October 21th, 2011

Economics & Finance

Venezuela to raise spending 46% in 2012 budget ahead of vote

The government will boost spending by 46% in 2012 as President Hugo Chavez seeks resources to fund housing, agriculture and job creation plans that are pillars of his re-election bid next October. Expenditures will jump to 297.8 billion bolivars (U$D 69.34 billion) while estimates see the economy expanding 5% and the Western Hemisphere’s highest inflation rate falling to between 20% to 22%, Finance Minister Jorge Giordani said during a presentation of the budget proposal to the National Assembly. Consumer prices rose 26.7% from a year earlier in September. The Bolívar won’t be devalued next year, Giordani said and added that the government will set a ceiling for new debt of 81.7 billion bolivars in 2012, of which 25.8 billion bolivars will be used to service outstanding borrowing. The budget was calculated using an average oil export price of $50 a barrel. Venezuela expects a deficit of 3.6% of GDP in 2012, a wider deficit than the 3.4% posted in 2010. (Business Week, 10-20-2011; http://www.businessweek.com/news/2011-10-20/venezuela-to-raise-spending-46-in-2012-budget-ahead-of-vote.html)

Takes on U$D 3 billion more debt

The Venezuelan government said on Monday it had successfully sold U$D3 billion of bonds maturing in 2026, making the South American OPEC member's debt issuance this year by far the largest in Latin America. The Finance Ministry said 40% of the bonds went to Venezuelan businesses in priority sectors at tranches of between U$D 3,000 and U$D 1.47 million, while the rest went to a mix of private investors and state-run financial institutions. Venezuela surprised markets last week with the new bond issue, intended both to supply dollars to businesses and to provide funds for social projects. (Latin American Herald Tribune, 10-19-2011; http://www.laht.com/article.asp?ArticleId=434362&CategoryId=10717)

Borrowing raises credit concerns-Fitch

Fitch Ratings on Monday said Venezuela's credit profile faces increased risk of deterioration if increased borrowing is met with a "significant" macroeconomic shock. Venezuela, rated B-plus by Fitch, sold an additional U$3D billion worth of debt maturing in 2026 at a discounted price of 95 cents on the dollar with a coupon of 11.75%. The OPEC member's borrowing, between the government and the state-run oil company PDVSA, totals U$D 15.2 billion so far in 2011. (Reuters, 10-17-2011; http://af.reuters.com/article/commoditiesNews/idAFWNA107020111017)

World Bank says it is difficult to conduct business in Venezuela

The Doing Business 2012 report by the World Bank and the International Finance Corporation (IFC) signals Venezuela as the most complicated country in which to do business in Latin America and most of the world. The country dropped two steps down to 177 out of 183 nations analyzed for investment and business creation climate. The report says: “Over the past 6 years, 163 economies adopted more open regulations for business, only a few went in the opposite direction. The Bolivarian Republic of Venezuela and Zimbabwe are those that enacted more difficult regulations for business” according to an AP report. More in Spanish: (El Nacional, 10-21-2011; http://www.el-nacional.com/)

Business questions allocation of foreign exchange

Carlos Fernández, president of the Venezuelan Council of Trade and Services (CONSECOMERCIO) says the Government must correct the criteria to allocate US dollars through the issuance of bonds. "It is not possible that (all the foreign currency) is allocated to priority sectors," said the business leader with regard to the recent issue of US dollar-denominated 2026 bonds. (El Universal, 10-19-2011; http://www.eluniversal.com/economia/111019/entrepreneurs-question-allocation-of-foreign-exchange)

350,000 hectares projected for additional government takeovers next year

The 2012 budget for the Agriculture and Land Ministry will grow 16.7%, to 2.93 billion VEB, and includes government plans to take over 350.000 hectares of agricultural land next year, 22.2% less than were projected in the 2011 budget. More in Spanish: (El Nacional, 10-21-2011; http://www.el-nacional.com/)

