemned what is happening at the National Assembly and the betrayal of a commitment by Tibisay Lucena and the National Elections Board to fully audit April 14th presidential elections". She added that some UNASUR representatives "believe they were cheated" by the Board, and that what is at stake is whether the regional organization "will be an organization known to defend democracy, or a club of nations meant to cover up each other's serious violations of democracy". More in Spanish: (Tal Cual, 04-26-2013; http://www.talcualdigital.com/index.html)

Fernández and Rousseff meet, discuss Venezuela

Argentine President Cristina Kirchner and Brazilian President Dilma Rousseff met yesterday in Buenos Aires and among other issues discussed the UNASUR declaration on the situation in Venezuela, which the termed "democratic". The UNASUR statement supported the decision to expand the election audit to the total number of voting centers. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/presidentas-fern%C3%A1ndez-y-rousseff-destacan-calidad-declaraci%C3%B3n-unasur-sobre-venezuela)

Around 93% of Venezuelans abroad voted for Capriles, further closing vote gap

A preliminary count of the votes cast abroad in the Venezuelan presidential election of April 14 show that opposition candidate Henrique Capriles Radonski won 93% of the ballots. However, these are unofficial results from a manual count conducted by the opposition campaign team, based on the manual tally sheets from the polling stations located in consulates and embassies. These preliminary results are available for consultation on the website comandoexteriorvenezuela.com. (El Universal, 04-24-2013; http://www.eluniversal.com/nacional-y-politica/130424/some-93-of-venezuelans-abroad-vote-capriles)

Opposition, government wrestle on web, airwaves over clinic firebombing claims

Hours after barely winning Venezuela’s presidential election, the ruling party started to flood state media with accusations that opposition provocateurs were firebombing Cuban-run neighborhood health clinics across the country in revenge. More than a week later, a national dispute is raging as the opposition wages a remarkably successful media counteroffensive showing the claims to be seriously exaggerated and in some cases entirely false. With meticulously dated amateur photos of undamaged clinics, opposition supporters have vividly illustrated how cellphone cameras, Twitter and Facebook can help even the playing field against a government that came to dominate broadcast media during the late Hugo Chavez’s 14-year presidency. (The Washington Post, 04-24-2013; http://www.washingtonpost.com/world/the_americas/opposition-government-wrestle-on-internet-airwaves-over-clinic-firebombing-claims/2013/04/24/51ef7e34-ad11-11e2-a8e6-b6e4cc7c49d1_story.html; Fox News, http://www.foxnews.com/world/2013/04/24/opposition-government-wrestle-on-internet-airwaves-over-clinic-firebombing/)

Cabello now says he will not pay National Assembly legislators who do not recognize Maduro

National Assembly President Diosdado Cabello, who has refused opposition members the right to speak at the National Assembly unless they first recognize Nicolás Maduro as President, now says he will not pay dissident Assembly members: "This is logical and coherent. How am I to pay a ghost? If they do not work they will not be paid, and they are not working because they do not recognize Maduro". More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/nacional-y-politica/130426/cabello-no-cobraran-diputados-que-no-reconozcan-a-maduro)

Parliament launches probe into Capriles

The government-controlled parliament set up an inquiry into violence over the disputed election that authorities blame on opposition leader Henrique Capriles. Nine people died and dozens were injured after opposition protests against Nicolas Maduro's narrow April 14 presidential poll win turned violent around the nation. The government said the unrest was evidence the opposition was planning a coup. Capriles' camp rejects that, saying officials exaggerated the violence and included deaths from common crimes to bolster the toll and discredit the opposition. (Reuters, 04-25-2013; http://www.reuters.com/article/2013/04/25/us-venezuela-opposition-idUSBRE93N0Z320130425)

Deputy Calixto Ortega, appointed chargé d’affaires to the United States, says he will do everything possible to keep improving relations “with the precise instructions our President and the Venezuelan Foreign Affairs Ministry". (Veneconomy, 04-24-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34434&idc=1; El Universal, 04-24-2013; http://www.eluniversal.com/nacional-y-politica/130424/venezuela-appoints-calixto-ortega-as-charge-daffaires-to-the-us)

American filmmaker detained in Venezuela post-vote crackdown

A 35-year-old filmmaker from California has been arrested by authorities who are accusing him of fomenting postelection violence on behalf of the U.S. government. President Nicolas Maduro says he personally ordered Timothy Tracy's arrest on suspicion of "creating violence in the cities of this country." The interior minister said Tracy was working for U.S. intelligence, paying right-wing youth groups to hold violent demonstrations in order to destabilize the country after Maduro's narrow election win last week. Friends and family of Tracy say he has been in Venezuela since last year making a documentary about. The Georgetown University English graduate produced the recent Discovery Channel program "Under Siege," about terrorism and smuggling across the U.S./Canada border. He is the first American in recent memory to be detained in Venezuela on politically related charges. (Fox News, 04-25-2013; http://www.foxnews.com/world/2013/04/25/us-man-detained-in-venezuela-post-vote-crackdown-family-says-innocent-filmmaker/#ixzz2Ra0WOOjX) 

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.