July 13th, 2012

Economics & Finance

Central Bank claims reserves are adequate

Eudomar Tovar, first Vice President of the Central Bank claims international reserves are holding at a level adequate to the nation's needs. He says total reserves are currently at U$D 27.772 billion, and operating reserves available for imports and debt service are over U$D 4 billion. (El Universal, 07-13-2012; http://www.eluniversal.com/economia/120713/bcv-afirma-que-las-reservas-mantienen-un-nivel-adecuado)

Rise in debt increases risk of devaluation

Despite a prolonged boom in oil prices, internal government debt rose 262% over the past six years. It is now starting to increase massively. The Annual Debt Law had authorized the government to generate new debt up to VEB 64.3 billion, and it has done so at such a speed that the National Assembly is about to authorize an extra VEB 30 billion for bonds and treasury bills. More in Spanish: (El Universal, 07-13-2012; http://www.eluniversal.com/economia/120713/alza-de-la-deuda-en-bolivares-eleva-riesgo-de-devaluacion;  El Nacional; http://www.el-nacional.com/)

Government claims Chavez government has created 4 million jobs.

Speaking to the official news agency, Elias Eljuri, head of the government's National Statistics Institute claims that over the past 11 years some 4 million jobs have been created. More in Spanish: (AVN, 07-13-2012; http://www.avn.info.ve/contenido/se-han-creado-4-millones-empleos-durante-gobierno-chávez)

Commodities

Venezuela spent U$D 288 million importing gasoline from the US

The decay in domestic refining within Venezuela, plus increasing internal consumption have led Venezuela to import not only ingredients for producing oil byproducts, but also gasoline and liquid gas, according to statistics from the US Commerce Department which show Venezuela as importing 15,800 barrels per day in gasoline from December 2011 through April 2012. Using the average price of U$D 122 per gasoline barrel, it is estimated that around U$D 288 million has been spend on importing gasoline within those months. More in Spanish: (El Universal, 07-13-2012; http://www.eluniversal.com/economia/120713/el-pais-gasto-unos-288-millones-en-importar-gasolina-en-5-meses)

India state oil firms plan to boost Venezuela investments

Indian state-run oil companies plan to boost investments in Venezuela and source higher volumes of crude oil from the South American country, India's junior industry minister said on Wednesday. An Indian consortium led by ONGC Videsh, the overseas investment arm of oil explorer ONGC, plans to invest U$D 2.2 billion in the Carabobo oil fiaeld project, and another U$D 500 million in the San Cristobel oil field, Jyotiraditya Scindia said in a statement. (Reuters, 07-11-2012; http://www.reuters.com/article/2012/07/11/india-venezuela-energy-idUSL3E8IB2XN20120711; El Universal; http://www.eluniversal.com/economia/120711/indian-oil-companies-plan-to-invest-more-in-venezuela; Fox Business, http://www.foxbusiness.com/news/2012/07/11/india-state-oil-companies-to-invest-nearly-3-billion-in-venezuela/)

Government does not want others to export coke

Science and Technology Minister Jorge Arreaza says that the mountains of coke accumulating around the Jose refining plant in Anzoátegui state is due to the fact that the government "does not want others to take coke away". He acknowledged environmental concerns over the very large accumulation of coke in the area. Arreaza is President Chavez's son-in-law. More in Spanish: (El Universal, 07-13-2012; http://www.eluniversal.com/economia/120713/el-gobierno-no-quiere-que-otros-se-lleven-el-coque)

FORTUNE ranks PDVSA among the 40 largest companies in the world

The state-run Petroleos de Venezuela is ranked 36 of the largest companies in the world, according to annual rankings compiled by FORTUNE magazine. PDVSA came in two steps under Mexico's PEMEX, with revenues at U$D 124.754 billion. More in Spanish: (Ultimas Noticias, 07-12-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/pdvsa-entre-las-40-mayores-empresas-del-mundo.aspx)

International Trade

Brazilian FM defends Venezuela's entry into Mercosur

Brazilian Foreign Minister Antonio Patriota on Wednesday once again advocated the entry of Venezuela into the Common Market of the South and the suspension of Paraguay from the bloc. He added that such move is intended to send a "clear" message against "anti-democratic adventures." Patriota appeared before the Foreign Relations Committee, Brazilian Senate, and replied to criticism from some opposition legislators who rejected the decisions made by Argentina, Brazil and Uruguay to suspend Paraguay and allow Venezuela to join the bloc, Efe said. (El Universal, 07-11-2012; http://www.eluniversal.com/economia/120711/brazilian-fm-defends-venezuelas-entry-into-mercosur)

