November 09th, 2012

Economics & Finance

Venezuela repays nearly half of U$D36 billion in Chinese loans

Venezuela has repaid close to half of U$D 36 billion borrowed from China through oil-for-financing agreements, says Oil Minister Rafael Ramirez. The government of President Hugo Chavez has increasingly relied on China for financing because its borrowing costs in international capital markets are among the highest in the world. "We've received U$D 36 billion through credits with China ... and of that, we've paid U$D 17.9 billion," Ramirez said during a congressional hearing. (Reuters, 11-07-2012; http://www.reuters.com/article/2012/11/07/venezuela-china-loans-idUSL1E8M7J9E20121107)

Exxon, Conoco arbitration rulings expected in late 2013

Venezuela expects international arbitration rulings by late 2013 in multi-billion-dollar claims by Exxon Mobil and ConocoPhillips over nationalizations by President Hugo Chavez's government, the oil minister said. Of more than 20 cases against Venezuela at the World Bank and the International Chamber of Commerce's panels, the biggest involve Conoco (COP.N) and Exxon Mobil Corp (XOM.N), which are seeking some U$D40 billion between them. Both companies filed for arbitration after Chavez ordered foreign firms to slash their stakes in production and upgrading projects for heavy crude oil in the Orinoco Belt as part of a 2007 wave of state takeovers. "We don't expect resolutions this year. Probably the biggest cases (Conoco and Exxon) will be resolved in the second half of 2013," Oil Minister Rafael Ramirez told Reuters. (Reuters, 11-08-2012; http://www.reuters.com/article/2012/11/08/us-venezuela-arbitrations-idUSBRE8A712620121108)

Inflation down for the 10th consecutive month

The annual rate of the National Consumer Price Index (NCPI) was 17.9% in October, far below the 2012 target of 20-22% set by the government. The Central Bank and National Statistics Institutes report that "this annual rate maintains the downward trend observed for 10 consecutive months, which began in December 2011 at 27.6%". (AVN, 11-07-2012; http://www.avn.info.ve/contenido/inflation-declines-tenth-consecutive-month-bcv-says; El Universal, http://www.eluniversal.com/economia/121107/central-bank-president-cherishes-inflation-at-14-16-in-2013; http://www.eluniversal.com/economia/121107/shortage-in-october-near-its-peak-in-53-months; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=32728&idc=2)

Central Bank says gold sale ensures profits

The Central Bank sold 4.9 tons of gold out of its reserves, and Nelson Merentes, president of the institution, says such operations yield profit to the bank. He stressed that the gold price has been on the rise since 2006. Today it is worth U$D 1,720 per ounce, an upward trend that favors transactions. He added that the institution buys gold in local currency (bolívares) at U$D 900 and then it sells it at U$D 1,700. "They all do the same; all banks must generate profits." (El Universal, 11-08-2012; http://www.eluniversal.com/economia/121108/central-banks-president-gold-sale-ensures-profits)

Central bank aid to PDVSA at U$D 29 billion

Financial assistance to state-owned oil company PDVSA by the Central Bank (BCV) continues to rise. BCV data shows that by the end of October, the financial institution's aid to the oil company increased by 79% over the last 12 months. By October 26, the BCV had allocated U$D 29 billion to Pdvsa, compared to only U$D 16.2 billion during the same period in 2011. (El Universal, 11-07-2012; http://www.eluniversal.com/economia/121107/central-bank-assistance-to-state-run-pdvsa-stands-at-usd-29-billion)

PDVSA to contribute U$D 60 billion in taxes and to social programs this year

PDVSA says its contributions to the tax authority and to social programs will reach U$D 60.3 billion this year. Oil and Mining Minister, and also PDVSA President Rafael Ramirez also told the National Assembly that 26% of the funds it turns over to the government are going to the National Development Fund (FONDEN), which is 11% above contributions made last year. More in Spanish: (El Universal, 11-09-2012; http://www.eluniversal.com/economia/121109/60-millardos-dara-pdvsa-al-fisco-y-a-misiones-este-ano)

Oil prices will determine the exchange rate adjustment in 2013, says ECOANALÍTICA Director Asdrúbal Oliveros, who says the "impending reality" is that the CADIVI rate should adjust from U$D4.30 a U$D 6,30; and SITME'S up to U$D 7.50. He says an alternate way would be to leave the CADIVI rate as is and raise SITME'S to U$D 9. In either case it would be an average devaluation of 46% for a net impact of VEB 84.6 billion, which would give the Government added funds for public spending. More in Spanish: (El Universal, 11-09-2012; http://www.eluniversal.com/economia/121109/precio-del-crudo-condicionara-magnitud-del-ajuste-cambiario; El Nacional; http://www.el-nacional.com/)

