Economics &
Finance
Dollar drought worsens amid
uncertain FOREX policy in Venezuela
Delayed implementation of a new FOREX system is stoking
the US dollar drought in the Venezuelan private sector, drying up inventories
and making the shortage of goods worse. The new register of companies
authorized to buy US dollars from the National Foreign Trade Corporation has
not been opened yet. Nor has the amount of the US dollar budget and general
guidelines for defining the exchange policy by sector been announced. Further,
it is not known which companies will be allowed to buy US dollars via the
Ancillary Foreign Currency Administration System (SICAD), the Foreign Exchange
Administration Commission (CADIVI), or the institution that could eventually
replace the latter. (El Universal,
01-13-2014; http://www.eluniversal.com/economia/140113/dollar-drought-worsens-amid-uncertain-forex-policy-in-venezuela)
Inflation up 398% since 2008 despite
monetary conversion
Inflation has accelerated over the last six years, and
the accumulated rate from January 1, 2008 (when reconversion was first
applied), to December 31, 2013 was 398%, according to the Central Bank of
Venezuela. During the six-year period prior to the monetary conversion, the
accumulated changes in the consumer price index had been 225.5%. (El Universal, 01-11-2014; http://www.eluniversal.com/economia/140111/inflation-has-reached-398-since-2008-despite-monetary-conversion)
Venezuelan government additional
expenditure rose 60% in 2013
Increased wages and pensions and increasing demand for
funds by government institutions and state-run companies hit public accounts
last year. The FY2013 initial budget was VEB 396.4 billion (U$D 62.9 billion),
and additional spending was VEB 279.9 billion (U$D 44.4 billion), up 60% from
2012 (VEB 174 billion – U$D 27.6 billion). The FY2013 budget closed at VEB
676.3 billion (U$D 107.3 billion). (El Universal, 01-13-2014; http://www.eluniversal.com/economia/140113/venezuelan-govt-additional-expenditure-up-60-in-2013)
Venezuela's country risk closed 2013
as the highest
The close of 2013 was not all positive for Latin America in terms of
economic confidence as per the EMBI economic country risk index. Venezuela
remains in the last place with 1138 points but is the one with a lowest rate of
0.96%. Similarly, Argentina with 872 integers and up 7.92% in the month
presents the worst results. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/infografia---riesgo-pais-de-venezuela-cerro-el-201.aspx#ixzz2qGwSfmxT)
Oil
& Energy
PETROVIETNAM halts PETROMACAREO project
PETROVIETNAM, which holds 40% in the PETROMACAREO project
within the Orinoco Oil Belt, has announced it is halting crude extraction at
the project due to economic difficulties in Venezuela. The information was
published by The Saigon Times, quoting Phung Dinh Thuc, Chairman of
PETROVIETNAM's Board of Directors, who said no investor can put money into
projects under such unfavorable market conditions, nor can they hire local
companies due to the rise in prices. More in Spanish: (El Universal, 01-14-2014;
http://www.eluniversal.com/economia/140114/petrovietnam-anuncio-paralizacion-de-petromacareo)
REPSOL plans U$D 1.2 billion investment to double Orinoco
Oil Belt production
REPSOL President Antonio Brufau plans to visit Venezuela
this week to sign a U$D 1.2 billion financing agreement with PDVSA to develop
capacity at PETROQUIRIQUIRE to over 100,000 BPD. The project is currently
pumping 40,000 BPD. More in Spanish: (Noticias 24, 01-13-2014; http://www.noticias24.com/venezuela/noticia/217251/presidente-de-repsol-viajara-esta-semana-a-venezuela-para-firmar-financiamiento-millonario-con-pdvsa/)
RELIANCE eyes stake in Venezuela
crude oil block
RELIANCE Industries is looking at buying PETRONAS' 11%
stake in Venezuela's U$D 20 billion Carabobo-1 project, a company official
says. RIL, which had in 2009 dropped out of the winning bid made by an ONGC-led
consortium for developing the giant Carabobo-1 project, is "looking at taking over the participating
interest of PETRONAS," says RIL senior vice-president Swagat Bham. The
Orinoco Oil Belt field, which had about 50 billion barrels of proven reserves,
can produce a minimum of 400,000 bpd of oil. Petroliam Nasional Bhd, Malaysia's
state-run oil company, has decided to withdraw from the Carabobo-I project in
August last year following dispute over terms with Venezuela's state explorer
Petroleos de Venezuela SA (PDVSA). Besides Indians, REPSOL too informed of the
decision not to buy PETRONAS stake before the expiry of the 30-day deadline on
September 27, 2013. The Indians had, however, promised to look for a suitable
replacement for PETRONAS. (India Times, http://economictimes.indiatimes.com/news/news-by-industry/energy/oil-gas/reliance-eyes-stake-in-venezuela-crude-oil-block-mexico-exploration-assets-executive/articleshow/28789808.cms)
Venezuela oil price starts 2014 at
low
Venezuela's weekly oil basket stayed below the country's desired U$D 100
a barrel floor for 2013 and fell further in the first week of 2014. According
to figures from the Ministry of Energy and Petroleum, the average price of
Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week
ending January 10 was U$D 94.34, down U$D 2.45 from the previous week's U$D
96.79. (Latin American Herald Tribune, 01-10-2014; http://www.laht.com/article.asp?ArticleId=1461325&CategoryId=10717;
El Universal, 01-10-2014; http://www.eluniversal.com/economia/140110/venezuelan-oil-basket-price-averages-usd-9949-per-barrel-in-2013)
Commodities
One million bag wheat flour deficit
estimated
Bread sales have been restricted at bakeries due to
exhausted flour inventories. Flour distribution was hit by two strikes at
state-run MONACA mills during 2013. Tomás Ramos, President of the Venezuelan
Bakery Association (FEVIPAN) reports the situation translated into a 410,000
bag hit in supplies which led bakeries nationwide to use up their inventories.