VENAMCHAM reports 42% increase in imports from the USA

Carlos Tejera, General Manager of the Venezuelan American Chamber of Commerce and Industry (VENAMCHAM) reports that while Venezuelan exports to the US dropped by 8%, imports from the US rose 42% during the first five months of the year. It is outstanding that oil imports rose 457% from 2011 to 2012. More in Spanish: (El Universal, 07-13-2012; http://www.eluniversal.com/economia/120713/venamcham-reporta-alza-de-42-en-compras-a-eeuu)

Imports from China increased 49% in one year

Imports from China increased 49% in a year for a total of U$D 1.7 billion between January and April 2012. This amounts to 13.4% of all imports, and places the Asian nation as a second source of the Venezuelan economy, according to data released by the National Institute of Statistics. More in Spanish: (El Nacional, 07-12-2012; http://www.el-nacional.com/)

Logistics & Transport

19 vessels remain at bay in Puerto Cabello, and La Guaira is unable to receive vessels

A total of 19 food-bearing vessels remain at bay in Puerto Cabello, waiting to dock. The ships are carrying bulk cargo such as yellow corn, malt, rice, soybeans, and livestock, and six are bearing containers. The option of diverting vessels from Puerto Cabello to the port of La Guaira is not available as the latter port is not operating at 100% capacity, according to Neidy Rosal, a member of the Carabobo State Legislative Council, who called for an improvement in offloading conditions at Puerto Cabello. More in Spanish: (El Carabobeño, 07-12-2012; http://www.el-carabobeno.com/impreso/articulo/23839/puerto-de-la-guaira-no-est-apto-para-recibir-buques-)

Politics

Chavez hits campaign trail in bid to prove he’s cancer-free

President Hugo Chavez is hitting the campaign trail in an attempt to persuade voters his battle with cancer hasn’t diminished his vitality ahead of what’s shaping up to be his toughest election. Mounted on a float-like truck, he attended a rally in the oil producing state of Anzoátegui on the northeastern coast and plans to hold a similar event in Barquisimeto in central Lara state July 14. The rallies are the first since the former tank commander marked the official start of campaigning July 1 with a caravan and speech in Maracay, 50 miles west of Caracas. (Bloomberg, 07-12-2012; http://www.bloomberg.com/news/2012-07-12/chavez-hits-campaign-trail-in-bid-to-prove-he-s-cancer-free.html)

Romney slams Obama for playing down threat of Hugo Chavez

Republican Mitt Romney chided President Barack Obama on Wednesday for playing down "the threat" posed by Hugo Chavez as he sought to portray the Democrat as soft on national security, an issue that may resonate with Latino voters in November's election. Romney was reacting to remarks Obama made to a Spanish language television station that Chavez's actions over recent years had "not had a serious national security impact" on America. (Reuters, 07-12-2012; http://www.reuters.com/article/2012/07/12/us-obama-romney-chavez-idUSBRE86A1HY20120712; El Universal, 07-11-2012; http://www.eluniversal.com/nacional-y-politica/120711/obama-hopes-that-venezuela-has-free-elections; The Washington Post, http://www.washingtonpost.com/politics/romney-obama-assertion-that-chavez-not-a-threat-to-us-is-stunning-and-shocking/2012/07/11/gJQAR49WdW_story.html; CNN, http://politicalticker.blogs.cnn.com/2012/07/11/romney-criticizes-obama-over-venezuela-comments/?iref=allsearch; Fox News, http://www.foxnews.com/politics/2012/07/11/romney-slams-obama-over-tunning-comment-on-chavez/; The Wall Street Journal, http://blogs.wsj.com/washwire/2012/07/11/gop-attacks-obama-for-downplaying-chavez-threat/?KEYWORDS=Venezuela)

Chavez says he seeks friendly relations with Catholic Church leaders

President Hugo Chavez says he’s seeking friendly relations with representatives of the Roman Catholic Church.

