September 16, 2014

International Trade

Cargo arrivals at Puerto Cabello:

• Over 1,454 tons of chicken and beef from Argentina to state agency CASA.
• Over 1,214 tons of frozen chicken from Brazil to CASA.

31 ships remain at bay awaiting dock assignment, 12 of them bearing food. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-dos-mil-toneladas-de-pollo-y-carne-llegaron-para-estatal-Casa-2234517/2014/09/15/353314)

Venezuelan fuel sold at US$ 6.36 per liter at the Colombian border, around 100,000 BPD are being smuggled

Illicit gasoline trade near the Venezuela-Colombia border is under no one's control. Purchase and sale of gasoline is carried out in daylight in front of everybody. The difference between the subsidized gasoline prices in Venezuela and the price of gasoline in Colombia encourages resale and fuel smuggling. Border communities practically live out of gasoline and food illegal trade. Gasoline is sold at the border at as much as VEB 400-800 (US$ 63.6-127) per every 20 liters. Those engaged in the sale of fuel pay VEB 1.94 (US$ 0.30) per every 20 liters and earn VEB 40 (US$ 6.36) on average per liter. PDVSA President Eulogio del Pino estimates around 100,000 BPD are being smuggled out of Venezuela. (El Universal, http://www.eluniversal.com/economia/140915/venezuelan-fuel-sold-at-usd-636-per-liter-at-the-border-with-colombia; and more in Spanish: AVN; http://www.avn.info.ve/contenido/estiman-que-cerca-100000-barriles-combustibles-diarios-están-siendo-contrabandeados; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/del-pino-sin-problema-en-que-se-audite-pdvsa.aspx; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/del-pino-no-tiene-rollos-en-que-se-audite-pdvsa.aspx; El Universal, http://www.eluniversal.com/economia/140915/en-la-frontera-compran-el-litro-de-gasolina-en-40-bolivares)

Oil & Energy

Venezuela’s export barrel, down to lowest level in two years, averaged $90.19/bbl., according to official figures published by the Ministry of Mining and Oil this Friday. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41042&idc=3)

Venezuelan oil sales to the US down to 747,000 bpd in June

Venezuelan exports of oil and byproducts to the United States plummeted 17% in June, according to figures disclosed by the US Department of Energy. The numbers showed Venezuelan state-run oil company PDVSA and its partners sold 747,000 barrels per day (bpd) in June, down from 899,000 bpd a year earlier. In May, the drop in oil exports was reported at 3.2%, totaling 772,000 bpd. (El Universal, http://www.eluniversal.com/economia/140915/venezuelan-oil-sales-to-the-us-down-to-747000-bpd-in-june)

CHEVRON weighs the purchase of one of CITGO's refineries

The government has lowered the sale price of CITGO, a US-based subsidiary of Venezuelan oil giant Petróleos de Venezuela (PDVSA), as the nation is faced with repayment of significant debt obligations in the next few months. Sources of the Venezuelan Ministry of Petroleum and Mining told Argus Media that the government expects to receive some US$ 8-10 billion from the sale of the three CITGO-owned refineries located in the US. CITGO's assets have been valued at US$ 15 billion. CHEVRON is one of the international companies that have been evaluating CITGO's assets, and might be interested in buying the Corpus Christi refinery, with a capacity to process 165,000 bpd of crude oil. (El Universal, http://www.eluniversal.com/economia/140915/chevron-weighs-the-purchase-of-one-of-citgos-refineries)

Commodities

TOYOTA renews production at Cumaná plant

TOYOTA has renewed production at its Cumaná plant in Eastern Venezuela, after negotiations were begun with striking workers. More in Spanish: (AVN; http://www.avn.info.ve/contenido/planta-toyota-cumaná-reanudó-operaciones; El Universal, http://www.eluniversal.com/economia/140916/se-reanudaron-actividades-en-la-planta-de-toyota-en-cumana)

Irregular situations reported at the Orinoco Oil Belt by Wills Rangel, head of the Bolivarian Socialist Workers’ Federation (CBST, in Spanish). Rangel said they had detected different irregular situations in oil operations at the Orinoco Oil Belt, as well as in the operational system, shifts, labor structures of drills and violations to the collective bargaining agreement. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41035&idc=4)

Economy & Finance

FEDECÁMARAS says current GDP equals that of 40 years ago

FEDECÁMARAS Vice President Francisco Martínez says Venezuela's current GDP has dropped down to its own levels 40 years ago (1974), due to "lack of productivity". FEDECÁMARAS is the nation's main private business organization. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140916/fedecamaras-senala-que-pib-es-el-mismo-de-hace-40-anos)

Imbalances in government accounts trigger inflation

In July the Central Bank of Venezuela (BCV) issued 41.9 million units of VEB 100 bills, an increase by 153% over the volume of bills issued during the same month in 2013. This is due to the loss of purchasing power of money in circulation, which in turn leads to a need for higher-value bills to be issued. Imbalances eating away at purchasing power - to the extent that the highest-denomination bill is not enough to pay for half a kilo of cheese - arise from asymmetry in government accounts. Efraín Velásquez, the president of the National Economic Council, explains that to cover expenditures that are soaring above oil revenue and tax collection the government creates more debt and seeks the aid of the Central Bank, which responds by creating more bolivars to fund the government. (El Universal, http://www.eluniversal.com/economia/140913/imbalances-in-government-accounts-trigger-inflation)

