July 30, 2015

International Trade

 

Less FOREX available for imports as oil income drops by US$ 3 billion in 2015

According to a report by the SÍNTESIS FINANCIERA think tank, a severe drop in oil income will further shrink FOREX allocations for imports. The study says that if oil prices continue at the current rate, this year's average would be around US$ 49.1 per barrel, which means an estimated US$ 3 billion oil income reduction in 2015. "This is an element that points to the persistent FOREX drought we have seen throughout July, unless until there is an inflow of US$ 1.5 billion from the sale of Jamaica's outstanding oil debt"...at a 50% discount. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

 

Logistics & Transport

 

Shortage of spare parts hampers timely repair of vehicles in Venezuela

Repairing any type of vehicle in Caracas can take from six months to one year due to shortages of spare parts and other supplies. José Manuel González, President of the Venezuelan Chamber of Mechanical Workshops, says that one of the difficulties to properly maintain vehicles is the high cost of spare parts, as a result of the increase in customs tariffs.
He explained that so far this year, 47 car shops have gone out of business nationwide. (El Universal, http://www.eluniversal.com/economia/150729/shortage-of-spare-parts-hampers-timely-repair-of-vehicles-in-venezuela)

 

 

Oil & Energy

 

Venezuela seeks light crude contracts to make blends

Petroleos de Venezuela (PDVSA) has asked oil suppliers to submit offers for up to 70,000 barrels per day of ultralight sweet crudes through contracts of one to five years. If successful, the move would mark the most definitive step state-owned PDVSA has taken to obtain longer-term supplies of ultralight crude, which it needs to use as a diluent for its growing output of extra heavy oil. PDVSA bought some 4 million barrels of Algeria's Saharan Blend light crude from October 2014 through January of this year under an agreement with state-run Sonatrach. That deal ended after disagreements over prices and delivery terms, forcing PDVSA to resume production of less attractive blends made with imported naphtha. (Reuters, http://www.reuters.com/article/2015/07/27/oil-venezuela-imports-idUSL1N1041K620150727; El Universal, http://www.eluniversal.com/economia/150728/venezuela-seeks-light-crude-contracts-to-make-more-attractive-blends)

 

40% of domestic liquid gas transportation is paralyzed due to lack of spare parts

40% of all vehicles that provide primary transportation for liquid gas to plants that fill and distribute containers for domestic use by 1.8 million Venezuelan families are paralyzed due to lack of spare parts.  Operators say "the situation tends to become worse as we cannot cover operating costs as rates have not been adjusted for the over 26 months for services they provide PDVSA Gas". More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

 

Economy & Finance

 

ECLAC: Venezuela's economy will contract by 5.5% in 2015, worst in the region

The UN's Economic Commission for Latin America and the Caribbean (ECLAC) estimated Venezuela's GDP will contract 5.5% by the end of this year, and will suffer the most severe contraction in the entire region. Panama is leading regional expansion with 6% growth, according to the 2015 study presented by ECLAC Executive Secretary Alicia Bárcena. More in Spanish: (2001, http://www.2001.com.ve/en-la-agenda/104908/cepal--economia-en-venezuela-se-contraera-5-5--a-finales-de-2015.html)

 

International reserves shrink even further, liquid reserves around US$ 900 million, asset sales recommended

Venezuela's international reserves were US$ 15.388 billion by 23 July, and pending debt repayments in 2015 and 2016 are US$ 15.461 billion. Morgan Stanley estimates that Venezuela's cash liquid reserves are now around US$ 900, a historic low, and is now burning reserves at a rate of some US$ 1.6 billion per month. The firm reports US$ 12.900 billion of reserves are held in gold bullion, and Venezuela's drawing rights with the IMF are now down to US$ 1.7 billion. The nation will also receive US$ 1.5 billion from Jamaica in advance payment - at a 50% discount - of that country's oil debt with Venezuela through PETROCARIBE. According to Bank of America, Venezuela faces a US$ 20 billion fiscal deficit, and the Morgan Stanley report doubts China will furnish new loans. Morgan Stanley believes President Maduro must now urgently start selling off assets, including the Chalmette refinery in the US. More in Spanish: (El Universal, http://www.eluniversal.com/economia/150729/que-esta-pasando; El Mundo, http://www.elmundo.com.ve/noticias/economia/mercados/bonos-soberanos-cierran-jornada-con-poco-movimient.aspx; Summarium, http://sumarium.com/reservas-liquidas-de-venezuela-rondarian-los-900-millones-de-dolares-segun-morgan-stanley/)

 

 

Politics and International Affairs

 

Maduro signals he won’t allow election monitoring, Capriles terms statements "unacceptable, suspicious"