Commodities

A Russian company  in the consortium working the Orinoco Belt abandons project

The board of directors of the fourth greatest oil producer in Russia, SURGUTNEFTEGAZ, voted for pulling out of the Russian consortium that operates in the Orinoco Oil Belt, its last project abroad, said the company on Wednesday. The Russian consortium has a 40% stake in the PETROMIRANDA joint venture. (Veneconomy, 11-07-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32721&idc=4)

Amuay refinery operations seen normal by year-end

The 645,000 barrel per day (bpd) Amuay refinery should be operating normally at about 500,000 bpd by year-end once it finishes repairs to a distillation unit damaged by an explosion in August, the country's energy minister said.

State oil company PDVSA had initially said the August 25 blast that killed more than 40 people had only affected storage tanks of its largest refinery. Amuay has been operating at around 50% capacity since then. Rafael Ramirez, who is also PDVSA president, told Reuters that Amuay's management determined that the explosion had damaged a furnace at an 180,000 bpd facility, one of five distillation units at Amuay. "The (replacement parts) arrive in December, and about three weeks after that we should have that unit in service, so we can reach the operational level the refinery was at before the incident, which was about 500,000 barrels per day," he said. (Reuters, 11-08-2012; http://www.reuters.com/article/2012/11/08/us-refinery-operations-pdvsa-amuay-idUSBRE8A710V20121108)

SIDOR losses around U$D 580 million; steel rod production down 29.4%

The SIDOR government steel complex is registering around U$D 580 million in losses to date, and year end production is expected to be at 1.8 million tons of liquid steel - down from a 4.3 million ton capacity - according to company director Pedro Acuña Grahan, who represents class B stockholders. Acuña called for an audit and assigning responsibilities for losses. He says when the government took over the company its assets were above U$D 3.4 billion and it now is in debt for more than U$D 900 million and decay is such that capacity is down 50%, and the technology infrastructure has been partially destroyed.  In the meantime, steel rod production - essential for public and private housing construction plans - is reported down 29.4% in October. SIDOR has a 50% share of the steel market. More in Spanish: (El Universal, 11-09-2012; http://www.eluniversal.com/economia/121109/advierten-que-las-perdidas-de-sidor-llegan-a-580-millones, http://www.eluniversal.com/economia/121109/la-produccion-de-cabillas-tuvo-una-caida-de-294-en-octubre)

International Trade

Venezuela imports from the US steadily rising

The US Department of Commerce reports Venezuela's imports from the US rose 71.6% during the last year, with U$D 2025 billion in September, up from U$D 1179 billion during the same month last year. January to September totals U$D 12.869 billion, which is above the amount for all of 2011. More in Spanish: (Últimas Noticias, 11-09-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-le-compra-cada-vez-mas-a-eeuu.aspx)

Politics

521 public protests in October nationwide

The Venezuelan Watch Group on Social Conflict (OVCS) reports in October alone there were 521 protest demonstrations and 11 strikes, which make it the most conflict ridden month to date this year. 204 protests were about labor rights, 197 over housing, 106 over crime and justice; and 14 over education problems. More in Spanish: (El Universal, 11-09-2012; http://www.eluniversal.com/nacional-y-politica/121109/octubre-cerro-con-521-protestas-en-todo-el-pais)

September 14th, 2012

Economics & Finance

Chavez 67% spending surge sets up devaluation after vote

President Hugo Chavez’s 67% increase in government spending is setting the stage for a currency devaluation after national elections next month. As the 58-year-old president boosts wages and builds houses for the poor to win a third term, the bolivar is tumbling in unregulated markets to a level 62% weaker than the regulated exchange rate, compared with a 50% difference at the end of 2011. Most individuals and businesses now pay 11.19 bolivars per dollar versus 8.63 at the start of the year and the fixed 4.3 bolivar official rate. (Bloomberg, 09-13-2012; http://www.bloomberg.com/news/2012-09-13/chavez-67-spending-increase-sets-up-devaluation-after-election.html)

Inflation in food prices doubles the average for Latin America

A 31 July report by the UN's Food and Agriculture Organization shows that Venezuela has the highest rate of inflation in food prices in the Hemisphere. The cost of food rose 21.7% from July 2011 to July 2012, which doubles the 8.7% regional average. Colombia came in with 3.8%, Perú 4.6%, Chile 6.5%, Brazil 8.7% and Argentina 10.09%. More in Spanish: (El Universal, 09-14-2012; http://www.eluniversal.com/economia/120914/inflacion-de-alimentos-duplica-al-promedio-de-america-latina)

