August 29, 2014

International Trade

Inbound cargo at Puerto Cabello:

• 58,000 tons of sugar from Brazil for Central Azucarera Portuguesa, C.A. Azúcar, Central El Palmar
• Over 34,000 tons of wheat from Terra World Trade y Gavilon Grain for Molinos Carabobo and Pastas Capri.
• 12,000 tons of rice from Guyana Rice Development Board for Corporación de Abastecimientos y Servicios Agrícolas (CASA)

24 vessels remain at bay awaiting dock assignment. Twelve if them carry food, specifically white and yellow corn, rice, sugar, oil, wheat and soybean meal. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Estatal-Casa-recibio-12-mil-toneladas-de-arroz-desde-Guyana-2223065/2014/08/26/348834)

Imports dropped 22% during first half of 2014

According to the National Statistics Institute (INE), total imports were US$ 22.1 billion in 2013 and for the same period in 2014 they have dropped to US$ 17.3 billion, a 22% contraction, mostly due to slow FOREX allocation by the government. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140829/22-caen-las-importaciones-en-el-primer-semestre)

Government has seized 503 tons of food in the border

Táchira Governor former Lieutenant José Vielma Mora reports public security patrols have seized 503 tons of food on the Colombian-Venezuelan border since the start of the joint plan to fight smuggling, two weeks ago. He said that about 25 people, covering their faces attempted on Monday to relaunch "guarimbas" (violent street closures) in Táchira state. (El Universal, http://www.avn.info.ve/contenido/govt-has-seized-503-tons-food-border)

Logistics & Transport

Airlines abandon fliers amid currency dispute

With the cash-strapped government holding back on releasing US$ 3.8 billion in airline-ticket revenue because of strict currency controls, carriers have slashed service to Venezuela by half since January, adding another layer of frustration to daily life here. But despite several months of talks over the money Venezuela owes to airlines, little progress has been made. About two-thirds of the 24 airlines that are affected, including those with the most money tied up in Venezuela, haven't reached a payment agreement with the state, said Jason Sinclair, a spokesman for the International Air Transport Association. And those that have reached deals lack guarantees that the funds will be released, he said. "The country unfortunately is disconnecting from the world economy and runs the risk of deeper isolation," he added. Earlier this month, the U.S. State Department issued an advisory urging Venezuela-bound travelers to take precautions as dwindling flights from the country leave people stranded here. Companies including DELTA, American Airlines and LUFTHANSA have drastically cut passenger capacity and offer only a small fraction of tickets in the local bolívar currency, whose value has plummeted on the black market. The flights that are left are too expensive for many Venezuelans to afford, with economy-class tickets to New York easily topping US$ 3,000, six times the price of a year ago, even when they're bought months in advance. Tickets for short flights to other transit hubs in the region, such as Panama City or Bogotá, are difficult to come by. (The Wall Street Journal, http://online.wsj.com/articles/trapped-in-venezuela-airlines-abandon-fliers-amid-currency-dispute-1409162327)

Oil & Energy

Venezuela may import crude oil for the first time in history. PDVSA may import Algiers’ Saharan Blend to dilute its own extra-heavy crude oils, according to a document from the State oil company Reuters had access to. This would be the first time Venezuela imports crude oil in its history. In recent years, PDVSA has been purchasing more and more refined products such as heavy naphtha to mix with the Orinoco Oil Belt’s extra-heavy crude. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40802&idc=4; El Universal, http://www.eluniversal.com/economia/140827/venezuela-considers-importing-crude-oil-from-algeria)

Venezuela's faltering oil sector could drag down PETROCARIBE

The decline of the Venezuelan oil sector could have wider effects in Central America and the Caribbean. Venezuela supplies crude oil and refined fuel shipments at reduced cost to 15 countries in the region under the PETROCARIBE pricing mechanism. Some of these countries depend on Venezuelan supplies for most of their energy use. Caracas has so far been able to maintain fuel supplies to these states because their low energy demands do not strain Venezuela's refining capacity. However, as Venezuela's energy sector declines -- and public finances deteriorate -- Venezuela eventually could change its terms for financing such shipments or reduce them altogether. The most immediate impact of a reduction in PETROCARIBE shipments would be energy supplies rapidly becoming more expensive for small states. Because of their extreme dependence on PETROCARIBE for energy, Nicaragua, Jamaica, the Dominican Republic and Haiti likely would be the most affected by such a measure. PDVSA likely will continue supplying PETROCARIBE energy supplies under the current terms for as long as it can. A reduction in PETROCARIBE shipments probably is not imminent but will become more plausible if the Venezuelan government does not relieve the financial burden on PDVSA. If Venezuela experiences problems in maintaining oil exports under its political agreements, it is likely to reduce supplies to PETROCARIBE members before it chooses to reduce similar shipments to Cuba. (Stratfor, http://www.stratfor.com/sample/analysis/venezuelas-faltering-oil-sector-could-drag-down-petrocaribe)