Giordani says FONDEN has received U$D 81.1 billion since creation

Venezuela’s Finance Minister Jorge Giordani said the government’s off-budget fund known as FONDEN has received U$D 81.1 billion dollars since it was created. About U$D 47.3 billion have already been spent while a further U$D 31.9 have been assigned to projects, Giordani said today in Caracas during the presentation of the country’s 2012 budget. (Bloomberg, 10-20-2011; http://www.bloomberg.com/news/2011-10-20/giordani-says-fonden-received-81-1-billion-since-creation.html)

Government approves U$D 179.16 million to strengthen food distribution

The Council of Ministers has approved U$D 179.16 million to continue strengthening food distribution, according to Food Minister, Carlos Osorio, who said that all the products within the basic-needs food basket (milk, chicken, sugar, etc) will have a priority so the Government can distribute them at low prices among Venezuelan families. (AVN, 10-19-2011; http://www.avn.info.ve/contenido/government-approves-17916-million-strengthen-food-distribution)

Commodities

PDVSA says studies show recovery factor above 20% in Orinoco Oil Belt

Eulogio Del Pino, vice-president of Exploration and Production of the Venezuelan state-run oil company PDVSA, says technical studies will be presented that show it possible to obtain a recovery factor above 20% in the Orinoco Oil Belt.

In a press release he announced the presentation of studies used to obtain the quantification and certification of oil reserves in the Orinoco Oil Belt, which placed Venezuela as the world's largest oil reserves holder.(AVN, 10-20-2011; http://www.avn.info.ve/contenido/studies-show-recovery-factor-above-20-orinoco-oil-belt)

Major refining compound hit by failure

A disruption has occurred within the gasoline production unit (which processes 8,300 tons of gasoline) at the Paraguaná-Cardón Refining Complex, in the northwestern Venezuelan state of Falcón. The glitch occurred in the catalytic cracking unit (FCC). Oil experts were working in the plant to start up the complex on Thursday. CRP oil workers said that the damaged equipment had been recently purchased for plant expansion. (El Universal, 10-20-2011; http://www.eluniversal.com/economia/111020/venezuelas-major-refining-compound-hit-by-failure)

International Trade

Peru announces new negotiations with Venezuela

The Peruvian Trade Ministry announced the Third Round of Negotiations for a Productive and Commercial Complementarities Agreement with Venezuela will be held November 9-11 in order to finish up pending issues. Foreign Affairs Ministers, Rafael Roncagliolo (Peru) and Nicolas Maduro (Venezuela), had already agreed to extend tax regulations between AnPact member countries. (AVN, 10-19-2011; http://www.avn.info.ve/contenido/peru-announces-new-round-negotiations-venezuela)

Politics

Chavez declares he is free of cancer

Hugo Chavez has declared he is cancer-free four months after surgery to remove a malignant tumor."I am free of illness," Chavez, 57, said in an address to Venezuelans after touching down from Cuba in a western state to make a pilgrimage to a Catholic shrine. "The new Chavez is back ... We will live!" Despite the charismatic socialist president's ebullience, doctors say it is impossible for him to be considered out of danger until at least two years after treatment has finished. "No matter what kind of cancer he was treated for, it's just too early to tell," said a U.S.-based cancer expert, who asked not to be named. U.S.-based Nomura Securities analyst said Chavez was seeking to quell the speculation his condition had awoken. "Nobody is going to know for sure if he is cured. But he has to say this because he needs to bring peace to the Chavistas. His being there is to try to calm them down and tell them that Chavismo continues and he'll take it from here." (Reuters, 10-20-2011; http://www.reuters.com/article/2011/10/20/us-venezuela-chavez-idUSTRE79J5CA20111020

Government fines TV station for prison coverage

Regulators fined a TV channel more than U$D 2 million on Tuesday for its coverage of a deadly prison riot that became a political headache for President Hugo Chavez. The hefty fine against GLOBOVISION sharply raises the stakes in an intermittent conflict between the government and the country's only remaining channel that takes a staunch anti-Chavez stance. GLOBOVISION was fined for its coverage of a prison riot that erupted in a prison in June after troops raided an adjacent prison looking for weapons. The raid set off gunfights that left three dead, and the standoff finally ended with negotiations after 27 days. Authorities said four inmates who escaped also were slain by soldiers. (Business Week, http://www.businessweek.com/ap/financialnews/D9QEUSH80.htm)