President Nicolas Maduro has indicated he won’t allow international observers to monitor December’s congressional elections, as opinion polls show the ruling party losing its majority. “Venezuela is not and will not be monitored by anyone,” Maduro said at the United Nations in New York on Tuesday in response to a reporter’s question about whether the UN could “monitor” the Dec. 6 vote. “Our country won’t accept it ever.” Maduro’s ruling United Socialist Party of Venezuela, known as PSUV, is forecast to lose its congressional majority for the first time in 16 years. Opposition candidates are backed by 56.2% of voters, compared with 29.8% for the PSUV, according to the latest available DATANALISIS poll taken between May 18 and 30. Opposition leader Henrique Capriles, who recently met with OAS Secretary General Luis Almagro to request monitoring, quickly called Maduro's statement "unacceptable" and "very suspicious", adding that "it is a contradiction to claim you are a majority and not accept observers". He said that according to law, the decision to accept observers in parliamentary elections is up to the Elections Council, "it is not up to him to decide who can come and who cannot". Capriles added that a document is being drawn up for the government to sign it will accept election results.  (Bloomberg, http://www.bloomberg.com/news/articles/2015-07-28/venezuela-s-president-signals-he-won-t-allow-election-monitoring; El Universal, http://www.eluniversal.com/nacional-y-politica/150728/maduro-rules-out-accepting-international-observation-in-6d-vote; and more in Spanish: El Universal: http://www.eluniversal.com/nacional-y-politica/150729/capriles-es-contradictorio-decir-que-eres-mayoria-y-no-aceptar-observa)

 

19, 504,106 Venezuelans are registered to vote on December 6th

Preliminary voter registration for parliamentary elections next December 6th shows 19,504,106 citizens will be able to vote, and reflects 887,278 new voters as well as 223,970 people dropped from the rolls due to death or disqualification. The registry will be audited starting August 5th. (El Universal, http://www.eluniversal.com/nacional-y-politica/150728/venezuelan-voters-register-to-be-audited-on-august-5; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/150729/19504106-electores-estan-habilitados-para-el-6d)

 

Maduro requests U.N. mediation in Guyana border dispute

President Nicolas Maduro said he asked U.N. Secretary-General Ban Ki-moon for U.N. mediation in his country's century-old border dispute with neighboring Guyana. The controversy was discussed by Maduro and Ban at a meeting Tuesday morning in New York. "We will continue to work through diplomatic means," Maduro told reporters after the meeting. "We will overcome the provocations and aggressions of (Guyanese president David) Granger." (Reuters, http://www.reuters.com/article/2015/07/28/venezuela-guyana-idUSL1N1081S520150728; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2393293&CategoryId=10717; http://www.laht.com/article.asp?ArticleId=2393217&CategoryId=10717)

 

Guyana publishes maritime coordinates in official gazette

Guyanese Minister of Foreign Affairs, Carl Greenidge has announced that Guyana has published the coordinates of its maritime space coordinates in the Official Gazette. The move comes about two months after Venezuela unilaterally extended its maritime border, leading to a new border dispute between the two countries. Minister Greenidge said that the coordinates of Guyana's maritime borders were published to reassert Guyana's stance regarding the ownership of the territorial sea, the Exclusive Economic Zone (ZEE) and the continental shelf. (El Universal, http://www.eluniversal.com/nacional-y-politica/150729/guyana-publishes-maritime-coordinates-in-official-gazette)

 

Attorney General: UN report is based on "false assumptions"

Venezuela´s Prosecutor General Luisa Ortega Díaz says she regrets the fact that the United Nations Human Rights Committee echoed "false assumptions" when it comes to crime in Venezuela. She said the Committee based its investigation on "false assumptions, because not all violent deaths can be regarded as crimes, as if they were all murders. A car accident is a violent death, but it is not a crime (...) a suicide (...) is a violent death, but it does not constitute a crime," she commented. (El Universal, http://www.eluniversal.com/nacional-y-politica/150729/attorney-general-un-report-is-based-on-false-assumptions)

 

Spanish FM: "Venezuela has a long way to go in human rights"

Spain´s Minister of Foreign Affairs, José Manuel García-Margallo, says Venezuela "has a long way to go in the matter of human rights, as many pronouncements issued by the United Nations have made public." The foreign minister's remarks came in reply to criticism from Venezuelan President Nicolás Maduro of a controversial law on security and public order passed by the conservative government of President Mariano Rajoy, whom Maduro labeled an "assassin of the people". Minister García-Margallo had summoned the Venezuelan ambassador to Madrid for the second time in three months. The first time was in April, following President Maduro's statements calling Rajoy "a racist." (El Universal, http://www.eluniversal.com/nacional-y-politica/150728/spanish-fm-venezuela-has-a-long-way-to-go-in-human-rights)

 

 

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.