Financial Times: Is Venezuela finally ready to sell CITGO?

A long-proposed sale of CITGO, the US subsidiary of Venezuela’s state oil company PDVSA, is once again making some waves. Rafael Ramírez, the powerful boss of PDVSA who is also oil minister and deputy president for the economy, said this month that a sale could go ahead “as soon as we receive a proposal that serves our interests.” But would Caracas really sell it this time? And would anyone buy it? Russ Dallen of Caracas Capital Markets wrote to clients: "They would like to sell it, but they are trying to talk up their book. It is worth about US$5-7 billion, not the US$10-15 billion they were are trying to assert they have offers. But, they need the money. They have huge dollar shortages at home. They have 2 bonds for US$ 4.5 billion maturing in October to pay off, in addition to high interest, and they are also concerned about the large arbitration judgments that loom in their future." Lazard, an investment bank, has been charged with the daunting task of finding buyers. Francisco Rodríguez, chief Andean economist at Bank of America-Merrill Lynch: "the market is reading it negatively, believing this is the result of a liquidity problem, and fearing that the government, instead of investing the cash from the sale, will either waste or siphon it somewhere in order to keep the status quo for a bit longer." China could be among the prospective buyers. Carmine Rositano, hydrocarbons analyst at GlobalData, a research and consulting firm, said a Chinese company could be “the most likely suitor” for CITGO, and wrote: "Chinese companies, such as SINOPEC and China National Offshore Oil Corporation, have already invested billions of dollars in Canadian oil sands projects and could use their equity production to supply heavy sour crude oil to the CITGO refineries." Freeing up crude that would otherwise be sold to CITGO would enable Venezuela to meet its obligations with China. (Financial Times, http://blogs.ft.com/beyond-brics/2014/08/28/is-venezuela-finally-ready-to-sell-citgo/)

U.S. Congressman urges Obama to block Venezuela's CITGO sale

A U.S. congressman has urged the Obama administration to block the proposed sale by Venezuela's state oil company of its North American refining unit CITGO, saying it would be against "vital national interests". CITGO has three U.S. refineries in Illinois, Louisiana and Texas with combined capacity of some 750,000 barrels per day, and it also has 48 terminals. Flanked by Venezuelan opposition figures, U.S. Representative Joe Garcia said the proposed sale by Venezuela's socialist-led government was "a huge concern." (Reuters, http://www.reuters.com/article/2014/08/27/usa-venezuela-citgo-idUSL1N0QX2J720140827; http://www.reuters.com/article/2014/08/27/us-usa-venezuela-citgo-idUSKBN0GR2DF20140827)

Cheap gasoline prices stir debate

When Venezuela recently announced it was consider raising the price of the world’s cheapest gasoline, it didn’t spark a rush to the pumps. Such threats have come and gone in the past and still it’s cheaper to buy a gallon of gas than a bottle of water. Even as fuel subsidies cost the country an estimated $12-$15 billion a year and have spawned powerful smuggling rings, the administration has been reluctant to budge. At the root of the inaction is the political cost for an administration that has seen its approval rates plummet and told its followers that cheap gas is a birthright in a country with the world’s largest oil reserves. There are fears that increasing prices might spark a repeat of the 1989 Caracazo riots, which were brought on, in part, by fuel and transportation hikes. In reality, however, the subsidies are benefiting smugglers and the car-owning middle class even as they deprive the needy of resources. Venezuela’s gasoline prices haven’t budged in 17 years, but rumors about an imminent increase are frequent. The latest round of speculation began early this month when the head of the state-run PDVSA oil company Rafael Ramírez, said the president was considering a “national debate” about raising prices. With National Assembly elections slated for next year and Maduro’s approval rating already in the dumps, some believe the gas hike isn’t imminent. (The Miami Herald, http://www.miamiherald.com/2014/08/28/4314961/in-venezuela-cheap-gasoline-prices.html#storylink=cpy)