Credit rises 52-96% year to date through August

According to the Banking Superintendent, net credit growth rose 52.96%, as it increased from VEB 223.386 million in August 2011 to VEB 341.699 million in August 2012. The amount is 44.97% of total active bank assets. More in Spanish: (El Mundo, 09-14-2012; http://www.avn.info.ve/contenido/sudeban-créditos-registran-aumento-anual-5296-para-agosto)

Commodities

SIDOR will continue in the red due to operating limitations, basic industries reaching rock bottom

SIDOR, Venezuela's government iron and steel producing company, may lose U$D 673.4 million by the end of 2012, and estimates a 42% rise in losses during 2013, going up to U$D 958 million. The figures are reflected in the company's 2012 Annual Budget, which also sets expected production at 4 million tons of liquid steel, doubling current output, as it continues to direct funds to "social" expenditure on individuals and communities. (El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/venezuelan-steel-company-to-suffer-losses-upon-numerous-limitations; and more in Spanish: El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/venezuelan-basic-industries-at-rock-bottom)

PDVSA says Amuay refinery operates at 52% capacity and under evaluation by reinsurance companies

Oil Minister Rafael Ramírez announced that reinsurance companies are evaluating damage at the Amuay refinery which -he said- is operating at 52% capacity. More in Spanish: (El Mundo, 09-13-2012;  http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa--amuay-opera-a-52--y-esta-siendo-evaluada-po.aspx; and El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/amuay-refinery-processes-300000-bpd)

           

OPEC reports 1.8% lower Venezuelan oil output

Venezuelan oil output dropped by 1.8% last August compared with the same month last year, according to statistics collected by the Organization of Petroleum Exporting Countries (OPEC) in its monthly report. The oil cartel reports oil drilling was 2.35 million barrels per day (bpd) in August, 43,000 barrels less than the average in August 2011. More in Spanish: (El Universal, 09-13-2012; http://www.eluniversal.com/economia/120912/opec-reports-lower-venezuelan-oil-output-at-18)

Venezuela, Argentina discuss Orinoco oil belt projects

Rafael Ramírez, Minister of Petroleum and Mining Rafael Ramírez, and Argentina´s Planning Minister Julio De Vido, inaugurated meetings between some 150 businessmen from both countries to discuss cooperation in the development of the Orinoco oil belt. More in Spanish: (El Universal, 09-13-2012; http://www.eluniversal.com/economia/120913/venezuela-argentina-sketch-works-at-orinoco-oil-belt)

Brazil may extend deadline for Venezuela’s PDVSA participation in refinery

Brazil may extend the deadline for Venezuelan state oil firm Petroleos de Venezuela S.A. to provide loan guarantees and secure its participation in the bi-national Abreu e Lima heavy-oil refinery, the CEO of Brazilian state-controlled energy company PETROBRAS said. Maria das Gracas Foster said PDVSA is in the “final” phase of securing a loan needed to pay for its 40% stake in the refinery, although the November deadline is approaching. “If they don’t present the guarantees in November, I’m going to discuss a new deadline because I want them (PDVSA) to be a part of this project,” Foster said in a Senate hearing. (Latin American Herald Tribune, 09-12-2012; http://www.laht.com/article.asp?ArticleId=576227&CategoryId=10717)

International Trade

Predicting 18.8% rise in imports from the country

The UN's Economic Commission for Latin America and the Caribbean is estimating that Venezuela will continue to increase imports through the end of the year. It projects imports will increase by 18.8% by the end of the year, after a rise of 25.3% in the first semester. Venezuela's rate of imports is the highest of the region, much above the 6.2% projected average increase. More in Spanish: (El Nacional, 09-14-2012; http://www.el-nacional.com/)

Logistics & Transport

Blackouts hit operations at main Venezuelan port

Continued blackouts at the port of Puerto Cabello, in Carabobo state are jeopardizing the operations in the main Venezuelan port. According to sources close to the terminal, electric power supply has been fitful, including extended lapses since last week. On September 5th, a 12 hour blackout interrupted commodity exports. (El Universal, 09-12-2012; http://www.eluniversal.com/economia/120912/blackouts-hit-operations-in-main-venezuelan-port)