Venezuela to take care of relations with Colombia, prevent conflicts

President Chavez has emphasized that the Government has recovered relations with Colombia and "we shall keep caring them. We do not want more conflicts, because that is a sister Republic." At his arrival from Cuba into La Fria, in Tachira state on the Colombian border he said that Venezuela and Colombia are destined to be brother countries.  (AVN, 10-20-2011; http://www.avn.info.ve/contenido/venezuela-care-relations-colombia-prevent-conflicts)

US urges Venezuela to abide by IACHR ruling on ex mayor, Venezuela rejects US statements

A US State Department spokesman says Venezuela should meet its international commitments and abide by the ruling of the Inter-American Court of Human Rights (IACHR Court) which restores the political rights of opposition leader Leopoldo López. "We join the Court, as well as Human Rights Watch and other observers to ask Venezuela to fulfill its international commitments," said spokesman Mark Toner. Venezuela then issued a formal communiqué rejecting the statements made by the US State Department spokesman questioning the local judiciary system. (El Universal, 10-19-2011; http://www.eluniversal.com/nacional-y-politica/111019/us-urges-venezuela-to-abide-by-ruling-on-ex-mayor; AVN, 10-20-2011; http://www.avn.info.ve/contenido/venezuela-rejects-us-statements-questioning-venezuelan-judiciary-system)

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.

October 14th, 2011

Economics & Finance

Venezuela selling U$D3 billion of bonds to meet demand for foreign currency, may trade at BF 5.70

Venezuela will offer U$D 3 billion of bonds in the local market, swelling dollar debt sales this year to U$D 7.2 billion, as the country seeks to finance spending and meet investor demand for foreign currency. The government will sell the 11.75% bonds due in 2026 to local investors, who will pay with bolivars at the official foreign-exchange rate of 4.3 bolivars per dollar, according to a statement posted on the Public Credit Office’s website. CREDIT SUISSE Group AG (CSGN) and EVROFINANCE MOSNARBANK SA will manage the sale, the statement said. “This has taken the market by surprise,” said Jeff Williams, an emerging-market debt strategist at Citigroup Inc. in New York. “People weren’t expecting a new Venezuela issue this year, so in that sense it’s negative for the market.” The Finance Ministry will announce the results of the sale on Oct. 17. Analysts say local demand will be very high as the year is ending and there are many bolivars circulating, plus banks offer financing in order to promote their acquisition and their web pages have collapsed with orders. (Bloomberg, 10-11-2011; http://mobile.bloomberg.com/news/2011-10-11/venezuela-to-sell-3-billion-of-bonds-to-meet-demand-for-foreign-currency?category=%2Fnews%2Fbonds%2F and more in Spanish: El Mundo, 10-14-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/dolar-del-bono-2026-se-acerca-a-bs-f--5,70.aspx)

FITCH rates Venezuela's 2026 bond "B+"

Credit rating agency FITCH Ratings said on Wednesday that it had assigned a rating of 'B+' to the Venezuela U$D 3 billion Global bond maturing in 2026, with a 11.75% coupon, Reuters reported. The rating is in line with Venezuela's sovereign bond rating, which is underpinned by its positive record of servicing debt even under political and economic stress in recent years, FITCH said. (El Universal, 10-12-2011; http://www.eluniversal.com/economia/111012/fitch-rates-venezuelas-2026-bond-b)

Venezuela to pay U$D 5.28 billion in interest

Although average oil prices have hit a record high at U$D 100 this year, the government here is getting into debt at a frantic pace. According to Angel García Banchs, director of economic research firm ECONOMÉTRICA, Venezuela will have to pay U$D 5.28 billion in interests on bonds issued this week. (El Universal, 10-12-2011; http://www.eluniversal.com/economia/111012/venezuela-to-pay-usd-528-billion-in-interest-for-bond-issue)

Commodities

Venezuelan upgrader stopped by equipment failure-source

Venezuelan heavy crude upgrader PETROPIAR suffered equipment failure that shut down operations this week, a project source told Reuters on Tuesday, adding the project was expected to be back up and running on Thursday.