Commodities

Chemical industry is now operating at 50% capacity

Juan Pablo Olalquiaga, President of the nation's Chemical and Petrochemical Association (ASOQUIM) reports the industry is operating at 50% capacity. "We have not shut down, but we have shut down production lines and inventories are being rationed to maintain operations. We are operating under survival conditions". Pigment production is operating at 7% capacity, and adhesives are at 22%. More in Spanish: (El Universal,

http://www.eluniversal.com/economia/140829/industria-quimica-opera-al-50-de-la-capacidad-instalada)

Food giant Polar to increase production of corn flour by 21%, prices may rise

The CEO of Venezuela's largest private food company Polar, Lorenzo Mendoza, has announced that pre-cooked corn flour production would be increase thanks to the expansion of a plant located in Chivacoa, north central Yaracuy state. "With this expansion, there will be a 21%-increase in the availability of Harina Pan (Polar's corn flour brand) in the market," Mendoza noted. The project's investment amounted to VEB 212 million (US$ 33.65 million), 70 jobs were created, and 41,244 additional tons of corn flour will be produced in that plant. At the same time, President Nicolás Maduro is considering price increases for corn flour; powdered, pasteurized and raw milk; pastas, sunflower and corn oil. He has advanced that “necessary and balanced” adjustments in the country’s economic system are to be implemented  in “the next few days.” (El Universal, http://www.eluniversal.com/economia/140828/food-giant-polar-to-increase-production-of-corn-flour-by-21; and Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40799&idc=2)

Economy & Finance

FEDECAMARAS says very serious economic crisis will cause GDP to shrink by 4-5%

Jorge Roig, President of Venezuela's main business federation, FEDECÁMARAS, has called upon the government to take steps to meet the current economic crisis. "The government is not taking the decisions called for by the very serious crisis that worsens by the day", he said, adding that the government owes the private sector US$ 9 billion from past import transactions. Roig asked the Central Bank to provide updated economic data which it has been withholding since May. He said "we believe this is an almost irreversible situation and we will probably close the year with a GDP contraction of around 4-5%", and added "we are asking the government to again set up a dialogue" with the private sector. Roig reported that during the past meetings the government agreed to pay up 30% of its debt with the private sector, which it did belatedly, but that the amount is now back up to US$ 9 billion due to delays in allocating FOREX. He also apologized to the public for being forced by authorities to "submit them to a humiliating procedure of being fingerprinted in order to buy food." He said the latest step by the government has been "badly implemented, badly executed and very badly explained". (Infolatam)

IMF to cut Venezuela's 2014 estimated growth rate

Alejandro Werner, IMF Director for the Western Hemisphere says the organization will probably cut 2014 estimated growth rates for countries such as Brazil, Chile, Peru, Argentina and Venezuela. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/fmi-recortaria-estimacion-de-crecimiento-para-vene.aspx#ixzz3BmMYLdMp; El Universal, http://www.eluniversal.com/economia/140829/fmi-preve-recortar-estimacion-de-crecimiento-para-la-region)

Black market bolívar slides to record low

Venezuela’s bolivar fell to a record low against the U.S. dollar on the black market today as the government tightens currency rationing to pay maturing debt. Two black market traders in Caracas, who asked not to be named because the trading isn’t legal, confirmed the record-low rate. Inflation reached 60.9% in May, the last month for which figures are available, while according to economists surveyed by Bloomberg gross domestic product shrank 2.1% (Bloomberg, http://www.bloomberg.com/news/2014-08-28/venezuela-s-black-market-bolivar-slides-to-record-low.html)

HSBC estimates exchange rates at VEB 15 and VEB 60 by year end

HSBC does not believe the Venezuelan government will unify foreign currency exchange rates and predicts that it will have a dual system before the year is out: One at VEB 15/US$1 through the National Foreign Trade Center (CENCOEX), and the other through SICAD2 at VEB 60/US$1. This would bring a devaluation of 138% through CENCOEX and a 20% devaluation through SICAD2. It believes unsatisfied demand "will continue to be met by the black market". It reports they estimate 2014 inflation at 65%, and prices to rise 76.8% in 2015. Their report adds: "In our scenario this strategy would allow Venezuela to maneuver until 2015 but at a very significant inflationary cost"; and warns "social dynamics can become unpredictable", adding that political reaction "to fast economic decline has been very slow". More in Spanish: (El Nacional; http://www.el-nacional.com/)