Venezuela bond rout

Venezuelan bonds came under pressure this week as talk of a potential default spooked the markets, causing the sovereign's curve to plunge several points before buying interest returned. The country's 2024s fell about 3.5 points to 65.00-66.00 on Monday, marking a five-point drop in four days. It was a similar story for bonds issued by state-owned oil company PDVSA, whose 2024s touched a low of 52.50-53.00 on the same day. The rout was triggered by an article written by two Harvard academics - a former Venezuelan minister and an ex advisor for the opposition - questioning whether the government should service its international bonds when it is not honoring other commitments at home and has left citizens scrambling for basic goods. (Reuters, http://www.reuters.com/article/2014/09/12/emergingmarkets-debt-idUSL1N0RD1D620140912)

Maduro threatens Harvard professor for default comment

President Nicolas Maduro instructed the attorney general and public prosecutor to take “actions” against Harvard Professor Ricardo Hausmann, saying the economist sought to destabilize the country by suggesting the government default on its debt. Maduro lashed out at Hausmann during a televised address last night, calling him a “financial hitman” and “outlaw” who forms part of a campaign “that has been initiated around the world against Venezuela .” He didn’t specify what actions he had asked the attorney general and prosecutor to take. (Bloomberg, http://www.bloomberg.com/news/2014-09-12/venezuela-threatens-harvard-professor-for-default-comment.html)

Politics

US Presidential Determination for major drug producing and transit countries includes Venezuela

Under the Foreign Relations Authorization Act (FRAA), the President is required each year to notify Congress of those countries he determines to be major illicit drug-producing countries or major drug-transit countries that “significantly affect the United States.” This year the President has identified twenty-two countries as major illicit drug-producing or drug-transit countries. Of these twenty-two, the President has determined that three countries, Bolivia, Burma, and Venezuela, “failed demonstrably” during the last twelve months to make sufficient or meaningful efforts to adhere to the obligations they have undertaken under international counternarcotics agreements. In accordance with provisions of the FRAA, the President has determined that support for programs to aid Burma and Venezuela remains vital to the national interests of the United States and therefore grant Burma and Venezuela National Interest Waivers. (State Department, http://www.state.gov/r/pa/prs/ps/2014/09/231658.htm)

Capriles’s party believes anti-Chavistas can win 2015 parliamentary elections

Venezuela’s Primero Justicia (PJ) party of two-time presidential opponent Henrique Capriles has announced that for the first time in 15 years since the first triumph of the late president Hugo Chavez, the opposition could win parliamentary elections scheduled for October 2015. “It will be the first time in 15 years when we will have the opportunity to have the country’s most important institution in service of people, and not the government,” PJ Secretary General Tomas Guanipa said Sunday in reference to in the National Assembly (AN, parliament). The triumph of the opposition will allow “the changes which the country demands,” Guanipa said in statements to journalists. The party must win not less than two-thirds of the seats in the NA single chamber, he explained. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2352079&CategoryId=10717)

TalCual: Where is the Government taking Venezuelans?

What does the Venezuelan government come up with when it deals with a serious issue such as that of general shortages of goods and services? Well, nothing but closing the borders and putting fingerprint scanners in markets, supermarkets and other food retailers. It is impossible stop a hemorrhage with plain Band-Aids. The logical thing to do would be to restructure the nation's debt, renegotiate it with the support of the IMF, and extend the payment deadlines. But the Government is never going to do that, so the fate of Venezuela is unknown. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2352045&CategoryId=10717)

Venezuelan FM: We are heading for a revolutionary State

Rafael Ramírez, recently appointed Vice-President for Political Affairs and Minister of Foreign Affairs, has pledged all of his support to President Nicolás Maduro in making the necessary changes within the so-called "shakeup" including his departure as president of state-run oil holding PDVSA. "I am honored to take on the task of representing our country in the world," says the new Foreign Minister. "I see it (the switchover in jobs) as a natural way, for the oil industry has always been tied to our foreign policy," he added. (El Universal, http://www.eluniversal.com/nacional-y-politica/140915/venezuelan-fm-we-are-heading-for-a-revolutionary-state)

Best and brightest for export

Approximately 90% of those who have emigrated from Venezuela in the last 15 years are highly skilled professionals. More important, according to researcher Tomás Páez, they take away with them their expertise and ability to create jobs and wealth. (El Universal, http://www.eluniversal.com/nacional-y-politica/140913/best-and-brightest-for-export)

Egyptian president thanks Venezuela for its solidarity with Palestine

Egypt's president Abdel Fattah el-Sisi expressed Sunday his gratitude to the Venezuelan people and his counterpart Nicolas Maduro due to their humanist actions and solidarity with Palestine, through medicine and food. (AVN, http://www.avn.info.ve/contenido/egyptian-president-thanks-venezuela-its-solidarity-palestine)

Aragua State Governor denies existence of a fast-acting deadly virus

A Venezuelan governor denied that eight people were killed by a deadly, fast-acting virus at a hospital in the north-central city of Maracay and accused the head of the local medical association of deliberately attempting to sow panic among the local population. “I must start by categorically denying the existence of some virus or bacteria on the premises of the Maracay Central Hospital that is putting the lives of patients at risk,” said Tarek el Aissami, governor of the north-central state of Aragua, whose capital is Maracay. El Aissami refuted reports by the head of Maracay’s medical association, Angel Sarmiento, who on Thursday said an unknown fatal illness at one of the state’s public hospitals was claiming the lives of its victims in as few as 72 hours. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2351964&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.