Politics

Former Justice confirms Chavez manipulates the Supreme Court

Former Supreme Court Justice Eladio Aponte has confessed that President Hugo Chavez personally ordered him to sentence former police officials accused for participating in the failed effort to replace him - Chavez - in 2002, to 30 years imprisonment. He added that the case "proves political persecution through the Judiciary". Aponte, who is currently in the US witness protection programs, made is revelation through a notarized statement recorded in Costa Rica last April and divulged yesterday in Miami by attorney Carlos Ramírez López, at the former magistrate's request. More in Spanish: (Tal Cual, 09-14-2012; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/120914/aponte-aponte-chavez-ordeno-condenar-a-comisarios-del-11a)

Capriles quickly fires high ranking ally following allegations of improper campaign funding activity

Opposition Presidential candidate Henrique Capriles Radonski moved swiftly to expel Congressman Juan Carlos Caldera, one of the highest officials in his own party, after pro Government television aired a clandestine tape showing the Congressman - who is also the opposition candidate for Mayor of the Sucre District in metropolitan Caracas - taking an unreported campaign contribution. Concealed cameras filmed Caldera a little less than U$D 4000 from Luis Peña, an emissary of pro-Chavez tycoon Wilmer Ruperti. The money was intended for Caldera's race for the mayoralty, Although Caldera has admitted his own entrapment, Capriles and the Justice First Party expelled him for unauthorized use of the candidate's name in soliciting funds, and demanded an investigation. Honesty and transparency are among the key goals of the Capriles campaign. More in Spanish: (El Universal, 09-14-2012; http://www.eluniversal.com/nacional-y-politica/120914/capriles-expulsa-a-caldera-y-exige-investigacion; El Universal; http://www.eluniversal.com/nacional-y-politica/120914/el-diputado-acusado-dice-que-recibio-bs-40-mil-de-ruperti; El Universal; http://www.eluniversal.com/nacional-y-politica/120914/primero-justicia-suspendio-a-caldera-de-toda-militancia; El Nacional; http://www.el-nacional.com/)

March 13th, 2012

Economics & Finance

Central Bank projects economic growth above 5% in 2012

Central Bank President Nelson Merentes, says the government’s economic goals for 2012 are starting to show positively with inflation slowing down for three consecutive months, He also says that, based on early results, economic growth may be above the 5% estimated in the 2012 budget. More in Spanish: (AVN, 03-13-2012; http://www.avn.info.ve/node/103125)

Price caps hit manufacturers and wholesalers

Industry is the most concerned sector impacted by plans set forward by National Superintendent’s Office for Cost and Prices (SUNDECOP) for setting and limiting prices. An initial analysis shows that announced criteria narrow any manufacturers' range of motion. Standard prices, according to industrial experts, mean that given SUNDECOP’s failure to acknowledge different product presentations, production costs for certain products will be above prices set by the governing agency. A press release from the National Federation of Industry (CONINDUSTRIA) says "certain personal-care products will have standard retail prices and, though those products may be similar in nature, they actually have different components and cost structures." (El Universal, 03-10-2012; http://www.eluniversal.com/economia/120310/price-caps-pound-manufacturers-and-wholesalers)

Exchange rate adjustment postponed, overvaluation aggravated

The outstanding rise in oil prices has allowed the government to resort once more to a strategy of maintaining the dollar exchange rate stable despite high inflation, which is a formula that increases imbalances and portends further devaluation in the future. The combination of static exchange rate and an inflation rate far above the U.S. and the rest of Latin America lead to an overvalued currency, an imbalance which makes imported products cheaper than those produced domestically, and imports soar. Over time, the imbalance will become unsustainable, the high demand for foreign exchange becomes impossible to satisfy, and a decrease in production in the face of competition from cheap imports will leave the Government no choice but to devalue the currency. More in Spanish: (El Universal, 03-12-2012; http://www.eluniversal.com/economia/120312/posponen-el-ajuste-cambiario-y-se-agrava-la-sobrevaluacion)

President Chavez has announced a VEB10 billion agricultural bond issue to pay 9% interest. He also approved a three to five-year deadline to place VEB.2 billion, maturing in 2015; VEB 4 billion, maturing in 2016 and VEB 4 billion, maturing in 2017. (Veneconomy, 03-12-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29747&idc=2)

Chavez funds priority sectors

President Hugo Chavez has approved a significant amount aimed at reinforcing the development of important sectors, such as housing, food, transport, agriculture and sports. VEB 216.9 million was allocated to speed up 10 agribusiness projects launched by the Government in different states. He also approved VEB 725.1 million 8 sugar-growing centers nationwide. (AVN, 03-12-2012; http://www.avn.info.ve/node/103005)

