Economics &
Finance
Government to "evaluate"
its FOREX debt to private sector
A recent resolution by the National Foreign Trade Center
(CENCOEX) established that government FOREX obligations to the private sector
for imports made under the abolished CADIVI system will now be subject to a "prior evaluation" as per a
timetable that is yet to be published. More in Spanish: (El Universal; http://www.eluniversal.com/economia/140211/gobierno-reitera-que-examinara-la-deuda-con-empresas-privadas)
SICAD U$D 4440 million auction to take place next Monday,
private banks excluded
The National Foreign Trade Center (CENCOEX) - which has
replaced CADIVI - will auction U$D 440 million next Monday through government
owned banks only. Private banks were left out of the process. Companies dealing in spare automotive parts,
chemicals, medical instruments, glass and ceramics have been chosen as
participants, and must have been clients of the government banking system for
"no less than 90 days". (Veneconomy, 02-10-2014; http://www.veneconomy.com/site/index.asp?ids=44&idt=38005&idc=2;
and more in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/cencoex-convoca-subasta-del-sicad-a-traves-de-la-b.aspx#ixzz2t0SAXr8x;
http://www.elmundo.com.ve/noticias/economia/politicas-publicas/cencoex-se-hace-cargo-del-sicad-con-nuevas-reglas-.aspx;
AVN; http://www.avn.info.ve/contenido/centro-comercio-exterior-convoca-nueva-subasta-del-sicad-440-millones)
FOREX 'swap' market may be operating
this month
The government says Venezuela will this month set up a
new parallel foreign currency exchange platform based on bond swaps to
complement two existing mechanisms for dollar sales. "It won't be any later than February," Oil Minister Rafael
Ramirez, who is also vice-president for the economy, was quoted as saying
by local media at the weekend. It "will
be more transparent and would allow different public and private players to
participate and bring foreign currency in," he said. The government
has been saying for months it plans to set up this system, but has given few
details on how it would work. (Reuters, 02-10-2014; http://www.reuters.com/article/2014/02/10/venezuela-economy-idUSL2N0LF0KY20140210;
http://www.reuters.com/article/2014/02/10/venezuela-economy-idUSL2N0LF0O920140210;
Bloomberg, http://www.bloomberg.com/news/2014-02-10/venezuela-plans-new-currency-swap-market-amid-dollar-shortage.html)
Venezuela bonds rally on currency
swap market promise
Venezuelan dollar bonds rallied the most in almost eight
months after Economy Vice President Rafael Ramirez said the country plans to
start operating a new currency swap market before the end of the month. The
benchmark dollar bond due in 2027 rose 0.99 cents on the dollar to 67.69 cents
at 11:14 a.m. in New York. The yield on the bond fell 23 basis points to 14.84%
after falling 66 basis points on Ramirez’s Feb. 7 comments, the biggest two-day
decline since June 27. “Unlike in 2010,
this new market will have a controlled price, and they will also likely
continue to ration dollars there because demand will be too high as international
companies try to take earnings out of the country,” says Henkel Garcia,
director of Caracas-based consultancy ECONOMETRICA. According to Ramírez: “The private sector should be able sell its
foreign currency so that our economy can function. With our public funds from
oil we’re going to guarantee what we consider essential to our priorities.”
(Bloomberg Business Week: http://www.businessweek.com/news/2014-02-10/venezuela-plans-new-currency-swap-market-amid-dollar-shortage)
Administrative, sales and advertising
expenses not considered costs in establishing profit margins
The National Superintendent for the Defense of
Socio-Economic Rights (SUNDDE) has ruled that administrative, sales and
advertising expenses will not be considered costs in estimating profit margins
under the Fair Prices Law. Distribution costs will only be accepted for
companies that carry out these tasks. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/empresas-no-podran-cargar-a-los-precios-sus-costos.aspx#ixzz2t0TJbSUO; AVN; http://www.avn.info.ve/contenido/c%C3%A1lculo-precios-justos-garantiza-ganancias-productores-y-comerciantes; http://www.avn.info.ve/contenido/precios-se-fijar%C3%A1n-funci%C3%B3n-del-costo-real-producci%C3%B3n; El Universal, http://www.eluniversal.com/economia/140211/sundde-establece-criterios-para-analizar-costos-de-produccion)
CONSECOMERCIO warns trade system is
not ready for the Fair Prices Law
CONSECOMERCIO, Venezuela's main trade association has warned
that the nation's trade system is "not prepared" for the Fair Prices
Law: "We have no doubt that an important segment of the nation's trade
system is not prepared for this type of procedure, particularly small business"
- and adds that this law has been passed amid inflation that appears "uncontrollable". More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/consecomercio---red-comercial-no-esta-preparada-pa.aspx#ixzz2t0Ttg3Yn
Authorities suspend remittances to
Colombia
Venezuelan authorities have suspended family remittances
for Venezuelan residents in Colombia. The measure will be effective pending the
implementation of a new mechanism and the establishment of the conditions
governing remittances, as per a resolution by the Ministry of Economy, Finance,
and Public Banking. As of February 10, authorized foreign exchange operators
are banned from processing any application or updating documents related to
remittances to Colombia. (El Universal,
02-10-2014; http://www.eluniversal.com/economia/140210/venezuelan-authorities-suspend-remittances-to-colombia)
Venezuela has the highest country
risk in the world
Venezuela closed last week with the highest country risk
in the world and if the government seeks funding through the sale of bonds
abroad, it could pay a tremendously high interest rate of 14.44% above the
amount paid by the United States, which is the nation financed at the lowest
cost. (El Universal,
02-10-2014; http://www.eluniversal.com/economia/140210/venezuela-has-the-highest-country-risk-in-the-world; http://www.eluniversal.com/economia/140210/inflation-in-venezuela-hits-highest-level-since-1996-despite-controls)
Venezuela could fall into an even more dramatic economic chaos than it currently is, warns International Monetary Fund Director for
Latin American Affairs Alejandro Werner. Werner points out “inflation episodes around 50-60% that are
stable through the years are difficult to find. These are the sort of levels in
which the economies speed out of control into a very, very high inflation or
political measures are put into action to control the pressures over prices.”