Auction sales of US dollars via SICAD decline

Official figures reveal that foreign currency provided through auction sales via the Ancillary Foreign Currency Administration System (SICAD), a mechanism where companies can legally buy US dollars at an exchange rate of VEB 11 per USD, hit its lowest level this year in August. (El Universal, http://www.eluniversal.com/economia/140827/auction-sales-of-us-dollars-via-sicad-decline)

Politics

PRIMERO JUSTICIA calls for a legislative elections "sweep" to cut Maduro's term of office

Tomás Guanipa, Secretary General of the PRIMERO JUSTICIA opposition party is calling for a "sweep" in the 2015 legislative elections in order has the National Assembly approve "the constitutional reforms needed to cut down Nicolás Maduro's term of office". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140829/pj-llama-a-ganar-la-an-para-recortar-periodo-de-maduro)

One European Union observer attends López trial

Katarina Lenoen, Political Counselor at the European Union office in Venezuela has attended the 3rd session of criminal proceedings against Leopoldo López, leader of Voluntad Popular, for the events of 12 February 2014. She talked to López, who told her: "The judge here is not the judge; decisions are taken outside the courts. In my specific case, they are taken in Miraflores Palace because I am a political prisoner of the Maduro regime". More in Spanish:  (El Nacional; http://www.el-nacional.com/)

Samper says: "Dialogue in Venezuela is frozen, not broken"

Former Colombian president Ernesto Samper (1994-1998) says dialogue in Venezuela "is frozen, not broken," and called President Nicolás Maduro "is a man of dialogue and peace."  Samper - who is denied a visa by nations involved in curbing drug traffic - was recently named Secretary General of the Union of South American Nations (UNASUR). He remarked that he had a good rapport with the Venezuelan president and described him as "a bridge of communication with president Chávez when confrontation between Colombia and Venezuela arose some years ago." Samper added he had intervened to try to ease tensions while Maduro was Venezuela's foreign minister. (El Universal, http://www.eluniversal.com/nacional-y-politica/140828/dialogue-in-venezuela-is-frozen-not-broken)

Foreign Minister to meet with US Charge d'Affaires

Foreign Minister Elías Jaua is scheduled to meet with newly appointed US charge d'affaires Lee McClenny, and will discuss diplomatic and economic relations. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/canciller-recibe-al-encargado-de-negocios-de-eeuu.aspx#ixzz3BgYfHhWM)

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.

January 31th, 2011

Economics, & Finance

Expert charges Venezuela’s Central Bank conceals information on government funding

For the last 12 months, the Central Bank of Venezuela (BCV) has not supplied information on the sources of the monetary base, a key indicator to assess economic performance. Among others, the sources of the monetary base show if the BCV has financed the government or state-owned companies, such as the oil holding Petróleos de Venezuela (Pdvsa). "The monetary base collects the creation of money; shows if there has been funding to the public sector. This is the first time that the BCV hides such statistics. It did not happen even under the government of General Marcos Pérez Jiménez," said José Guerra, former BCV manager of economic research. (El Universal, 01-28-2011;

 http://english.eluniversal.com/2011/01/28/en_ing_esp_central-bank-of-vene_28A5058171.shtml)

Markets view Venezuela as a high-risk country despite high oil prices

Since oil prices are climbing, thus ensuring enough funds for Venezuela to meet its obligations, investors should view Venezuela as a low-risk country. However, the lack of confidence in the South American nation lingers. Venezuela's country risk -an indicator of the spread between the yield an investor demands in order not to buy US Treasury bonds and purchase instead Venezuelan sovereign bonds- started the week at 11 percent. This figure exceeds by far Chile's 1.16 percent; Peru's 1.48 percent; Colombia's 1.49 percent; Mexico's 1.64 percent; Brazil's 1.75 percent; Argentina's 4.95 percent and Ecuador's 8.41 percent. Low country-risk is important for developing countries to borrow money in international markets at a lower cost and attract foreign investments, a prerequisite for improving job creation and technology breakthroughs. (El Universal, 31-01-2011;

http://english.eluniversal.com/2011/01/31/en_eco_esp_markets-view-venezue_31A5080811.shtml)