Commodities

Junín 10 block within the Orinoco Belt to begin production in 2012

The Junín 10 block within the Orinoco Oil Belt, which holds proven reserves of 10.5 million barrels of extra-heavy crude oil according to state-run oil holding Petróleos de Venezuela, SA (PDVSA), will be the first among the new oil drilling projects at the belt to start producing oil as early as in 2012. Eulogio del Pino, PDVSA’s VP for Exploration and Production, reports that the first oil barrels from Junín 10 block -an area developed by PDVSA alone and likely to be renamed as the Southern Junín District-will be pumped by June this year. The partner selection process for the Junín 10 block closed on January 21, 2010, as "proposals made by French TOTAL and Norwegian STATOILHYDRO failed to meet eligibility criteria," according to PDVSA. (El Universal, 03-10-2012; http://www.eluniversal.com/economia/120310/junin-10-block-at-the-orinoco-belt-starts-production-in-2012)

Oil basket down to U$D 115.82

The price of the Venezuelan oil basket of crude oil and products decreased by U$D 1.28 during the week of March 5-9, according to the Ministry of Petroleum and Mining on its Twitter account. As a result, the average price of the Venezuelan oil basket of crude oil and products year to date fell to U$D 110.60. The ministry reports that "prices fluctuated amid concerns about the economy, mainly the Euro zone and its effects on global demand, geopolitical tensions and changes in the US dollar.” (El Universal, 03-09-2012; http://www.eluniversal.com/economia/120309/venezuelas-oil-basket-down-to-usd-11582)

Analysis: CHEVRON's Amazon-sized gamble on Latin America

Its footing in Venezuela -- where Chevron stayed after major U.S. oil companies EXXON MOBIL and CONOCO PHILLIPS departed in 2007 following oil nationalizations -- is also unstable. Ali Moshiri, Chevron's head of exploration and production in Latin America and Africa, is hailed as a "close friend" by anti-American President Hugo Chavez. Moshiri has strived to keep CHEVRON in Chavez's good graces, accepting laws limiting foreign oil companies to minority roles. The company shares projects led by state-owned oil company PDVSA, and invests in Venezuelan social welfare programs. However, a tax increase last year rattled oil companies that stayed in Venezuela, and PDVSA annoyed CHEVRON last month when it announced plans to sell part of the giant PETROPIAR oil upgrading plant to a Chinese state fund, industry sources said. CHEVRON owns 30% of PETROPIAR but was not consulted. Meanwhile Chevron's newest oil venture with PDVSA in the oil-rich Orinoco Belt faces delays. Production was expected to start this year, but sources say Chevron and PDVSA have yet to agree on investment terms, and basic engineering is unfinished. (Reuters, 03-12-2012; http://www.reuters.com/article/2012/03/12/us-chevron-latam-analysis-idUSBRE82B0FX20120312)

International Trade

Colombia and Venezuela will complete trade agreement within the next few days when Foreign Ministers Nicolás Maduro of Venezuela and María Ángela Holguín of Colombia sign six corollary agreements as agreed to by Presidents Chavez and Santos in their recent meeting in Havana. The agreement will then go to the legislatures of both countries for ratification. More in Spanish: (El Universal; http://www.eluniversal.com/economia/120313/esperan-refrendar-anexos-del-acuerdo-comercial-con-colombia)

Politics

President Chavez announces he will return to Venezuela next Sunday

During a special TV program broadcast from Havana, President Hugo Chavez announced he will return to Venezuela next Sunday, March 18. "God willing, next Sunday afternoon I will already be in Venezuela," said President Chavez. (AVN, 03-12-2012, http://www.avn.info.ve/node/102985; CNN, http://edition.cnn.com/2012/03/12/world/americas/venezuela-chavez/index.html?iref=allsearch; The Washington Post, http://www.washingtonpost.com/world/the_americas/chavez-recovering-after-cancer-surgery-in-cuba-says-he-will-return-to-venezuela-soon/2012/03/11/gIQAdHJA6R_story.html)