 

July 19, 2013

Economics & Finance

Fitch: Venezuela's foreign exchange policy faces challenges

Venezuela's foreign exchange (FX) policy adjustments in 2013 could reduce fiscal imbalances and limit the need of continued external debt issuance. However, the room to stabilize creditworthiness could be constrained by weaker external buffers, limited upside for oil revenues and non-debt capital inflows, a rapidly decelerating economy, and political changes, according to a new Fitch Ratings report. As a pillar of economic policy over the past 11 years, Venezuela's exchange rate regime continues to weigh on the country's creditworthiness. (Reuters, 07-18-2013; http://www.reuters.com/article/2013/07/18/fitch-venezuelas-foreign-exchange-policy-idUSFit66349520130718)

Central Bank sells U$D 215 million at currency auction

The Central Bank says it sold U$D 215.3 million at an auction of its revamped currency exchange system that closed this week, and Finance Minister Nelson Merentes separately said auctions will be held every 15 days as the country seeks to boost the flow of dollars. Merentes said he expects Venezuela's high inflation rate to ease by August, adding that economic growth for the second quarter of this year would be higher than the 0.7% rate seen in the first quarter. In a statement, the Central Bank said U$D 180.5 million was allocated to local businesses and U$D 34.8 million to individuals. The sale was restricted to companies registered in two Venezuelan states and to firms in the automotive and health sectors. Officials say other sectors and states will be addressed in future auctions. Merentes offered an optimistic view on the economy, saying that inflation "is decelerating... We are going to see better results." he added. "Given this panorama, one cannot say we are facing stagflation." He declined to give an estimate for the annual inflation figure. (Reuters, 07-17-2013; http://www.reuters.com/article/2013/07/17/venezuela-currency-idUSL1N0FN2DL20130717)

High end bidders left out of tender by Central Bank in an attempt to brake inflation

Financial sources say that in an effort to rein in inflation, the Central Bank ignored bidders willing to pay between 16 and 26 Bolivars for the U$D 215 million at the recent FOREX tender. Those who offered the most were not assigned dollars. A study by BARCLAY's shows that if the Bank had considered those willing to pay more it would have sold each dollar at 20 Bolivars, but chose not to validate such a high rate. More in Spanish: (El Universal, 07-19-2013; http://www.eluniversal.com/economia/130719/para-contener-la-devaluacion-bcv-castigo-al-mejor-postor)

Izarra expects tourism will bring in an extra U$D 2.5 billion

Tourism Minister Andrés Izarra believes an additional U$D 2.5 billion will come to Venezuela through tourists exchanging FOREX under regulations currently in the works. He says the exchange rate for tourists will follow the auction system recently undertaken by the Central Bank. More in Spanish: (El Mundo, 07-19-2013; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/gobierno-espera-percibir--2-500-millones-por-cambi.aspx#ixzz2ZUNTr7wx)

Government claims unemployment hits its lowest level in June, at 6.9%

According to the National Statistics Institute, June unemployment dropped beneath 7% for a historic low of 6.9%, down from 7.4% in June 2012 and 8.6% in June 2011. More in Spanish: (AVN, 07-19-2013;; http://www.avn.info.ve/contenido/tasa-desocupaci%C3%B3n-rompi%C3%B3-piso-hist%C3%B3rico-junio-al-ubicarse-69; El Universal, http://www.eluniversal.com/economia/130719/en-69-cerro-la-tasa-de-desempleo-en-junio; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ine-tasa-de-desempleo-disminuyo-a-6-9.aspx)

Commodities

Ramirez says Venezuela will export gas in 2014, gas tol replace liquid fuel at electric plants

Oil and Mining Minister Rafael Ramírez says Venezuela will be able to export gas in 2014, particularly to nations in the region such as Argentina and Brazil. He has also said PDVSA Gas is currently producing 7 billion cubic feet of gas, adding that gas supplied to electric plants will replace liquid fuel, particularly diesel. "We have replaced 40,000 BPD of diesel out of 160,000 BPD the electric sector currently consumes". Ramirez recalled that Venezuela's proven natural gas reserves are estimated at 196 billion cubic feet, with a potential above 300 billion cubic feet, which can certify the nation as the world's fifth largest gas reserve. More in Spanish: (AVN, 07-19-2013; http://www.avn.info.ve/contenido/ministro-ram%C3%ADrez-estima-que-venezuela-exportar%C3%A1-gas-2014; PDVSA, http://www.pdvsa.com/; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ramirez-nuestro-gas-esta-sustituyendo-el-diesel-en.aspx; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/ramirez--nuestro-gas-esta-sustituyendo-el-diesel-e.aspx)