April 19, 2013

Economics & Finance

Venezuelan bonds do the collapse

It’s been a rough few days for Venezuelan bonds. Since peaking on April 10 ahead of this past weekend’s elections to replace Hugo Chavez as president of that Latin American nation, a 10-year government bond has dropped 5.3% and is down 8.7% since its high on Mar. 5. And now the once popular bonds are also losing their appeal to strategists and investors, as close elections raise questions about the stability of the county. Venezuela’s bonds were once much loved by investors. With their big coupons and the country’s capacity to pay thanks to hefty oil revenues, many bond managers found them more appealing than those of other high-yielding nations like Ukraine and Argentina. (Latin American Herald Tribune, 04-17-2013; http://www.laht.com/article.asp?ArticleId=750431&CategoryId=10717)

Fitch: Close Venezuelan election fails to dispel uncertainty

The unexpectedly close election outcome in Venezuela’s presidential race has created a more dynamic and uncertain political situation, which could influence the new government’s approach to economic policy and its ability to govern effectively, according to Fitch. President-elect Nicolas Maduro’s failure to capture a clear electoral mandate could complicate the task of making policy adjustments to rebalance the Venezuelan economy. This could slow progress toward the reduction of fiscal and external vulnerabilities that could undermine growth and erode sovereign creditworthiness. (Latin American Herald Tribune, 04-17-2013; http://www.laht.com/article.asp?ArticleId=750342&CategoryId=10717)

Commodities

Russian oil giant ROSNEFT to participate in Orinoco Oil Belt development

Russian oil company ROSNEFT will participate in blocks Carabobo 2 north and Carabobo 4 west in the Orinoco Oil Belt, Venezuela. ROSNEFT's share is 40% while PDVSA holds 60%. The agreement is for construction of a refinery with annual total output estimated at ten million tons to enhance the quality of the oil extracted for export 2 oil reserves total 40 billion barrels approximately. (El Universal, 04-18-2013; http://www.eluniversal.com/economia/130418/russian-oil-giant-rosneft-to-participate-in-orinoco-oil-belts-activiti)

Fire lashes refinery in Northwest Venezuela

A fire was reported at Cardón refinery in Northwest Venezuela, after midnight on Wednesday. The incident seems due to a leak in one of the plant's pumps. No one was reported injured but damages extend to a large part of the plant's MEK de-waxing unit (MDU). Iván Freites, Executive Secretary of the United Federation of Venezuelan Oil Workers (FUTPV) explained that a defective seal in pump G-18 caused a leak of oil transferred to furnace A-18 in the MDU. He said fire destroyed nearly 70-80% of the unit which " needs to be rebuilt." (El Universal, 04-18-2013; http://www.eluniversal.com/economia/130418/fire-event-lashes-refinery-in-northwest-venezuela)

Venezuela says OPEC may hold special meeting

Members of the Organization of Petroleum Exporting Countries are discussing holding a special meeting following the recent drops in international oil prices, Venezuela Oil Minister Rafael Ramirez told reporters Thursday. "We're watching the price of oil, and we're being careful," Mr. Ramirez said at the central office of state energy company Petroleos de Venezuela SA, which is also headed by the minister. "We've been in discussions over whether or not they are going to call a special meeting of OPEC. We've maintained that there is oversupply of oil in the market," said Mr. Ramirez, repeating his government's frequent calls to hold a "floor" of $100 a barrel. (Fox Business, 04-18-2013; http://www.foxbusiness.com/news/2013/04/18/venezuela-says-opec-may-hold-special-meeting/#ixzz2QrBgeN8b)

Politics

Conceding to opposition, election council to audit Venezuela vote

Government supporters began filling the streets of Caracas today to celebrate the inauguration of Nicolás Maduro, even as opponents greeted officials’ surprise announcement they will accept an audit of the disputed vote that handed a narrow margin of victory to the heir of late President Hugo Chavez. Opposition candidate Henrique Capriles said the audit announced late last night will prove he won the presidency, but officials appear to be confident there will be no reversal of the result when the count is finished, long after Nicolas Maduro is legally sworn in for a new term as president. Still, the audit was a sudden reversal for a government that insisted all week that there would be no review of Sunday’s vote and took a hard line against the opposition that included allegedly brutal treatment of protesters. The announcement appeared to be the result of pressure from at least some of the South American leaders who called an emergency meeting in Lima, Peru, Thursday night to discuss Venezuela’s electoral crisis — and wound up endorsing Maduro’s victory. Even if it leaves the vote standing and calms tensions in the country, the recount will strengthen the Venezuelan opposition against a president whose narrow victory left him far weaker than his widely popular predecessor Chavez, analysts said. That will complicate Maduro’s effort to consolidate control of a country struggling with steep inflation, shortages of food and medicines, chronic power outages and one of the world’s highest homicide and kidnapping rates. Venezuela’s National Electoral Council said just before the start of the meeting in Lima that it would audit 46% of the vote not already scrutinized on election night. An electoral official told The Associated Press that the new process, to start next week, would replicate the one from election night. (The Washington Post, 04-18-2013; http://www.washingtonpost.com/world/the_americas/post-election-venezuela-crackdown-deemed-worst-in-years/2013/04/18/df5f153a-a88f-11e2-9e1c-bb0fb0c2edd9_story.html)