National Assembly Finance Committee Chairman says Government analyzing tax changes under Enabling Law. More information in Spanish. (Entorno Inteligente, 01-31-2011;

http://www.entornointeligente.com/resumen/resumen.php?items=1087193)

Commodities

OPEC Would Act If Egypt Crisis Disrupts Supplies

The Organization of Petroleum Exporting Countries said Monday it would increase output if the Egyptian crisis lead to supply disruptions but sees this situation as unlikely, the OPEC secretary-general said. (Nasdaq, 01-31-2011; http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201101310958dowjonesdjonline000167&title=update-opec-would-act-if-egypt-crisis-disrupts-supplies--head)

There are 233 working drilling rigs permanently in Venezuela at the moment, according to PDVSA president and Energy and Oil Minister Rafael Ramírez. He said the goal is to get to 240 drilling rigs. (Veneconomy, 01-28-2011; http://www.veneconomy.com/site/index.asp?idt=24681&idc=4&ids=44&Var_Send=1&mmD=01&ddD=28&mmH=01&aaD=2011&ddH=31&aaH=2011&Send=Find)

The rapid decline of PDVSA is reported

What is the production of Petróleos de Venezuela (PDVSA), the state-owned oil company of Venezuela? The company claims a production of 3.2 million barrels per day, although OPEC and the International Energy Agency place it at 2.3 million barrels per day, almost one million barrels per day less. This is a huge discrepancy that has already persisted for a long time. The level of commercial oil exports is also in doubt since Venezuela is consuming over 600,000 barrels per day internally and is sending highly subsidized oil to Cuba, Nicaragua, Bolivia, Ecuador, Argentina, Central America and the Caribbean countries. (Latin Business Chronicles, 01-28-2011;

 http://www.latinbusinesschronicle.com/app/article.aspx?id=4755)

Venezuela may review licenses granted to foreign oil companies

Venezuela would review the rights granted to foreign oil firms to operate in the South American country in joint ventures with state-run oil company Petróleos de Venezuela (Pdvsa) if they fail to increase output, warned Venezuela's Minister of Energy and Petroleum Rafael Ramírez. In December, amid a decline in oil production in Venezuela -where more than 90 percent of revenues come from oil exports- the Ministry of Energy and Petroleum asked oil joint ventures to increase oil output, Reuters reported. In December, Venezuela requested oil firms to present a schedule to raise output within a period of 30 working days. "If they fail to comply with their schedules, I would have enough grounds to review the rights that were granted," Ramírez said. (El Universal, 01-28-2011;

 http://english.eluniversal.com/2011/01/28/en_eco_esp_venezuela-may-review_28A5061653.shtml)

Petrovietnam and PDVSA are developing a joint venture that would produce 200,000 barrels per day (bpd) of heavy crude at Bloc Junín 2 in the Orinoco Belt by 2015. On Friday, Vietnamese media informed the Standard Chartered Bank had arranged to raise financing up to $430 million for Petrovietnam Exploration Production Corp (PVEP) to help it extend its operations in Venezuela. (Veneconomy, 01-28-2011;

http://www.veneconomy.com/site/index.asp?idt=24679&idc=4&ids=44&Var_Send=1&mmD=01&ddD=28&mmH=01&aaD=2011&ddH=31&aaH=2011&Send=Find)

New seizures aim at consolidating State controls over agribusiness

Consolidation of networks of agricultural producers seems to be the government strategy to secure the supply of raw materials for the operation of industries under its umbrella. The latest event is being faced by farmers in South Lake Maracaibo, western Zulia state. Some of them have been recommended to send their milk output to Lácteos Los Andes, a company that was expropriated in 2008. Some farmers answered to the call made by government authorities; some others were exempted due to their commitments to private companies. (El Universal, 01-28-2011; http://english.eluniversal.com/2011/01/28/en_ing_esp_seizures-are-set-to_28A5058133.shtml)