Down but not out, a sick Chavez seeks re-election

Facing potentially debilitating radiation treatment after a second malignant tumor was removed from his pelvis, the once-inexhaustible Chavez, 57, is being forced to slow down just as he goes into what could be his toughest election yet. "Unfortunately you are not going to see that much of me," a reflective Chavez said from Cuba, where he is recovering from surgery late last month after a recurrence of the cancer that struck him in 2011. "I'm forced to confront this new situation, to rethink my personal agenda and take better care of myself."Chavez has denied rumors that his cancer has spread but if his health worsens and less-popular ministers are pushed into the spotlight on his behalf, voters will wonder if a weakened Chavez can govern for another six-year term. The only person giving information on his condition, Chavez has not said what kind of cancer he has or laid out a detailed prognosis, though he has announced he will need radiation treatments which are bound to take a heavy physical toll. (Reuters, 03-11-2012; http://www.reuters.com/article/2012/03/11/us-venezuela-election-chavez-idUSBRE82A07720120311)

In Venezuela, elections won't bring stability

In Venezuela's increasingly unpredictable presidential election, voters face more than a choice between competing ideologies. They must also weigh which candidate represents the best hope of staving off political and social upheaval. Neither of the two contenders can guarantee the nation's stability past the Oct. 7 election. The challenges extend well beyond a polarized electorate, Latin America's highest inflation rate, rampant crime and shortages of basic goods, electricity and housing. (The Wall Street Journal, 03-08-2012; http://online.wsj.com/article/SB10001424052970204781804577269442727746860.html?KEYWORDS=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.

November 04th, 2011

Economics & Finance

An estimated U$D 9 billion corporate dividends frozen in local market

Asdrúbal Oliveros, a director at the ECOANALÍTICA economic analysis firm estimates that total pending Central Bank obligations to multinational companies for dividend repatriation, plus amounts still in the works comes to approximately U$D 9 billion. He explained the CADIVI currency board shows U$D 2.5 billion pending, but says there are another U$D 6.5 still undeclared, adding that this situation is halting investments until after the 2012 Presidential elections allows a clear picture on debt repayment. He says dividend repatriation will remain on “standby” for the next months; and adds that if there is a Chavez reelection there may be a plan for “payments through debt”, in order to finance investment projects in the oil industry. (El Universal, 11-02-2011; http://www.eluniversal.com/economia/111102/access-to-foreign-currency-is-the-main-problem-for-companies)

Year to date inflation at 22.7%; 27.7% for foods and beverages

The Central Bank (BCV) and the National Statistics Institute (INE) officially confirmed that the consumer Price index for October was 1.8%, which brings year to date inflation to 22.7%. However, inflation for foods and beverages was 2.5% in October, which brings year to date inflation in this to 27.7%. However, Augusto Montiel, head of the official Consumer Protection Agency says price increases are not due to inflation, but rather to “speculation” and the “perception of rising prices”. More in Spanish: (Tal Cual, 11-04-2011; http://www.talcualdigital.com/index.html; El Nacional; http://www.el-nacional.com/; El Universal; http://www.eluniversal.com/economia/111104/en-10-meses-los-precios-de-los-alimentos-se-aceleraron-277 and El Mundo; http://www.elmundo.com.ve/noticias/economia/empresas/-percepcion-de-alzas-de-precios--se-debe-a-especul.aspx)

No other country in the world pays as much interest as Venezuela

Alejandro Grisanti, research director for Latin America at Barclays Capital, says Venezuela is paying interest rates around 12% due to a policy of high indebtedness in order to meet currency demands. He points out no country is in such a situation, not even Greece; and considers it necessary to stop this policy immediately given foreseeable short term consequences. More in Spanish: (Tal Cual, 11-04-2011; http://www.talcualdigital.com/index.html)

Industrial capability shrank by 40% in 12 years

Carlos Larrazabal, President of the National Industrial Council (CONINDUSTRIA) reports that investment in manufacturing is either stagnant or receding as attacks on prívate property increase. He says the situation has become worse since 2006 when there was one takeover; 126 in 2007, 24 in 2008, 137 in 2009, 284 in 2010 and 497 takeovers to date in 2011. More in Spanish:(Tal Cual, 11-04-2011; http://www.talcualdigital.com/index.html)

Land rescue policy shows no success in the market

Official spokesmen say decisions to seize lands implemented by the Government over the past 10 have been aimed at increasing meat and milk production, on the premise they are ensuring food security. However, results of this policy are not borne out by the market. Meat is not easily found on the shelves of butcher shops and supermarkets due to low prices and to the inability of the local production base. The supply of milk has been also hit by the same problems. Production of milk in Venezuela's two most productive areas in the state of Zulia has declined between 50% and 60% due to the takeover of farms and weather factors, according to cattle raiser associations. (El Universal, 11-02-2011; http://www.eluniversal.com/economia/111102/success-of-land-rescue-policy-is-not-reflected-in-the-market)