JP Morgan: Signs of a negotiated solution

New developments overnight suggest an attempt at a negotiated solution to the political crisis that followed the narrow victory of the government candidate Nicolas Maduro over opposition leader Henrique Capriles. Currently with 99.2% of votes counted the CNE has given Maduro 50.75% of the valid vote, compared to 48.98% for Capriles -- a difference of some 262k votes.  Last evening, in chronological order: 1. Venezuela's electoral authority (CNE) announced that it would grant a full audit of the 46% of ballot boxes that were not audited immediately after April 14.  This does not entail a full vote-by-vote recount; rather a relevant sample of the paper receipts of each ballot box will be compared with the official electronic tabulation.  The CNE said this process will take 30 days and they would provide regular updates every 10 days. 2. Henrique Capriles held a press conference in which he said he was satisfied with the CNE's response and confident that his concerns over irregularities would be revealed in the 46% of remaining ballot boxes. Capriles said he was prepared to go to a regional UNASUR presidential summit last night to discuss the crisis, but he stayed in Caracas to respond to the CNE ruling. He also called for calm and "no anarchy" at today's inauguration, which his supporters should peacefully protest by banging pots and pans (cacerolazo) and blaring salsa music. 3. The UNASUR summit in the early morning hours of Friday issued a declaration recognizing Maduro's election but praising the CNE's audit decision, and calling on all sides to respect the CNE's final conclusions. The summit declaration also deplored the violence that followed the result and agreed to send a commission to follow the investigation into those events. In our view, the way the events unfolded suggest some kind of negotiated solution took place yesterday. In sum, regional leaders agreed to recognize Maduro, but only on the condition of the CNE conceding the vote audit. For his part, Capriles would agree to recognize the CNE results and not disrupt Maduro's inauguration today. The successive timing of these announcements yesterday night (1. CNE, 2. Capriles, 3. UNASUR -- with all the presidents up well after midnight) suggests this agreement was to some degree negotiated beforehand and coordinated, which should help reinforce its goal in easing the crisis. Indeed, barring some unexpected twist we think the immediate crisis should ease, and the immediate risks that the crisis will escalate into outright institutional breakdown are lower. Market focus should gradually shift to analyzing Maduro's relative political strength going forward and his ability to address economic concerns. We think there are still major questions surrounding both issues, and will watch for signals in the coming days to hopefully provide more clarity. (JP Morgan Latin America Emerging Markets Research; https://markets.jpmorgan.com/research/EmailPubServlet?action=open&hashcode=-c9n0tnb&doc=GPS-1099819-0.html)

Opposition legislators to refrain from attending presidential inauguration

Venezuelan opposition legislators announced they will not quit the National Assembly although Speaker Diosdado Cabello has barred from speaking those who have not recognized Nicolás Maduro as newly elected president of Venezuela. Opposition deputy Leomagno Flores says ruling party legislators simply seek the withdrawal of opposition deputies from the National Assembly to freely appoint representatives in the National Electoral Council, judges in the Supreme Tribunal of Justice, the Comptroller, among others. (El Universal, 04-18-2013; http://www.eluniversal.com/nacional-y-politica/130418/opposition-legislators-to-refrain-from-attending-presidential-inaugura)

Maduro trades barbs with U.S. over Venezuela election

Venezuela's opposition leaders feared persecution over post-election protests while the U.S. government backed their calls for a recount and said on Wednesday it was still deciding if it would recognize President-elect Nicolas Maduro.

The narrow victory by Maduro in Sunday's presidential vote has been rejected by his rival, Henrique Capriles, who is alleging thousands of irregularities at polling centers and wants a full audit of the ballots. Washington said it had not decided whether to recognize Maduro, a former bus driver-turned-foreign minister who was picked as successor by the late socialist leader Hugo Chavez. (Reuters, 04-17-2013; http://www.reuters.com/article/2013/04/18/us-venezuela-election-idUSBRE93F0RU20130418)

Kerry Encourages Venezuela Recount

Secretary of State John Kerry said Wednesday that Venezuela should hold a recount of votes cast in its presidential election, which the country’s electoral authorities say was narrowly won by a protégé of former President Hugo Chávez. Mr. Kerry, in comments to a House committee, said, “We think there ought to be a recount.” He added that he had not yet evaluated whether Washington would recognize Mr. Maduro’s victory. (The New York Times, 04-17-2013; http://www.nytimes.com/2013/04/18/world/americas/kerry-encourages-recount-in-venezuela.html?_r=0)

HRF calls for peaceful solution of Venezuela's political crisis

Following the political crisis arising from the results of the presidential election held in Venezuela on April 14, the Human Rights Foundation has called on Venezuelan authorities and opposition leaders to come to terms.

