Economics &
Finance
Venezuela launches first auction of
new FOREX system
Venezuela offered U$D 200 million to local businesses yesterday
in the first auction of a new foreign currency system that will bring another
partial devaluation of the Bolivar. The government devalued the fixed rate of
the local bolivar currency from 4.3 to 6.3 against the dollar last month. Monday's
formal launch of the previously-announced Complementary System for Foreign
Currency Administration (SICAD) sets up a parallel mechanism for businesses
unable to cover all their dollar needs at that rate via state currency board
Cadivi. (Reuters,
03-25-2013; http://www.reuters.com/article/2013/03/25/venezuela-economy-idUSL2N0CH0G820130325;
AVN, 03-25-2013; http://www.avn.info.ve/contenido/convened-private-business-sicad-foreign-currency-auction;
El Universal, http://www.eluniversal.com/economia/130325/venezuelan-finance-ministry-calls-for-first-us-dollar-bid)
SICAD is doomed to fail
According to financial analysts, the SICAD system is
doomed to failure since it calls for compulsory use of letters of credit in order
to access FOREX, and due to the insistence by Finance and Planning Minister
Jorge Giordani in having the Central Bank pay foreign exporters directly.
Experts say the procedure is not possible since letters of credit are regulated
internationally and establish that banks undertake these obligations on behalf
of clients, not third parties such as the Central Bank. Within the
international system payments must be made within a set time frame, and any
delays on the part of SICAD would make the Central Bank liable. Businessmen
report the entire system is complicated because "purchase orders must be made through a pro forma invoice",
along with a certification by the national importers registry (RUSAD) and
another certificate that planned imports are not domestically produced. In
addition the company must register electronically with the Finance and Planning
Ministry and fill out customs information in items to be imported, all of which
must be presented overnight. More in
Spanish: (Tal Cual, 03-26-2012; http://www.talcualdigital.com/index.html;
El Nacional; http://www.el-nacional.com/)
CANTV turned VEB 1.8 billion profits
over to the Government for social programs. Last week a group of workers from the national company
delivered a check for this amount to acting President Nicolas Maduro. More in
Spanish: (AVN, 03-26-2013; http://www.avn.info.ve/contenido/dividendos-generados-cantv-2012-se-destinar%C3%A1n-grandes-misiones)
Economy shows signs of slowdown
After the Venezuelan economy gained 5.5% in Q4 2012, authorities
predicted vigorous growth would take place this year, but actual results are
flashing warning signs. Automotive production for the first two months this
year has dropped 53.5% from the same term in 2012; and the banking sector is
also showing weakness.
Data from consulting firm Softline Consultores shows that overall loans through the end of February have increased 1.2%, versus 2.5% for the same period in 2012. (El Universal, 03-23-2013; http://www.eluniversal.com/economia/130323/venezuelan-economy-shows-signs-of-slowdown)
Data from consulting firm Softline Consultores shows that overall loans through the end of February have increased 1.2%, versus 2.5% for the same period in 2012. (El Universal, 03-23-2013; http://www.eluniversal.com/economia/130323/venezuelan-economy-shows-signs-of-slowdown)
Lack of industry limits growth
Figures from the Central Bank of Venezuela (BCV) indicate
that 96% of the country's income stems from oil activity, and that
manufacturing rose a mere 1.8%, lagging behind commerce, telecoms, and
financial institutions. (El Universal,
03-25-2013; http://www.eluniversal.com/economia/130325/lack-of-industrial-policies-limits-venezuelas-domestic-output)
Venezuela’s minimum wage now ranks 10th in Latin America,
well below Argentina ($600), Costa
Rica ($500), Panamá, Chile, Uruguay, Paraguay and Colombia ($400), and Honduras
and Brazil which exceed Venezuela’s ($325), says Primero Justicia national
coordinator Julio Borges. He explains that the comparison that really matters
is what is called “the buying power”
in each country and there “we are doing
much worse”. (Veneconomy, 03-25-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34156&idc=2)
Officials claim unemployment is 7.6%
According to the National Statistics Institute (INE) 1,027,994 were out
of the labor market in February, either because they lost their jobs or because
they failed to find their first job. This is a 7.6% unemployment rate, a drop
of 1.6% from 9.2% (1,210,964 people) in February 2012. (El Universal, 03-25-2013; http://www.eluniversal.com/economia/130325/unemployment-rate-in-venezuela-at-76)
Commodities
PDVSA revenue slips on domestic fuel
sales, net profits down 6.1%
State oil company PDVSA's 2012 revenue slipped 0.2% from
the year before despite an increase in oil prices as the company sold more fuel
on the subsidized domestic market, the oil minister said Friday. The nation's
fuel subsidy leaves the cost of gasoline and gas oil for power generation at
less than 10 cents per gallon, which creates consistent losses for the state
oil giant. The company paid U$D 43.9 billion to finance social programs and a