Chacon claims electricity outages down 47%

Electric Energy Minister Jesse Chacon says electricity outages have been reduced by 47% nationwide and the goal is to bring them down to half by the second week in August. He said this progress was made possible by carrying out 90% of maintenance in relay stations, rehabilitating six underground cables in the capital region, among other initiatives; and added that consumption has been lowered by 430 MW out of a total goal of 1000 MW. More in Spanish: (AVN, 07-19-2013; http://www.avn.info.ve/contenido/chac%C3%B3n-hemos-reducido-47-interrupciones-el%C3%A9ctricas; El Mundo, http://www.elmundo.com.ve/noticias/economia/energia/chacon--meta-de-sumar-1-000-mw-al-sistema-se-cumpl.aspx)

Government criticized for funding electrification in other nations

Caracas city councilman Alejandro Vivas has blasted official plans to implement new electricity rates as Venezuela "has given away large amounts of money" to other countries in the region. He points out that since 2006, "the electric power crisis in the country has become worse," while U$D 200.3 million has been delivered to neighboring nations to finance "electrification plans and programs." Vivas said Cuba has been given U$D 20 million; Nicaragua, U$D 90 million for electrification of Managua and other cities; Uruguay, U$D 10.3 million; and Bolivia, U4$D 80 million. (El Universal, 07-17-2013; http://www.eluniversal.com/economia/130717/venezuela-criticized-for-funding-electrification-in-the-region)

Land Law is termed a "failure", has driven farmers out

Carlos Albornoz, Vice President of the FEDEAGRO Agrarian Federation says the Land Law has "failed" and merely "drove farmers out of the fields". Venezuela is currently meeting consumer demand through imports, such as 83% yellow corn and 40% whote corn, 50% beef, 70% dairy products, and 50% coffee. More in Spanish: (Ultima Hora Digital, 07-19-2013; http://ultimahoradigital.com/ultimahora/detalles_noticias.php?id=42478)

International Trade

Arreaza proposes Venezuela as China's entry point into MERCOSUR

Vice President Jorge Arreaza has begun an official four day visit to China by offering Venezuela as the Asian nation's "port of entry" into the MERCOSUR common market. Arreaza said: "We have the most important natural resources in the region despite being a country that is not so large, the largest oil reserves in the world, and one of the most important gas reserves". He has met which China's Vice President Li Yuanchao and with Hu Haibang, President of the China Development Bank. (El Universal, 07-19-2013; http://www.eluniversal.com/nacional-y-politica/130719/venezuela-se-ofrece-como-puerta-de-china-al-mercosur)

Iran, Venezuela vow to boost economic cooperation

Meeting with Venezuelan Ambassador to Iran Amenhotep Zambrano, the head of the Iran-Venezuela Parliamentary Friendship Group, Abdolreza Mesri denounced the sanctions imposed by Western powers against Iran and Venezuela as "fruitless." "Mutual economic and commercial cooperation between the two countries can meet the interests of the two nations and improve their international position," he was quoted as saying. He also expressed the full preparedness of Iran's Majlis (parliament) and the members of the Iran-Venezuela Parliamentary Friendship Group to promote ties with the Venezuelan parliament. Zambrano, for his part, expressed Caracas' willingness to cement ties with Tehran in economic, industrial and commercial fields and hailed the two countries' scientific achievements. (XINHUA, 07-18-2013; http://news.xinhuanet.com/english/world/2013-07/18/c_125025327.htm)

Politics

Santos-Maduro meeting seeks resuming dialog

As the Presidents of Colombia and Venezuela prepare to meet next Monday on the border town of Puerto Ayacucho, Venezuela's Amazonas state, Colombian President Juan Manuel Santos says: "There were some differences there which I believe came from some misunderstandings which can be easily explained". Santos says the two Presidents will "undertake a full a review of bilateral relations". Colombia´s Foreign Minister María Angela Holguín says the two leaders will discuss pending matters, including trade, border issues, security, energy, and fuel. More in Spanish: (El Universal, 07-18-2013; http://www.eluniversal.com/nacional-y-politica/130718/colombian-fm-santos-maduro-meeting-seeks-resuming-dialog; and more in Spanish: INFOLATAM)

Capriles to meet with Chile's Piñera to seek support for compliance with UNASUR resolution

Opposition leader Henrique Capriles Radonski is scheduled to meet privately tomorrow with Chilean President Sebastián Piñera during his current visit to Chile and Peru seeking support for the enforcement of an UNASUR resolution which calls for a full vote recount in Venezuela's April 14th Presidential elections. Former Chilean President Michelle Bachelet, a leading candidate in her country's upcoming presidential elections said she will not meet with Capriles due to scheduling problems, but suggested he meet with one of her foreign policy advisors. Capriles said he came to remind all that the "commitment undertaken by Venezuela with UNASUR has not been honored". More in Spanish: (El Universal, 07-19-2013; http://www.eluniversal.com/nacional-y-politica/130719/capriles-pedira-a-pinera-hacer-cumplir-compromiso-de-unasur and INFOLATAM)


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.