Their dealings have been tense in the past. Church representatives have accused the socialist leader of becoming increasingly authoritarian and Chavez has strongly criticized Cardinal Jorge Urosa, saying he has misled the Vatican with warnings that Venezuela is drifting toward dictatorship. (The Washington Post, 07-11-2012; http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-says-he-seeks-friendly-relations-with-catholic-church-leaders/2012/07/11/gJQABJbQdW_story.html; Fox News, http://www.foxnews.com/world/2012/07/11/chavez-seeks-friendly-ties-with-catholic-church/)

National Elections Board proposes pact on election rules, Chavez quickly says he will sign

The pro-government majority National Elections Board has set forth an agreement for presidential candidates to respect election results, and avoid violence. President Hugo Chavez was quick to say he would sign immediately, while opposition leaders - and the only independent Elections Board member - say the agreement failed to include provisions on the use of government funds and resources, and the abuse of media time by the government in favor of Mr. Chavez. More in Spanish: (AVN, 07-13-2012; http://www.avn.info.ve/contenido/cne-aprueba-acuerdo-compromiso-candidatos-presidenciales-para-respetar-resultados; http://www.avn.info.ve/contenido/chávez-anuncia-que-firmará-acuerdo-electoral-propuesto-cne)

April 17, 2012

Economics & Finance

Banks increase purchases of Government bonds

The Venezuelan basket of crude oil and products stands at U$D 112 per barrel year to date, but the increase in spending is so high that the Chavez regime is quickly increasing debts with local banks. The Ministry of Finance sells bonds each week to local banks and - according to official data - the government bonds portfolio held by private and state-run banks has increased by 20% in the first two months of the year, amounting to VEB 100.19 billion (U$D 23.46 billion). Debt creation will accelerate over the coming weeks as the government sells more bonds to Venezuelan banks in order to fund the agricultural sector. (El Universal, 04-16-2012; http://www.eluniversal.com/economia/120416/private-and-state-run-banks-increase-purchase-of-govt-bonds)

CADIVI has authorized 1,000 million dollars for the food industry

The Currency Board (CADIVI) has approved U$D $ 1.202 billion for food imports during the first three months of the year, an increase of 16.6% over U$D 1.030 billion approved for the same period in 2011. Among the key food items purchased abroad are: yellow corn, cake and other soybean oil residues, milk powder, soybean oil, raw, unroasted malt, hatching eggs, animal and vegetable fats and oils. More in Spanish: (RNV; 04-16-2012; http://www.rnv.gov.ve/noticias/index.php?act=ST&f=4&t=181618)

Venezuela's stock-market registers world's largest growth

Venezuela's Stock Index is well above European stock-markets and showed the world's highest growth in 2012 with a 77.79% increase in equities, according to information published in the Spanish newspaper El Pais. Venezuela doubles Vietnam, which is second in the list. So far this year the index has grown 33.44%, followed by Egypt with 30.72%. An economic surge appeared by the end of 2011, when the Gross Domestic Product (GDP) went up 4.2%. Financial institutions and insurance grew 18.8%; construction, 12.8%; communications, 6.9%; trade, 5.7%; and manufacture, 3.3%. (AVN, 04-16-2012; http://www.avn.info.ve/contenido/venezuela039s-stock-market-registers-world039s-largest-growth)

Commodities

VENALUM operating at 28,2% capacity

Shrinking operations at the CVG VENALUM aluminum plant have taken a turn for the worse, as the industry started this week operating at 28,2% of capacity. On balance, updated yesterday, is has 26 connected cells and 649 that are out of service. 114 cells were shut down during the second week in April. More in Spanish: (El Universal; http://www.eluniversal.com/economia/120417/venalum-opera-a-282-de-su-capacidad-instalada)

Grupo Zuliano to buy Koch stake in Venezuela propylene plant

Grupo Zuliano CA will buy a 35% stake in a Venezuelan propylene plant from Koch Industries Inc., says Armando Sandoval, general manager of the Maracaibo-based company. The transaction, valued at about U$D35 million, will be completed by April 30. Grupo Zuliano, a Maracaibo-based holding company whose subsidiaries produce chemicals and plastics, previously had a 15% stake in Propileno de Falcon CA, known as PROFALCA, and will now hold 50%. A unit of state-run chemicals company PEQUIVEN SA holds the remaining amount. The acquisition was approved in a shareholders meeting yesterday, Sandoval said. (Bloomberg, 04-13-2012; http://www.bloomberg.com/news/2012-04-13/grupo-zuliano-to-buy-koch-stake-in-venezuela-propylene-plant-1-.html)

Venezuela oil falls to $113.85

Venezuela's weekly oil basket fell U$D 1.16 to U$D 113.85 as oil prices slipped in international markets on concerns over moderating world growth and European debt problems. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petróleos de Venezuela S.A. (PDVSA) during the week ending April 13 fell to U$D 113.85, down from the previous week's U$D 115.01. (Latin American Herald Tribune, 04-13-2012; http://www.laht.com/article.asp?ArticleId=491978&CategoryId=10717)

PETROPAR prepares U$D 264 million debt payment

Sergio Escobar, president of Paraguayan state-run oil company Petropar, says he plans to travel to Venezuela this week to settle the payment of a U$D 264 million debt with state-run oil company Petróleos de Venezuela (PDVSA).