Camiven president projects a bleak future for Venezuela's mining sector

El Mundo Economía y Negocios newspaper has published an interview with Mining Chamber of Venezuela (Camiven) president, Jose Alejandro Rojas, who seems down in the mouth about the mining situation in Venezuela. Painting a doomsday picture, Rojas sustained that the mining sector is being destroyed … "no new mines this year, no projects on the agenda that we are aware of." Any mining project, he stated, usually takes between one to ten years to get through depending of course of its size and the amount of investment involved. In Venezuela's case, it will be a matter of first recovering existing installed capacities that are destroyed before embarking on a project. In the last two years (private) mining companies have contracted 60%. Rojas disclosed that if money isn't invested in maintenance of machinery, then production drops within two to three years. (VHeadline, 01-27-2011;

http://www.vheadline.com/readnews.asp?id=100573)

Politics

Venezuelan and Uruguayan presidents signed 16 bilateral agreements in the areas of agriculture (4), science and technology (5), trade (3), power generation (1) society (2) and nutrition (1). (Veneconomy, 01-28-2011; http://www.veneconomy.com/site/index.asp?idt=24683&idc=1&ids=44&Var_Send=1&mmD=01&ddD=28&mmH=01&aaD=2011&ddH=31&aaH=2011&Send=Find)

Chavez says no plans to takeover Spanish bank unit

Venezuela's President Hugo Chavez said on Saturday he had no plans to nationalize the local unit of Spanish bank BBVA because a senior company official had apologized for his comments during a testy exchange. The socialist leader said the executive, Pedro Rodriguez, had behaved "haughtily" when Chavez phoned him live on television this week and warned him the bank could be taken over if it did not provide more home loans. (Reuters, 01-29-2011;

 http://www.reuters.com/article/2011/01/29/venezuela-bank-idUSN2914205020110129)

Edmee Betancourt takes over as new Trade Minister

Mr. Betancourt was Viceminister of Labor in 2000-2003, Viceminister for Industry at the former Ministry of Trade and Inddustry (2003-2005) and Minister of Trade and Light Industry when it was established in 2005 and until recently President of Venezuela´s Economic and Social Development Bank (BANDES). She is generally considered a moderate technocrat and replaces Ricardo Canaan, who is very hostile toward the private sector. More information in Spanish at:

(Noticias Candela, 01-31-2011; http://noticiascandela.blogspot.com/2011/01/edmee-betancourt-nueva-ministra-de.html)

Venezuela Arms Factory Explosions Leave One Dead, Three Injured

A fire at an arms factory in Venezuela triggered a series of explosions that killed one person and injured three others, Aragua state governor Rafael Isea said in comments carried on state television. Authorities in the city of Maracay began evacuating a 5- square-kilometer (3-square-mile) area around the Compañía Anónima Venezolana de Industrias Militares, or CAVIM, a state- run weapons factory, and restricted traffic on a nearby freeway after the fire began at about 4:45 a.m. local time, the Interior Ministry said in a statement. (Bloomberg, 01-30-2011;

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aD5kkfwras_U)

Primero Justicia lawmaker Julio Borges claims Chávez has given away $69.9 billion to over 40 countries worldwide over the last five years. Only in 2010 the give-aways amounted to $13.4 million and the most recent, a submarine fiber optic cable to improve the Internet in Cuba cost $70 million. (Veneconomy, 01-31-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24699&idc=1)

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 8th, 2010

Economics, Trade & Business

Venezuela Raises Price Caps on Corn Flour and Rice

Venezuela’s government is raising the price of corn flour and rice by as much as 24 percent for the first time since March in a bid to avoid food shortages. The government, which regulates prices of basic food goods, raised the cap on corn flour, which is used to make the breakfast staple arepa, by 24 percent to 3.37 bolivars ($0.78) per kilo from 2.72, according to a resolution published today in the Official Gazette. It also raised the cap on rice by 22 percent to 4.46 bolivars per kilo from 3.66. (Bloomberg, 11-08-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ax.eJPgsVULQ)

BCV proposes to reduce inflation thorough planning

Nelson Merentes, the president of the Central Bank of Venezuela, said that reducing the inflation rate is the government’s most important challenge; to that end, there is the need for several changes in terms of production and imports. (El Universal, 11-08-2010; http://english.eluniversal.com/2010/11/08/en_eco_esp_bcv-proposes-thoroug_08A4706255.shtml)

Venezuela growth hit by state seizures

Venezuela, the only Latin American nation still in recession in the last quarter of 2010, risks fresh blows to its growth prospects in 2011 after a spate of new nationalizations hitting key resource industries. Privately run steel manufacturing plant Sidetur was taken under state control after officials accused its operators of keeping productivity low and not doing enough to meet domestic demand. Earlier in October two glass factories went under state ownership in a measure seen largely as the result of President Hugo Chavez objecting to the companies' U.S. ownership. (UPI, 11-08-2010; http://www.upi.com/Science_News/Resource-Wars/2010/11/08/Venezuela-growth-hit-by-state-seizures/UPI-45111289217060/)