(Veneconomy, 02-10-2014; http://www.veneconomy.com/site/index.asp?ids=44&idt=38006&idc=2)
Oil
& Energy
Promised swap system could provide oil companies with
options
Analysts report markets have quieted slightly with the announcement that
the Venezuelan government will allow a FOREX swap market, with PDVSA
participating, which could also allow PDVSA's partner companies to go ahead
with projects that are currently delayed or paralyzed. More in Spanish: (El
Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/sistema-de-permuta-abre-opciones-a-petroleras.aspx#ixzz2t0PmIoOd)
Commodities
MONACA flour plants are reported
operating at 45% capacity
Fernando Ortega, an official in the flour workers union
reports that MONACA plants at Puerto Cabello are operating at 45% capacity and
90 workers remain outside the plant.. He says this is reflected in flour
scarcity. "We cannot understand why
they are not working at 100% capacity, mills stop every so often". And
adds that 156 workers are back in line, while 90 remain outside, receiving no
pay. More in Spanish: (Notitarde, http://www.notitarde.com/La-Costa/Plantas-de-Monaca-operan-solo-al-45-de-su-capacidad-productiva-2104570/2014/02/10/303923
287 tons of newsprint said to have arrived at
Puerto Cabello, from New York. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Desembarcaron-papel-prensa-en-el-puerto-local-2104575/2014/02/10/303927; El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/93751/-ms-de-mil-toneladas-de-autopartes-llegaron-al-puerto)
International
Trade
Toyota Venezuela slams brakes on
vehicle assembly, irks president
Toyota Motor Corp plans to halt vehicle assembly
in Venezuela this week despite a rebuke over the weekend from
socialist President Nicolas Maduro and a demand for talks with the Japanese
automaker's top executives. The move by the world's No. 1 automaker would
appear to bring vehicle production to a standstill, given it made almost all
the units produced in Venezuela in January, according to the local
automobile chamber. Like other private businesses in Venezuela, carmakers are
complaining that the socialist government's currency controls are preventing
them from importing essential products. An official at Toyota Venezuela, who
asked not to be named, confirmed on Monday that its assembly plant in the eastern
state of Sucre would be temporarily shut from Thursday. (Reuters, 02-10-2014; http://www.reuters.com/article/2014/02/10/toyota-venezuela-idUSL2N0LF0SP20140210;
Bloomberg, http://www.bloomberg.com/news/2014-02-07/toyota-halts-venezuela-production-as-car-sales-fall.html)
Logistics
& Transport
Government orders a review of
airfares
As distorted airfares continue to plague Venezuela, both international
and national airlines have adjusted fares to an exchange rate that is above the
FOREX rate established by the Ancillary Foreign Currency Administration System (SICAD).
This also includes state-owned airline CONVIASA, which has implemented several
adjustments in international airfares since January 24. Travel agencies report
that some international airlines, namely AIR EUROPA, AEROMEXICO, and AIR CANADA,
cut down their flight frequencies, and "this explains why there are fewer flights and higher fares." (El Universal, 02-10-2014; http://www.eluniversal.com/economia/140210/venezuelan-executive-office-orders-revision-of-airfares)
Politics
Maduro: "Not one dollar more for the parasitic bourgeoisie"
President Nicolás Maduro says the government is preparing
a "productive map of all public sector
areas" that he intends to reinforce in order to "expand the nation's productive forces",
adding that "we will not allocate a
dollar more to the parasitic bourgeoisie; the Fatherland's dollars are for
production". He again attacked FEDECÁMARAS, the nation´s main business
organization: "Their hour will come,
FEDECÁMARAS and VENAMCHAM (Venezuelan-American Chamber of Commerce) you feel secure because you have the gringo
blessing, but your hour will come", he warned. More in Spanish:
(Últimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maduro-no-habra-ni-un-dolar-mas-para-la-burguesia-.aspx#ixzz2t137MTCp)
Maduro threatens to disqualify
opponents from public office "for
life"
As students protest to seek liberation of other students
imprisoned for protesting in Táchira state, President Maduro says he will seek
a way to stop those who take part in "pro
coup adventures" from running for office. "I will seek strict rules so that those who take part in this pro coup
adventure or any other adventure can never again be a candidate for anything in
this country". Both Maduro and National Assembly President Diosdado
Cabello specifically accused Leopoldo López, a key opposition leader, of
instigating protests. López was previously disqualified by the National
Comptroller until this year, in a decision highly questioned by the Inter
American Human Rights Court. The opposition is expected to stage nationwide
protests tomorrow. More in Spanish: (BBC)
Two German tourists shot on
Margarita Island
A German tourist who arrived on the island of Margarita was gunned down
Friday and another was wounded while they were being robbed, Tourism Minister
Andres Izarra said. "We deeply
regret the incident in which a German tourist died on Margarita. Security
forces are searching for the criminals," Izarra. "We are providing all possible help to the
injured tourist, and to the tourism company and the German Embassy,"
the minister wrote. (Latin American Herald Tribune, 02-08-2014; http://www.laht.com/article.asp?ArticleId=1578229&CategoryId=10717)
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.