The top official added that there is an agreement to pay the debt. (El Universal, 04-16-2012; http://www.eluniversal.com/economia/120416/petropar-tunes-up-details-of-usd-264-million-debt-payment)

Venezuela does little to develop its mining potential

Venezuela has the largest gold reserves sin Latin America, about 65% of the region's total, but is the country with least invests in them. The same situation arises with regard to proven iron ore reserves held by the Guayana Development Corporation and developed by Ferrominera del Orinoco, are estimated at 1.7 billion tons, and calculated probable and possible deposits add up to 13 billion tons, which make it the tenth nation in the world in iron ore reserves. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/mineria/venezuela-hace-poco-para-desarrollar-el-gran-poten.aspx)

International Trade

Colombia and Venezuela ratified pending addenda to bilateral trade agreement, signed by the presidents of both nations in 2011. They include preferential tariff treatment, sanitary and phitosanitary regulations, and rules of origin, among others. (Veneconomy, 04-16-2012; AVN, 04-16-2012; http://www.avn.info.ve/contenido/venezuela-colombia-sign-commercial-accord-cartagena)

Politics

Chavez skips summit citing medical reasons, heads to Cuba for cancer treatment

President Hugo Chavez skipped the Summit of the Americas for medical reasons and headed to Cuba to continue with cancer treatment that is increasingly forcing him out of the international spotlight. Foreign Minister Nicolas Maduro announced the decision from Colombia, where he was attending the summit in Chavez’s place. He told state television that Chavez decided not to attend on the advice of his doctors. (Washington Post, 04-14-2012; http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-skips-summit-citing-medical-reasons-heads-to-cuba-for-cancer-treatment/2012/04/14/gIQAthU9HT_story.html; El Universal, 04-16-2012; http://www.eluniversal.com/nacional-y-politica/120416/chavez-back-in-cuba-to-continue-his-medical-treatment)

Evo Morales fears for Chavez health

Bolivian President Evo Morales says he fears for the life of his counterpart Hugo Chávez. In an interview with Bogotá's El Tiempo daily he said: "I have a lot of fear...It hurts that a commander has health problems", and added that the Venezuelan leader is "always an optimist" More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/120417/evo-morales-expreso-su-miedo-por-salud-de-chavez)

Farmers report guerrilla presence in Zulia

Farmers and peasants in the Machiques region of Zulia are reporting the presence of guerrilla groups in farms located at the foot of the mountains. They say that for the last week over 100 men armed with weapons and sophisticated warfare equipment have been visiting properties and requesting cooperation for their movement. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Trends in drugs trafficking in Venezuela: a "concern"

Adam Szubin, Director of US Treasury's Office of Foreign Asset Control (OFAC), the agency responsible for assistance in anti-terrorist efforts, says trends in Venezuela are "a concern". He made his statement in an interview with Caracas daily "El Universal". In 2008, the agency for the first time added senior Venezuelan government officials to its OFAC's black list of drug kingpins for alleged cooperation with the Colombian Revolutionary Armed Forces (FARC). (El Universal, 04-16-2012; http://www.eluniversal.com/nacional-y-politica/120416/the-drugs-issue-indicates-to-a-concerning-trend-in-venezuela)

Chavez listed as the most garrulous president among those still in office, adding up over 1,500 hours of speeches during in his 13-year presidency, according to Spain's daily ABC newspaper. “Long speeches are typical of leaders who are not very fond of democracy and appeal to mobilize listeners with sensations instead of presenting arguments,” explained La Fábrica de Discursos director Fran Carrillo. (Veneconomy, 04-16-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30141&idc=1)

Election Board estimates 75-80% will vote in presidential elections

Socorro Hernandez, a director at the National Elections Board (CNE), estimates that between 75 and 80% of Venezuelans registered to vote will attend on October 7 for presidential elections. "High participation is expected," as it seen by registration processes. (AVN, 04-16-2012; http://www.avn.info.ve/node/108278; el Universal, http://www.eluniversal.com/nacional-y-politica/120416/one-million-venezuelans-fail-to-enroll-in-the-register-of-voters)





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.