Budgetary allocation for agriculture dives 16.2% in 2012

Transparency Venezuela says a 45% nominal growth in Venezuela's 2012 budget compared to funds initially appropriated in the 2011 budget does not reflect in funds available to productive sectors. The NGO found that the funds appropriated in the 2012 proposed budget for several production areas fell in real terms compared to 2011. (El Universal, 11-02-2011; http://www.eluniversal.com/economia/111102/budgetary-allocation-for-agriculture-dives-162-in-2012)

An increase of money supply (M2) expected by the last quarter of 2011 in the domestic market as a result of the traditional Christmas bonuses and other payments made by both the public and private sectors before the end of the year. Data from the Central Bank (BCV) indicate money supply has increased 25% since the beginning of the year when it was Bs.F.294,492 million. The indicator posted Bs.F.366,694 million on October 21. (Veneconomy, 11-02-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28288&idc=2)

Commodities

Venezuela 2012 oil output to stay at 3.01 million barrels a day, calls for OPEC production cut

Venezuela will maintain its current crude oil production of 3.01 million barrels a day in 2012, Oil Minister Rafael Ramirez said today during a presentation to the National Assembly’s Finance Committee to discuss the budget.

“We’re going to continue to comply with our OPEC quota until there’s an agreement to change output levels,” Ramirez said. “We’re going to keep working on stabilizing our oil price.” He also said members of the Organization of Petroleum Exporting Countries who are producing above their mandated output quotas must cut oil production before discussing future decisions; and added that uncertainty over the future of the global economy has increased since the last OPEC meeting when member countries failed to reach a consensus. (Bloomberg, 11-02-2011; http://www.bloomberg.com/news/2011-11-02/venezuela-2012-oil-output-to-stay-at-3-01-million-barrels-a-day.html and http://www.bloomberg.com/news/2011-11-02/opec-members-must-cut-extra-production-venezuela-s-ramirez-says.html)

PetroSa finds 1 billion barrels in Orinoco Belt

South Africa's national oil company PetroSA reported on Wednesday that its joint venture with state-run oil company Petróleos de Venezuela (PDVSA) has found about 1 billion barrels of recoverable oil at the Orinoco Oil Belt.

In 2008, PetroSA signed oil exploration and heavy crude oil production agreements with Pdvsa, Reuters quoted. (El Universal, 11-02-2011; http://www.eluniversal.com/economia/111102/petrosa-finds-1-billion-barrels-in-orinoco-belt)

PDVSA to transfer 14% of oilfield in Orinoco belt to PETROECUADOR

State-run oil company PDVSA will transfer to Ecuadorian PETROECUADOR a 14% stake in the Dobokubi oilfield in Orinoco oil belt, according to Alexi Arellano, manager of PETROECUADOR, who said the operation will be completed "in the next three months". The Dobokubi oilfield currently produces 6,200 barrels per day, but it has potential to reach 25,000 to 30,000 bpd. (El Universal, 11-01-2011; http://www.eluniversal.com/economia/111101/pdvsa-to-transfer-to-petroecuador-14-of-oilfield-in-orinoco-belt)

Indigenous miners complain about illegal acts by military

Indigenous communities in the Amanaima area (Upper Paragua) of Guayana have released a group of 19 military officers and soldiers the Indians had held and disarmed in the La Paragua township, after finding soldiers engaged in illegal mining activities. The area was demilitarized, mining by the military halted, and Indians recovered their areas. Indigenous leaders complained that people reacted to abuses by troops, whose job is to prevent illegal mining for environmental purposes. (El Universal, 11-01-2011; http://www.eluniversal.com/economia/111101/venezuelan-indigenous-miners-complain-about-illegal-acts)

CAF approves U$D 380 million to streamline GURI plant

The Andean Development Corporation (CAF) has approved a U$D 380 million loan to Venezuela, to be executed by the National Electricity Corporation (CORPOELEC) for a comprehensive streamlining plan for the first six generating units at Simón Bolívar (GURI) Hydroelectric Power Plant which has been operating for 50 years,. (El Universal, 11-02-2011; http://www.eluniversal.com/economia/111102/caf-approves-usd-380-million-to-streamline-guri-plant)

Sugar production only covers 30% of local demand, due to a decreasing production and population growth, according to the head of the Venezuelan National Sugar Cane Growers Federation (FESOCA) José Ricardo Álvarez. The current sugar cane harvest is only 6,500,000 tons which represents some 500,000 tons of the final products, according to data from FUNDACAÑA. (Veneconomy, 11-02-2011;  http://www.veneconomy.com/site/index.asp?ids=44&idt=28291&idc=3)