development fund created by the late Hugo Chavez. Under his leadership, PDVSA
evolved from a profit-oriented company into the financial engine of
anti-poverty efforts. "This is not a
company designed to generate profits. This is a national company. We're not
here to provide benefits to private individuals," Oil Minister Rafael
Ramirez, who is also PDVSA president, said in comments to reporters. The oil
giant's revenues were U$D 124.75 billion in 2011, with average oil prices at U$D
101.06 per barrel. 2012 income was US$D 124.45 billion. Net profits tumbled
6.1%, from U$D 4.49 billion in 2011 to USD 4.21 billion in 2012 (Reuters,
03-22-2013; http://www.reuters.com/article/2013/03/22/venezuela-pdvsa-idUSL1N0CEB7U20130322;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=722412&CategoryId=10717;
El Universal, 03-23-2013; http://www.eluniversal.com/economia/130322/venezuelan-oil-giant-pdvsas-net-profit-down-61-in-2012)
Oil Ministry reports 1.4% hike in
oil output
Increase in oil and gas output was reported in 2012, According
to a report submitted by the Ministry of Oil and Mining to the National
Assembly oil and gas output increased in 2012. The preliminary report (since
operating and financial results from the audit on Pdvsa are not disclosed) indicates
Venezuela's oil output averaged 3.03 million barrels per day in 2012, 1.4%
above the 2.99 million recorded a year earlier. The Ministry claims "production levels are in keeping with the
364,000 bpd cut in output agreed by OPEC (Organization of Petroleum Exporting
Countries) to stop the drop in prices and bring them up again." (El Universal, 03-25-2013; http://www.eluniversal.com/economia/130325/venezuelan-oil-ministry-reports-14-hike-in-oil-output)
SIDOR production down 50% in 2012
Workers at the SIDOR Orinoco steel plant have stopped work there for the
past five days, and have paralyzed the entire production chain. Liquid steel
production in 2012 was 1510220 tons, 50% less than had been budgeted for the
entire year, according to the annual report by the Ministry for Industries. The
report says the drop was due to "lack of equipment and spare parts, delays
in special maintenance, lack of working capital, and continuous labor
stoppages". More in Spanish: (El Nacional, 03-26-2013; http://www.el-nacional.com/)
International Trade
Maduro proposes ALBA-MERCOSUR economic alliance
Acting President Nicolás Maduro is calling for broadened economic
integration, exchange and complementariness mechanisms among member states of
the Bolivarian Alliance for the Peoples of our America (ALBA) and the Common
Market of the South (MERCOSUR). (AVN, 03-25-2013; http://www.avn.info.ve/contenido/venezuela-proposes-alba-mercosur-economic-alliance)
Politics
Electoral Council, UNASUR agree on attendance
for election
The National Electoral Council (CNE) has entered into an
agreement with the Union for South American Nations for their attendance during
Presidential elections to be held next April 14. The agreement was signed by
the principal director of the Council, Tibisay Lucena, and the pro tempore
president of Unasur's Electoral Council, Francisco Tavara Córdoba. (El
Universal, 03-25-2013; http://www.eluniversal.com/nacional-y-politica/130325/venezuelas-electoral-council-unasur-agree-on-accompaniment-for-electio)
HR advocate says 4,500 people killed
in Venezuela under Nicolás Maduro
Lawyer and human rights advocate Alfredo Romero says some
4,500 people have been killed in the first 100 days of acting President Nicolás
Maduro's government. He charged this is the result of inefficiency and anarchy due
to the government's lack of political will to cope with crime, one of the main
problems facing Venezuelans. "Twenty
security plans have been implemented, yet violent crime continues escalating.
This will go on as long as anarchy prevails in the legal system, and hatred and
death are encouraged," Romero outlined. According to the United
Nations Report on Human Development and Violence, Venezuela is in the top-five
list of violent countries in the world. (El Universal, 03-23-2013; http://www.eluniversal.com/nacional-y-politica/130323/hr-advocate-4500-people-killed-in-venezuela-under-nicolas-maduro)
Paris refuses to name location after
"Hugo Chávez"
The Paris Mayoralty refuse to name a location there after
Hugo Chávez, after the proposal was made by Communist aldermen and their
allies. More in Spanish: (Tal Cual, 03-26-2013; http://www.talcualdigital.com/index.html)
A study shows "chavismo" polarizes Latin America
A study by Spain's International Perspectives Institute shows Latin
America, in general, does not support the continuation of support for the
system established by the late Hugo Chavez, but reflects deep divisions within
Latin American public opinion in this matter. According to the study there is
"intense and general" support for the movement in Bolivia, Cuba,
Ecuador and Nicaragua; and "general rejection for it in Chile, Colombia,
Guatemala, Haiti, Panama and Paraguay. Polarization is not as strong in Brazil
and Mexico. More in Spanish: (El Universal, 03-26-2013; http://www.eluniversal.com/nacional-y-politica/130326/un-estudio-revela-que-el-chavismo-polariza-a-america-latina)
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.