The organization also expressed in its statement its rejection to reported physical aggressions against opposition deputies Julio Borges and William Dávila by Government's supporters. (El Universal, 04-18-2013; http://www.eluniversal.com/nacional-y-politica/130418/hrf-calls-for-peaceful-solution-of-venezuelas-political-crisis)

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.

February 05th, 2013

Economics & Finance

Foreign Minister Jaua in China for more loans as shortages bite at home

Foreign Minister Elías Jaua Milano is in Beijing for meetings with his counterpart of the People's Republic of China, Yang Jiechi, as well as Senior Communist Party of China (CPC) leader Yu Zhengsheng, seeking further loans as shortages of goods caused by a lack of foreign currency as well as price controls continue to frustrate consumers in the oil rich Latin American nation. There have been no announcements of new loans after days of meetings, though both sides have noted that they will continue strengthening bilateral relations. (Latin American Herald Tribune, 02-03-2013; http://www.laht.com/article.asp?ArticleId=669461&CategoryId=10717)

Venezuela seeks U$D 4 billion China loan, U$D 2 billion Chevron credit

Venezuela's government and state oil company PDVSA are in urgent talks over a long-awaited U$D 6 billion in loans from China and U.S. energy giant Chevron that would help relieve the nation's strained finances, sources close to the discussions said. Oil Minister Rafael Ramirez said this week that PDVSA had no plans to issue any more dollar-denominated bonds, confounding widespread speculation that one was planned to address a chronic shortage of dollars for local businesses. (Reuters, 02-01-2013; http://www.reuters.com/article/2013/02/01/us-venezuela-chavez-funding-idUSBRE91011L201302019

Shoppers vie to buy scarce staples amid the worst shortages in nearly four years

Shortages have become the government's latest challenge, as it deals with political uncertainty. The central bank's Scarcity Index, a measure of the percentage of products missing from store shelves, jumped to 16.3% in December, the highest level since May 2008 due to price controls that were too low.  Some owners sell to preferred customers ready to spend anywhere from 30% to 90% above state-regulated levels. Many supermarkets remind shoppers they can purchase no more than two packages of cooking oil or corn flour, products whose prices are regulated. Long lines of customers buying rationed goods are a common sight. Angel García Banchs, head of local economic-research house ECONOMETRICA, said in an opinion column: "There's only one strategy left for the government, even though it's a failed one from my point of view: to design and execute a media campaign to blame the shortages on private national companies." (The Wall Street Journal; http://online.wsj.com/article/SB10001424127887323854904578261933682923580.html?mod=googlenews_wsj)

Maduro warns businesses against hoarding amid food shortages

The government has warned businesses against hoarding food amid problems with shortages, saying authorities are poised to take action. Shortages of some basic foods such as sugar and cornmeal have worsened recently while the government has been making available fewer dollars at the fixed exchange rate. Business leaders say the limited supply of dollars, along with decreased industrial and agricultural production, has caused shortages.  Vice President Nicolas Maduro said Friday the government would crack down on businesses caught hoarding food. (The Washington Post, 02-01-2013; http://www.washingtonpost.com/world/the_americas/venezuelas-vice-president-warns-businesses-against-hoarding-amid-food-shortages/2013/02/01/d95c35d0-6cc3-11e2-8f4f-2abd96162ba8_story.html)

Government spending rose 67% in January

Although outflows typically shrink in January, government payroll and management expenses rose 67% last month, from VEB 26 billion to VEB 43.6 billion, according to a SINTESIS FINANCIERA report which says "there is no sign of reduction". More in Spanish: (El Universal, 02-05-2013; http://www.eluniversal.com/economia/130205/gasto-del-gobierno-central-se-disparo-67-en-enero)

Venezuela's Big Mac world's most expensive

The Big Mac index prepared by "The Economist", shows Venezuela with the world's most expensive hamburger: U$D 9.08 at the official rate of VEB 4.30 to the U$D, making the Bolivar the most overvalued currency in thw world.  More in Spanish: (El Mundo, 02-05-2013; http://www.elmundo.com.ve/Noticias/Economia/Politicas-Publicas/En-Venezuela-se-come-el-Big-Mac-mas-caro-del-mundo.aspx)

Daily FOREX supply via SITME dropped 57.55% in January, compared to the same period last year. The average amount available during January 2013 via the system was U$D 15.7 million while the daily average offer in January 2012 was U$D 37.1 million. (VENECONOMY, 02-04-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33618&idc=2)

Commodities

Steelmaker SIDETUR's UD$100 million bond issue in default

Deutsche Bank, trustee for a U$D 100 million bond issued by steelmaker SIDETUR, has issued a notice of default saying the company violated one of the provisions of the bond sale. Deutsche Bank said that SIDETUR, nationalized by President Hugo Chavez in 2010, failed to make necessary deposits to a debt servicing reserve fund required by the covenants of the financing deal. The company, which makes rebar, flat and angle steel products, did not respond to phone calls seeking comment. (Reuters, 02-01-2013; http://www.reuters.com/article/2013/02/02/venezuela-sidetur-idUSL1N0B1LDG20130202; Bloomberg, http://www.bloomberg.com/news/2013-02-01/sidetur-trustee-said-to-declare-steelmaker-in-default.html)