Logistics & Transport

New Land Transport, and Air and Aquatic Transport Ministries created, under military direction

President Chavez has decided to split the Ministry of Transport and Communications to provide better attention to land and aeronautical areas. The new Ministry for Air and Aquatic Transportation will be headed by Capitan Elsa Gutierrez, who has been in charge of port management; and the newly created Ministry for Land Transportation will be headed by General Juan Garcia. (AVN, 11-03-2011; http://www.avn.info.ve/contenido/created-offices-land-transport-air-and-aquatic-transport)

International trade

Venezuela and Portugal signed 13 new agreements extending their bilateral cooperation in areas of industrial development, which include the construction of a factory to assemble Canaima computers (these are the computers the government gives to primary school children) and a commitment between PDVSA Gas and a Portuguese engineering company to develop a gas project in Cumaná, Sucre state. (Veneconomy, 11-02-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28289&idc=3)

Politics

Three-horse race for Venezuela's anti-Chavez ticket

The race to be the presidential candidate of Venezuela's opposition coalition has come down to three challengers who all hope their youth and experience in office make them the best bet to unseat President Hugo Chavez.

Less than a year ahead of the South American OPEC member's October 7 vote politics are dominated by two issues: the health of socialist leader Chavez after cancer treatment, and who will win the Democratic Unity coalition's February primary. The three frontrunners in the opposition tussle ahead of the February primary are state governors Henrique Capriles Radonski and Pablo Perez, and former district mayor Leopoldo Lopez. (Reuters, 11-02-2011; http://www.reuters.com/article/2011/11/02/us-venezuela-opposition-idUSTRE7A14QR20111102)

Chavez says he needs more time, prepares new administration

After 12 years in office, Hugo Chavez says he needs more time ruling the country in order to fulfill his task; and says he has started plans for his 2013-2019 term, which he calls the second stage of the “revolution” and says it will be to strengthen XXI century socialism. More in Spanish: (Tal Cual, 11-04-2011; http://www.talcualdigital.com/index.html)

Chavez foes criticize big boost in 2012 budget

Opposition leaders criticized lawmakers loyal to Venezuelan leader Hugo Chavez on Wednesday for sharply boosting the government's budget, saying they suspect it is meant to help the president's bid for re-election. Pro-Chavez lawmakers who hold a majority in the National Assembly have proposed a 2012 budget totaling U$D 69 billion, which is a 45.6% rise from this year's budget. Legislators are expected to approve the budget within several weeks. Chavez's opponents called the increase excessive, saying it will allow Chavez to spend lavishly to help augment his popularity before the election next Oct. 7. (AP, 11-02-2011; http://www.google.com/hostednews/ap/article/ALeqM5jPZElENR8dLqgHbRcDur5GbK3EAg?docId=cabefd3737da414c8c3c885dca8d37ef)

Pollster: 50% thinks Venezuela needs a change of course

Oscar Schemel, CEO of the HINTERLACES polling firm, found that while 49% of respondents disagree with President Hugo Chávez s governance, they replied emotionally because he is a "charismatic leader". (El Universal, 11-02-2011; http://www.eluniversal.com/nacional-y-politica/111102/pollster-50-thinks-venezuela-needs-a-change-of-course)

TIME Magazine: Chavez goes after the islands of Venezuela's rich — and their yachts

President Hugo Chavez announced earlier this month he'd like to expropriate much of private property the resort archipelago of Los Roques for state tourism — including yachts, which he says would be better used for ferrying visitors. Chavez spoke on state television denouncing the "high bourgeoisie" and "international set" that frequent the islands. But while spoiling the high life might sound appealing to his supporters, environmentalists fear the President's plan could instead spoil Los Roques, one of the Caribbean's most gorgeous natural treasures — and one of the most fragile. "It was due to that "fragility," says former Tourism Minister Diego Arria, “that Los Roques was made a national park in 1972, to protect it from developers.” (Time, http://www.time.com/time/world/article/0,8599,2097735,00.html#ixzz1cYYgXMXE)

19 new Ministries have been created in 12 years

Despite a December 8, 1998pledge by then President elect Chavez to bring the number of Ministries down to 11 or 12, the number of ministerial positions has been raised from 21 to 32 over the past 12 years. More in Spanish:. (El Universal, 11-04-2011; http://www.eluniversal.com/nacional-y-politica/111104/19-despachos-ejecutivos-ha-creado-chavez-en-12-anos)

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.