PETROPIAR converts up to 180,000 barrels per day of extra heavy crude from the Orinoco belt into exportable oil.

"There was a problem in a water pump and the upgrader is being reactivated," said the source, who requested anonymity as they are not allowed to comment on operations. (Reuters, 10-11-2011; http://www.reuters.com/article/2011/10/11/venezuela-upgrader-equipment-idUSN1E79A1T020111011)

Public foodstuff distribution data

According to official figures, 60% of food purchased through the MERCAL network comes from international purchases carried out by the Corporation CASA, while the other 40% is produced locally. The distribution plan of the main state network marketing is still at 130,000 tons of food a month, despite resources approved to expand its distribution to 140,000 tons. The Government, through MERCAL, PDVAL and the Bicentennial market network, provides some 300,000 tons of food for public consumption. It also has an infrastructure of 19,000 retail outlets across the country. The government's goal is to meet 50% of national consumption. More in Spanish. (El Universal, 10-13-2011; http://www.eluniversal.com/economia/111013/datos-de-distribucion-publica)

MERCAL price increase denied: Productive Economy Vice President Minister Ricardo Menéndez denied government plans to increase prices of products distributed by the MERCAL Network and assured they will remain under Government subsidy. However, last Monday Venezuelan News Agency reported that at least 14 food staples could experience increases, citing Food Minister Carlos Osorio. (Veneconomy, 10-12-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28002&idc=3)

International Trade

Trade with Colombia to be conducted in local currencies

Trade between Colombia and Venezuela is no longer dependent on the dollar as the only means of payment. The Venezuelan customs authority (SENIAT) has issued a resolution allowing bilateral trade to be priced in local currencies. Henceforth products exported to Colombia may be payable in pesos and imported into bolivars. More in Spanish. (El Universal, 10-13-2011; http://www.eluniversal.com/economia/111013/comercio-con-colombia-se-transa-en-moneda-nacional)

Economic agreement to relaunch Venezuela, Peru relations

The governments of Peru and Venezuela will relaunch their political and economic relations by signing an agreement on productive and commercial complementation next Friday in Lima, according to Peruvian Foreign Minister Rafael Roncagliolo, who will meet with his Venezuelan counterpart Nicolas Maduro. Roncagliolo said that the accord was previously debated in round tables of technical commissions from the two countries, which took place on October 04-05 in the Peruvian capital city. "These talks attained advances, but there are some aspects pending to be defined," said the Peruvian diplomat. (AVN, 10-12-2011; http://www.avn.info.ve/node/81797)

13% of Nicaraguan exports go to Venezuela

Nicaragua expects to close 2011 with record exports of over U$D 2,000 billion, sending its main products in the U.S. and Venezuela. The first country is 30% of sales and 12% in Venezuela, mainly beef, cattle and beans, DPA said. More in Spanish. (El Universal, 10-13-2011; http://www.eluniversal.com/economia/111013/breves)

Politics

President Chavez in Cuba for medical exams

President Chavez confirmed he will travel to Cuba for a series of medical exams to check on his recovery. He said; ”I am going to Cuba this weekend for some medical exams. I have no more chemotherapy. My hair has started to grow out and now I am going to have thorough exams to see how I am. I feel well and better every day, I am not exaggerating”. More in Spanish. (AVN, 10-14-2011;  http://www.avn.info.ve/node/82060)

US asks Venezuela to "reconsider" human rights suggestions

The United States on Wednesday urged Venezuela to reconsider its decision to reject several of the recommendations made during the Universal Periodic Review of the UN Human Rights Council that Venezuela underwent last week.