Energy minister predicts mining arc will be like Orinoco Oil Belt

With state oil holding Petróleos de Venezuela (PDVSA) now responsible for gold exploitation, Petroleum and Mining Minister and PDVSA President Rafael Ramirez is saying the mining arc will be similar to the Orinoco Oil Belt. "There will be a mining arc, which will be like the Belt. We will do with gold the same as we have done with oil". The state-owned oil company, through the Venezuelan Mining Corporation, will carry out operations and has already allocated three blocs, containing reserves for 85 million ounces. (El Universal, 02-02-2013; http://www.eluniversal.com/economia/130202/energy-minister-mining-arc-will-be-like-orinoco-oil-belt)

VP says Chavez signed order enlarging PDVSA project

Vice President Nicolás Maduro says President Hugo Chavez authorized a PDVSA project to enlarge a state oil company PDVSA project in Zulia. Oil Minister Rafael Ramirez said that Chavez had approved terms and conditions to annex areas to the PETROCABIMAS joint venture, including Tia Juana Tierra and exploratory areas in Cabimas East and Cabimas South. (Latin American Herald Tribune, 02-03-2013; http://www.laht.com/article.asp?ArticleId=669167&CategoryId=10717)

Expert predicts oil prices will go down

Ramón Castro Pimentel, an analyst and professor at Venezuela´s Central University says shale oil entering global markets will lower oil prices globally and cut short currently rising trends. More in Spanish: (El Mundo, 02-05-2013; http://www.elmundo.com.ve/Noticias/Petroleo/Industria/Nueva-oferta-de-crudo-para-este-ano-tumbara-altos-.aspx)

International Trade

Oil over 60% of Venezuelan exports to China

Venezuela's relation with China has become vital as never before. The Asian country is now Venezuela's top funding source, with Beijing granting loans to Caracas in exchange for oil. By the end of 2011, oil was 62.2% of Venezuela's exports to China, with oil byproducts at 28.5%, iron (8.1%), ferroalloys (1.6%), and common metal scraps (0.4%), according to a report compiled by the Economic Commission for Latin America and the Caribbean (ECLAC): "The People's Republic of China and Latin America and the Caribbean: Dialogue and cooperation vis-a-vis the new challenges of the global economy". In 2011, Venezuela-China trade was U$D 18 billion, 24 times higher than in 2003 (U$D 742 million). (El Universal, 02-04-2013; http://www.eluniversal.com/economia/130204/oil-represents-more-than-60-of-venezuelas-exports-to-china) 

Logistics & Transport

22 ships at bay in Puerto Cabello

This includes 2 vessels laden with rice from the US and 2 others bearing sugar from Brazil and Nicaragua. There are also 2 tankers, 9 bearing containers, 2 general cargo and 3 with ballast, awaiting instructions. More in Spanish: (Notitarde, 02-05-2013; http://www.notitarde.com/La-Costa/Embarcaciones-con-az%C3%BAcar-y--arroz-permanecen-en-la-bah%C3%ADa/2013/02/04/164080)

Economist claims 40% of government imports are fake

Economist Asdrúbal Oliveros says that according to an ECOANALITICA report government companies overcharge for imports and receive FOREX for them, but do not actually bring in products. He says private companies also do this, but on a much smaller scale; and adds that 16% of all total "imports" are dollars assigned to fake purchases. Oliveros points out that total Central Bank disposable reserves are barely above U$D 2 billion but adds that devaluation is "not strictly necessary". More in Spanish: (El Nacional, 02-05-2013; http://www.el-nacional.com/)

Politics

Officials say Chávez recovering, signs documents and makes decisions

"The president (Hugo Chávez) affixed his signature to these accounts," says Congress Speaker Diosdado Cabello, adding that Chávez "continues moving forward slowly and steadily towards his recovery (...) The president has signed and given instructions regarding some decisions that must be adopted in the party (ruling United Socialist Party of Venezuela) and the Government". He adds that "the health of Commander (Hugo) Chavez is clearly recovering, complying with medical treatment." (El Universal, 02-04-2013;

http://www.eluniversal.com/economia/130204/venezuelan-officials-say-chavez-signed-documents-and-made-decisions; AVN, 02-03-2013; http://www.avn.info.ve/contenido/chavez-recovering-undergoes-medical-treatment; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=668165&CategoryId=10717; Fox News, http://www.foxnews.com/world/2013/02/03/venezuela-military-chief-says-president-hugo-chavez-experiencing-best-moment/)

Castro says Chavez improving after tough cancer fight

Former Cuban leader Fidel Castro said Venezuelan President Hugo Chavez is getting "much better" as he recovers from cancer surgery almost two months ago in Havana. (Reuters, 02-04-2013; http://www.reuters.com/article/2013/02/04/venezuela-chavez-castro-idUSL1N0B462L20130204; Fox News, http://www.foxnews.com/world/2013/02/04/fidel-castro-says-hugo-chavez-condition-improving-in-battle-against-pelvic/)