IOE: Venezuelan government is "destroying" the private sector

Venezuelan government actions against the private sector feed what has been described by the International Organization of Employers (IOE) as the "Venezuelan case." In the opinion of Antonio Peñalosa, Secretary General of the organization based in Geneva, the "blindness" of Venezuelan authorities is creating a scenario that will be difficult to overcome. The international business leader considers that the economic policy implemented by President Hugo Chávez is aimed at destroying the private enterprise. (El Universal, 11-08-2010; http://english.eluniversal.com/2010/11/08/en_eco_esp_ioe:-venezuelan-gove_08A4705053.shtml)

Politics

New agreements with Syria under discussion

In Damascus, Venezuelan Foreign Affairs Minister Nicolás Maduro and Syrian Prime Minister Mohamed Nayi Otri studied new ways to boost bilateral cooperation in economics, trade, oil and energy, amongst others areas. They are studying strategic alliances, a joint development and industrial projects, especially in crude refining and in the production and manufacturing of olive oil and cotton. (Veneconomy, 11-08-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23805&idc=1)

"Chávez needs silence of the media," IAPA cautions

The government of President Hugo Chávez seeks to control the ideas of the media and impose silence, warned a report presented to the Inter-American Press Association (IAPA). The report on freedom of expression in Venezuela, which was presented in the context of the 66th General Assembly of the Inter-American Press Association (IAPA), considered that the Venezuelan government has decided to use the seizure of companies as a means of social control and therefore it needs the silence of the media. (El Universal, http://english.eluniversal.com/2010/11/08/en_pol_esp_chavez-needs-silenc_08A4704811.shtml)

Julio Borges: If the President does not believe in personal initiative, it does not believe in the Venezuelan

The National Coordinator of the Primero Justicia Party and National Assembly member Julio Borges said that "we have been insisting that most of the country disagrees with the government's radical way; recent opinion polls show that 70% of the population disapproves. But we want to talk to the 30% who think that the radical route is correct." "The President and the government do not believe in private enterprise, they do not believe in Venezuela, the simply do not trust the people that have the potential to create jobs, to grow and thrive." (Ultimas Noticias, 11-08-2010; http://www.ultimasnoticias.com.ve/capriles/cadena-global/detalle.aspx?idart=3450756&idcat=56657&tipo=2)

Venezuela, Colombia to install commission this Monday to boost bilateral trade

Venezuela and Colombia will install this Monday in Caracas a bilateral commission to study the integral cooperation agreements endorsed by the two countries, as established by the presidents Juan Manuel Santos (Colombia) and Hugo Chavez (Venezuela) during a meeting held past Tuesday. The commission will be installed in the headquarters of the Science, Technology and Intermediate Industries Ministry, and the Minister and Vice President for Productive Economy Ricardo Menendez will chair the encounter, Telesur informed. (AVN, 11-08-2010; http://www.avn.info.ve/node/27192)

Acid from Cuba

Those who thought that the unexpected suspension of last Sunday’s Aló Presidente would bring a brief respite from the anxiety generated by Chávez’s habitual Sunday announcements were mistaken. Instead, the state-owned Venezolana de Televisión broadcast an interview with Hugo Chávez from Cuba in which he dropped three bombshells whose repercussions are impossible to predict. (Veneconomy, 11-08-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=23805&idc=1)

Petroleum & Energy

Revenues of Pdvsa foreign subsidiaries down 7 percent

State-run oil holding Petróleos de Venezuela (Pdvsa) recorded falling income for sales of oil and gas products, and byproducts, manufactured by its foreign subsidiaries. According to a report released by Pdvsa, in the six months ending June 30, 2010, the volume of sales of crude oil and refined products of oil and liquefied petroleum gas by Pdvsa subsidiaries abroad totaled 3.1 million bpd, 7.2 percent less than 3.34 million bpd on average in the first half of 2009. (El Universal, 11-08-2010; http://english.eluniversal.com/2010/11/05/en_ing_esp_revenues-of-pdvsa-fo_05A4697171.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.