"Many countries raised serious and legitimate concerns about the state of human rights in Venezuela at its Universal Periodic Review (UPR) process," the US State Department said in a statement quoted by AFP. (El Universal, 10-12-2011; http://www.eluniversal.com/nacional-y-politica/111012/us-asks-venezuela-to-reconsider-human-rights-suggestions)

Chavez proposes a law to defend airspace

President Chavez has proposed a Law for the Control and Defense of Airspace which will authorize gunning down aircraft involved in drug trafficking. More in Spanish. (El Universal, 10-14-2011; http://www.eluniversal.com/nacional-y-politica/111014/chavez-pide-crear-ley-de-defensa-del-espacio-aereo)

Chavez gives U$D 1.5 billion to Cuba and ALBA

Venezuela spent more than U$D 1.5 billion in three years to finance dozens of projects in Cuba and other allied countries, including airport expansions in Cuba and replacing light bulbs in Bolivia, although the oil producer has amassed massive debt in the last few years to cover its own commitments, according to a Venezuelan government document. 88% of disbursements from January 2007 to May 2010 covered Cuban financial projects said the document from the Economic Social Development Bank of Venezuela (BANDES), which was obtained by El Nuevo Herald. (The Miami Herald, 10-13-2011; http://www.miamiherald.com/2011/10/13/2452971/chavez-gives-15-billion-to-cuba.html#ixzz1alEL7Nuf)

Chavez's increasingly long shadow in Latin America

Recent reports, no less than their accompanying photos, suggest that Hugo Chavez may be dying. But if he hangs on, he is on his way to being reelected president again in Venezuela's December 2012 national elections. He is now using his cancer patient status to his political advantage, and his popularity is rising as a result. But if his illness increases his popularity, it lessens his authority. He is getting his medical treatment in Cuba in order to control the flow of information that might leak back into Caracas. So an optimist might say that the prospects for change in Venezuela are excellent: Either Chavez is finished, by cancer or the ballot box; or in his efforts to appeal to the middle class and small businessmen he is compelled to moderate his socialist policies. However, it now seems that Chavez is hardly the extent of Venezuela's political problem. No matter what happens to the founder of chavismo, evidence shows that the country's political class is marked by institutionalized criminality and ties to international terrorism. (CBS News, 10-11-2011; http://www.cbsnews.com/stories/2011/10/11/opinion/main20118378.shtml)

REUTERS: Re-energized Chavez floods Venezuela's airwaves

Of many surreal moments in the life and times of Hugo Chavez, the flamboyant Venezuelan leader's encounter with a puppet of himself this week was one of the wackiest. Despite his convalescence from cancer surgery and four rounds of chemotherapy, the 57-year-old Chavez has since the start of October been hitting the air-waves like the old days, with phone-ins to state TV any time from dawn to midnight. "It's not time to die, it's time to live! To those who want me dead, I tell them that soon my return will be complete," Chavez said in what has become a daily mantra. He clearly feels upbeat, re-energized -- and desperate to show it. Yet cancer experts say it takes several years before anyone can be confident they have beaten the disease. "If you were my patient, and you said you had just finished chemotherapy two weeks ago and you were cured, I would say that is absolutely ridiculous," said a U.S. specialist, who asked not to be named. "It is much too early to say." (Reuters, 10-13-2011; http://in.reuters.com/article/2011/10/13/idINIndia-59876320111013)

Minister claims GUMILLA poll shows 52% prefer socialism over capitalism

And 71,4% say a socialist system guarantees the common good, according to a poll allegedly taken by the Jesuit Center for Research and Social Action (Centro GUMILLA) and distributed by Communications and Information Minister Andrés Izarra. More in Spanish: (Ultimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/gumilla--52--prefiere-el-socialismo-al-capitalismo.aspx)

Venezuela, Palestine to create commission to review bilateral accords

President Chavez and Palestinian National Authority President Mahmoud Abbas, have agreed to create a joint commission to extend and strengthen the accords signed by the two nations. "We have agreed to create a commission to review what we are doing and to review the new horizons of cooperation in all matters possible," said Chavez after a meeting he held in Caracas with Abbas. (AVN, 10-12-2011; http://www.avn.info.ve/node/81792)