VP leads rally in commemoration of February 4, 1992

President Hugo Chávez's supporters rallied in Caracas to commemorate the 21st anniversary of a failed coup d'état in 1992. The event, which took place at the Historic Military Museum, west Caracas, was broadcast nationwide and attended by several senior officials, including the Vice-President Nicolás Maduro and Congress Speaker Diosdado Cabello. High-ranking members of the Armed Forces were also present. (El Universal, 02-04-2013; http://www.eluniversal.com/nacional-y-politica/130204/venezuelas-vp-leads-rally-in-commemoration-of-february-4-1992; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-government-supporters-mark-anniversary-of-1992-coup-attempt-with-chavez-absent/2013/02/04/33a23ad8-6eec-11e2-b35a-0ee56f0518d2_story.html; Fox News, http://www.foxnews.com/world/2013/02/04/venezuela-government-supporters-mark-anniversary-12-coup-attempt-with-chavez/)

Elections Board sets tentative timetable for presidential elections for March 31st

Inside sources report meetings led by IT Director Carlos Quintero have discussed a timetable for presidential elections, setting March 31st as a tentative date, obviously subject to the health of President Chavez, his return, and official decisions once he is back. More in Spanish: (El Nacional, 02-05-2013; http://www.el-nacional.com/)

COPEI spokesman reports 170 municipalities have more voters than people

COPEI Party VP Enrique Naime has claimed that there are more voters than people in 170 municipalities, comprising 90 election circuits. His report is based on a study by the Andrés Bello Catholic University, and once again calls transparency at the Elections Board into question. He specifically points out municipalities in Nueva Esparta, Delta Amacuro, Mérida, Táchira and Portuguesa states, and this is 34% of all 375 Venezuelan municipalities. More in Spanish: (Tal Cual, 02-05-2013; http://www.talcualdigital.com/index.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. 

February 28th, 2012

Economics & Finance

New price controls order cuts of up to 25%

The government will cut prices on a slate of basic goods up to an average of 25% as part of a long-awaited first wave of broadly expanded price controls that officials say will combat the country's soaring inflation, Vice President Elias Jaua announced Monday. "We have not messed with profit margins," Jaua said during a televised rally. "We have only taken out the costs that should not be included in a cost structure." Among the adjustments, the price of bleach and dishwashing liquid will fall 6%, toilet paper and tooth paste, 11%, and shampoo and detergent, 25%. The new prices will go into effect April 1, allowing a chance for appeals, though Chavez has threatened to seize the assets of any company that resists the changes. Companies that faced audits in connection with the first installment of revised prices include local units of multinationals like Colgate-Palmolive Co., PepsiCo Inc., H.J. Heinz Co., Johnson & Johnson Unilever PLC and Nestle, as well as local food distributor and packager Alimentos Polar. (Fox Business, 02-27-2012; http://www.foxbusiness.com/news/2012/02/27/venezuelas-new-price-controls-order-cuts-up-to-25/#ixzz1niHkOVEY)

Venezuelan bonds continue their momentum

Since 2006, the government has been issuing government bonds, with three objectives: control the parallel dollar exchange rate, drain excess cash flows and secure financial resources to invest. Although experts say these goals have not been achieved (the parallel dollar drops momentarily, but quickly starts rising again, liquidity is drained only temporarily), they provide an important opportunity for many Venezuelans to secure dollars below parallel market prices. More in Spanish: (Tal Cual, 02-27-2012; http://www.talcualdigital.com/index.html)

Internal debt increased 13% in six weeks to Bs.148 billion despite the fact that oil prices, the country’s main source of revenue, have rallied 24% in the first six weeks of this year, compared to the same period in 2011. (Veneconomy, 02-24-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29548&idc=2)

Private consumption gets a breath of fresh air, but still at bottom

Central Bank statistics show that last year government spending moved up 5.9% to create a boom as part of the election agenda. Nonetheless, private consumption is still 1% below the 2008 level. Barclays Capital explored the effect of public spending and transfers such as scholarships and subsidies in household consumption. According to the investment bank, while there was a positive reaction, "it is worth noting that it is relatively modest compared with that recorded between 2006 and 2008." At that time, a similar expansion of spending attained a "two-digit growth in private consumption." (El Universal, 02-27-2012; http://www.eluniversal.com/economia/120227/private-consumption-takes-a-breath-of-fresh-air-but-still-at-bottom)

Commodities

China raises financing to Venezuela

The government has signed as many as 14 additional bilateral cooperation agreements with the People's Republic of China. The legal instruments will allow for additional funding around U$D 10 billion. As a result, Chinese total lending amounts to U$D 38 billion. "(U$D) 10 billion to reinforce and expand oil drilling at the Orinoco Oil Belt, for agricultural development, for home building, for economic and industrial development, and infrastructure development," said Vice-President Elías Jaua during the signing ceremony held at the headquarters of state-run oil holding Petróleos de Venezuela. (El Universal, 02-28-2012; http://www.eluniversal.com/economia/120228/china-raises-financing-facility-for-venezuela)

Capacity to raise production at the Orinoco Oil Belt in doubt

State-run oil holding Petróleos de Venezuela has voiced its intention to raise by 445,000 barrels per day (bpd) the output at the Orinoco Oil Belt in 2012, that is: from 1.18 million bpd to 1.63 million bpd. PDVSA needs to invest heavily to meet this schedule. The oil company has particularly neglected production due to the large amount of social and industrial commitments set by the Chavez government, which leads many to question the far-reaching nature of the goals in view of difficulties faced by Pdvsa. (El Universal, 02-25-2012; http://www.eluniversal.com/economia/120225/doubts-about-the-capacity-to-lift-production-at-the-orinoco-oil-belt)

Agricultural balance still in the red

World food prices will continue to play a key role in supplying goods to the Venezuelan market in 2012. While the value of some commodities, including sugar, cereal and oil, dropped at the end of 2011, international organizations fear that prices this year will continue above the average. This situation will undoubtedly benefit traditional Latin American exporters, such as Colombia, Brazil, Argentina and Paraguay. However, for Venezuela as an importer of both final products and raw materials, the outlook will not that bright. (El Universal, 02-27-2012; http://www.eluniversal.com/economia/120227/agricultural-balance-still-in-the-red)

Venezuela heads in the opposite direction of Carbs

The new map of the global economy encompasses China and India as a bloc of high-growth emerging nations; superpowers hit by the crisis and showing little progress, such as the United States and the Euro area, and the CARBS (Canada, Australia, Russia, Brazil and South Africa) a the group of countries, which have made effective use of the boom of commodities. CARGS is the acronym coined by Citigroup, to describe the five countries that make-up the world's key commodity markets. As a whole, these countries own commodity-related assets worth U$D 60 trillion. The sun does not set in territories that cover 29% of the planet and control 25-50% of the output of important metals and minerals. (El Universal, 02-25-2012; http://www.eluniversal.com/economia/120225/venezuela-heads-in-the-opposite-direction-of-carbs)

Cristinas gold mine to be developed with China

Venezuela will develop its huge Las Cristinas gold project in partnership with Chinese state investment company CITIC, President Hugo Chavez announced on Friday. The government last year cancelled Canadian company CRYSTALLEX International's permit to develop the long-troubled mine project south of the Orinoco river. Russian-Canadian miner RUSORO had hoped to partner with Venezuela in what could be Latin America's largest gold deposit. Las Cristinas has estimated reserves of 17 million ounces. (Reuters, 02-24-2012; http://www.reuters.com/article/2012/02/24/venezuela-gold-idUSL2E8DOBTT20120224)

International Trade

U$D34 million allocation to raise tractor production

The production capacity at the Pauny tractor factory Pauny, in Guarico State, should rise after the National Government approved U$D 34.990 million to purchase spare parts. Vice President Jaua says "These resources will allow us to purchase over 300 parts to manufacture the same number of tractors, as well as 120 sowers, 5 sowing drill-machines, 150 rotary seeders, 50 stick compactors from Argentina and 100 spray machines". (AVN, 02-26-2012; http://www.avn.info.ve/node/100839)

Chavez says Venezuela is risk-free for foreign investment, after signing new accords with China and reviewing figures of production and oil revenues, as the country has sufficient resources to offer security and guarantee to foreign investment. (AVN, 02-25-2012; http://www.avn.info.ve/node/100749)

Politics

Chavez in good shape after surgery, VP Says

President Hugo Chavez is in good condition and recovering from surgery in Cuba to remove a lesion in his pelvic area where doctors previously detected cancer, Vice President Elias Jaua said. Jaua, reading from a statement while speaking to the National Assembly on state television, said tests on the “lesion,” which was removed in its entirety, will become available in the coming hours. “President Chavez finds himself in good physical condition, in the company of his family and in constant contact with his Vice President and ministers,” Jaua said as allied lawmakers chanted “Oh no, Chavez won’t go!” (Bloomberg, 02-28-2012; http://www.bloomberg.com/news/2012-02-28/chavez-in-good-health-after-operation-vp-says.html; Reuters, http://www.reuters.com/article/2012/02/28/venezuela-chavez-jaua-idUSL2E8DS70T20120228; El Universal, http://www.eluniversal.com/nacional-y-politica/120228/chavez-in-good-condition-following-operation-authorities-confirm)

Chavez surgery gives rival an opening before vote

Throughout his presidency, Hugo Chavez has relied on his vigor and endurance: playing baseball, speaking for hours at a stretch and making decisions on the fly while bounding around Venezuela exuding energy. Now, just as he may need it most, Chavez finds himself ailing heading into a re-election campaign. The 39-year-old state governor has cast himself as a polite, non-confrontational politician, a sharp contrast to the venom-tongued president, who recently referred to Capriles as "a pig" and has accused rivals of wanting him dead. But Capriles didn't rise to the bait. "I wish the head of state a long life," Capriles said. "I want him to see the changes that are going to come about in our country, for him to see a Venezuela of progress, a united country, a country where Venezuelans have many opportunities." (AJC, 02-26-2012; http://www.ajc.com/news/nation-world/chavez-surgery-gives-rival-1363590.html)