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 22th, 2011

Economics & Finance

Venezuela’s possible debt crisis

Greece may have to move over. While global investors and financial regulators have been transfixed in recent months on a possible European debt crisis, Venezuela, a major oil exporter, ranks just behind the cradle of Western civilization in terms of the risk of defaulting on its debt and roiling global financial markets. Will its petrodollars be enough to keep it from default? While analysts say yes for now -- and probably for as long as oil prices stay high -- the long-term odds are not as good. London consultancy CMA Datavision July 7 gave Venezuela a greater than 51.4% chance of defaulting on its sovereign debt within five years. That puts it right behind Greece, which tops CMA’s list with an 80.6% chance. (Platts, 07-19-2011; http://www.platts.com/NewsFeature/2011/venezuela/index)

Venezuela bonds slide on speculation sale will top U$D 4 billion

Venezuelan bonds fell on speculation the government will sell more than U$D 4 billion of bonds to finance government programs, swelling the supply of debt in international markets. The yield on Venezuela’s benchmark 9.25% dollar bonds due in 2027 rose 15 basis points to 13.05% in New York, according to data compiled by Bloomberg. The price on the bonds fell 0.82 cent on the dollar to 74.63 cents. Speculation is mounting that the offering will total about U$D 4.2 billion. A Finance Ministry press official declined to comment on the sale. (Bloomberg, 07-20-2011; http://www.bloomberg.com/news/2011-07-20/venezuelan-dollar-bonds-slide-as-investors-anticipate-4-billion-offering.html)

International reserves at $ 29.923 million

International reserves closed yesterday at U$D 29.923 million, having increased by U$D 473 million, according to the Central Bank of Venezuela (BCV). More information in Spanish. (El Mundo, 07-22-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/reservas-internacionales-llegaron-a-$29-923-millon.aspx)

Government to ban unauthorized price increases

The just published law on Costs and Prices authorizes Government control over any and all production, importation and marketing of all products and services it deems priority to ensure the population’s well being. The text on “Integrated National Costs and Prices” establishes controls on companies with profits deemed excessive in proportion to cost structures of goods produced and sold or services rendered. Companies are now required to inform and request permission from the government when they change production costs or prices. The act requires labeling that indicates amounts are calculated according to the new system. More information in Spanish. (El Nacional; 07-20-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Experience shows market distortion has forced relaxation of price controls on 48 items

While the Executive insists on price controls as a strategy to stem the rise in prices, Central Bank figures reveal it has not been effective in combating inflation. After eight years of price regulations, the government has had to admit distortions generated by controls over the economy, and to authorize increases in regulated areas at least once a year and release product prices. It has had to exclude 48 controlled items from the original list of 106 retail food products published in February 2003. More information in Spanish. (El Universal; 07-21-2011; http://www.eluniversal.com/2011/07/21/distorsiones-del-control-han-obligado-a-liberar-48-rubros.shtml)

World Bank to hear Koch arbitration against Venezuela

The World Bank will hear an arbitration case requested by U.S. company Koch Industries after Venezuela's President Hugo Chavez nationalized a fertilizer plant it owned with the OPEC nation's state oil firm. The World Bank's investment dispute body ICSID says on its website it will form a tribunal to hear the complaint by two subsidiaries of Koch, one of the world's largest privately owned companies. (Reuters, 07-20-2011; http://www.reuters.com/article/2011/07/20/venezuela-koch-idUSN1E76I27U20110720)

Commodities

OPEC certifies growth of Venezuelan oil reserves by 339% in last 5 years

The project Magna Reserva, launched in June 2005 to quantify and certify oil reserves at the Orinoco Oil Belt, was the key for Venezuela to become the country with the world’s largest oil reserves, adding up 296.5 billion barrels by the end of 2010. Said figure shows an increase of 339% of certified reserves in the last five years. According to the annual report issued by the Organization of Petroleum Exporting Countries (OPEC) in 2006, Venezuela owned a total of 87.32 billion barrels of certified reserves. Venezuela ranks over big oil exporting countries, such as Saudi Arabia (264.52 bn b); Iran (151.17 bn b); and Iraq (143.1 bn b). (AVN, 07-20-2011; http://www.avn.info.ve/node/68240)

Venezuela boosts proven natgas reserves by 11.3 tcf

Venezuela boosted its proven reserves of natural gas by 11.3 trillion cubic feet (tcf), taking reserves to 195.1 tcf as of the end of 2010, according to the government's gazette circulating on Wednesday. The gazette did not specify from where the new reserves came. (Reuters, 07-20-2011; http://www.reuters.com/article/2011/07/20/venezuela-gas-idUSN1E76J0DK20110720)

PETROBAR’s debt with PDVSA is the result of the subsidy on gasoil prices, as well as a series of illegal operations and administrative sloppiness by the Paraguayan state oil company and prohibited by the Public Contract’s Office. Other multi-million dollar amounts that are part of the debt were due to the purchase of fuels from PDVSA without signed contracts. (Veneconomy, 07-21-2011;  http://www.veneconomy.com/site/index.asp?ids=44&idt=26819&idc=4)

Politics

DATANALISIS warns opposition results depend on official failure

José Antonio Gil Yepes, president of DATANÁLISIS, says that despite poll figures that show the opposition with a good chance of winning the 2012 presidential election, results depends largely on one factor controlled by the Government: "The main source of votes for the opposition is not from offering, or leadership, but what the other side (the government) does or does not". He explained that according to their statistics voting intentions between Hugo Chavez and combined opposition candidates are in a stalemate. More information in Spanish. (El Universal; 07-21-2011; http://www.eluniversal.com/2011/07/21/advierten-que-la-oposicion-depende-del-fracaso-oficial.shtml)

Role reversal: Latin America taunts US on debt woes

After three decades spent battling their own debt crises and getting constantly lectured about them by Uncle Sam, many Latin Americans are watching the countdown to a possible default in Washington with a mix of “schadenfraude” and fear of what a collapse might mean for them. For everybody from presidents on down to street vendors, seeing US politicians argue over where to make painful budget cuts has also been a reminder that those days are over in Latin America. For now, at least, as most of the region enjoys an era of economic prosperity and comparatively tiny deficits. (Reuters, 07-20-2011; http://www.reuters.com/article/2011/07/20/us-latinamerica-usa-idUSTRE76J5XS20110720)

Peru and Venezuela Andean Community tariff preferences extended for 90 days

Peru and Venezuela agreed to extend Andean Community tariff preferences between the two countries for 90 days, according to Peruvian Minister of Foreign Trade, Eduardo Ferreyros, who said: "Both countries expressed their agreement to maintain the tariff preferences in force from July 22, 2011, and within 90 additional days, with the objective of concluding negotiations for a Trade and Productive Complementarities between Peru and Venezuela". More information in Spanish. (El Mundo, 07-22-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/peru-y-venezuela-prorrogan-preferencias-arancelari.aspx)

Provisional tariff agreement with Colombia could be extended

The deadline set by the governments of Hugo Chavez and Juan Manuel Santos to maintain trade agreements between the two countries after Venezuela’s formal withdrawal from the Andean Community (CAN) ended as of July 21st.

At the time the extension was enacted President Santos had said: “As there is yet no new agreement, it was decided to extend the rules that now govern for three months, extendable, as the teams are still in negotiation". According to the Executive President of the Venezuela-Colombia Chamber of Commerce (CAVECOL) Luis Alberto Russián, some experts another extension of the 18 April agreement “is automatic”, while others believe a new decision should be published in order to eliminate any doubt. More information in Spanish. (El Universal; 07-22-2011; http://www.eluniversal.com/2011/07/22/proponen-que-venezuela-regrese-y-refunde-a-la-can.shtml and http://www.eluniversal.com/2011/07/21/vence-prorroga-de-acuerdo-comercial-con-colombia.shtml)

US Congress eliminates aid to Venezuela and allies

The US House Committee on Foreign Affairs has passed an amendment to remove in FY2012 US assistance to Argentina, Bolivia, Ecuador, Nicaragua and Venezuela. The move, championed by Republican Connie Mack -Chairman of the Subcommittee on the Western Hemisphere- cuts out U$D 96 million requested by President Barack Obama in February. The decision does not include government funds to NGOs, AP reported. (El Universal, 07-22-2011; http://english.eluniversal.com/2011/07/21/us-congress-deletes-aid-of-venezuela-and-allies.shtml)

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.