He reports there is now a one million bag deficit in the market which has
brought scarcity to around 30-40%. More in Spanish: (El Universal, 01-14-2014; http://www.eluniversal.com/economia/140114/estiman-en-un-millon-de-sacos-el-deficit-de-harina-de-trigo)
National chemical inventories running out
Juan Pablo Olalquiaga, President of the Chemical and Petrochemical
Industry Association (ASOQUIM) reports supply problems in several key areas,
calling the situation with inventories "very bad". He said: "I
cannot provide the number of days, but I can say there are very low inventories
and an important number of products are not available to markets.".
More in Spanish: (El Universal, 01-14-2014; http://www.eluniversal.com/economia/140114/se-agotan-los-inventarios-de-la-industria-quimica-nacional)
International
Trade
Bolivia sold Venezuela 60% fewer
textiles due to late payments
Bolivian textile exports to Venezuela dropped by 60% in 2013 due to late
payments. "In 2012 a record of
exports was reached and sales were U$D 180 million, and this year it has
dropped to about 60 million. Thing is that Venezuela is not paying in currency,"
says the president of the Chamber of Exporters the region of Santa Cruz,
Wilfredo Rojo. More in Spanish: (El Nacional; http://www.el-nacional.com/)
Logistics
& Transport
Trapped airline cash in Venezuela
rises to U$D 3.3 billion
International airlines operating in Venezuela have U$D
3.3 billion trapped in the country because of currency controls, the
International Air Transport Association said. Valued at the official exchange
rate of 6.3 bolivars per dollar, the amount of cash airlines have in Venezuela
has risen 27% from U$D 2.6 billion in November, Jason Sinclair, an IATA
spokesman, said yesterday. Companies including Brazil’s GOL Linhas Aereas
Inteligentes, S.A. and Panama’s COPA Holdings, S.A. (CPA) are among those
affected by the restrictions. Airlines have to wait around 12 months for the
government to convert their Bolivar earnings into dollars, with the time lag
growing, according to the Venezuela Airline Association. Madrid-based AIR
EUROPA said Jan. 8 it suspended ticket sales from Venezuela as its cash in the
country totaled U$D 100 million. “We are
looking for formulas to resolve these issues,” Tourism Minister Andres
Izarra told reporters in Caracas today. “We
will make announcements shortly.”
COPA said in a statement the same day that it had about U$D 392 million
“pending repatriation” from
Venezuela. Carriers including AMERICAN AIRLINES (AAL) Inc., Grupo AEROMEXICO
SAB and AVIANCA Holdings SA have been reducing their sales in the country since
late 2012, as tighter currency controls make it difficult for companies to
expatriate earnings amid 56% annual inflation and gradual devaluation.
(Bloomberg, http://www.bloomberg.com/news/2014-01-09/trapped-airline-cash-in-venezuela-rises-to-3-3-billion.html)
BOLIPUERTOS blames state-run CASA
for port congestion
Venezuela's Port Authority corporation BOLIPUERTOS says
government imports are partly to blame for congestion at Puerto Cabello. In a
press release, the institute admits that "massive imports" carried out by the Supply and Agricultural
Services Corporation (CASA) - another government agency - are at the root of
the problem: "Massive imports by the
government during the last months of last year have generated a large number of
empty containers that must return to their points of origin, in this case,
Brazil." Shipping sources have often pointed to "unplanned" food imports by the
government as the main cause for congestion at Venezuelan ports. Delays in the
return of containers also bring about fines. Las year shipping companies were
pressing PDVSA to pay U$D 196 million in overdue containers. At that time, the
Venezuelan Shipping Association reported PDVSA had not returned "some 2900 containers", some of
which remained in country for up to 700 days. More in Spanish: (El Universal,
01-10-2014; http://www.eluniversal.com/economia/140110/bolipuertos-culpa-a-la-estatal-casa-por-congestion-en-puertos)
Panama Canal dispute enters crucial
week
Negotiations are starting this week between the Panama Canal authority
and the consortium charged with the Canal's expansion, in order to keep works
going after a 20 January deadline. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/disputa-por-ampliacion-del-canal-de-panama-entra-e.aspx#ixzz2qMnDm3gE)
Politics
24,000 murders last year confirm
Venezuela as one of the world's most dangerous countries
Venezuela made headlines last week, for wretched reasons.
Late last Monday a former beauty queen, Monica Spear, 29, and her British
ex-husband, Thomas Henry Berry, 39, were murdered on a lonely stretch of
highway in front of their five-year-old daughter. The couples were assaulted in
an altogether too common way: an obstacle left in the road punctured the tires
of their car, forcing it onto the hard shoulder. A tow truck came to their
rescue, but as their vehicle was being lifted to safety a gang of up to 11
people attacked. Their deaths have shocked and infuriated the already
violence-numbed Venezuelans. Murders such as these usually go unreported on
account of their tragic frequency, but Spear's fame made this different."We are all Monica," said a
protester's poster in Caracas, as people gathered to mourn and voice their
anger. Last year Venezuela was branded the most dangerous country in Latin
America. A 2010 UN report places it among the top four most murderous countries
in the world. While the government has refused to release its own statistics
for years, a recent report by an NGO, the Venezuelan Observatory on Violence,
estimates that 24,000 people were murdered in 2013 alone, a 14% rise on 2012,
with nine out of 10 homicides going unsolved. In a country of 29 million
people, there is roughly one gun for every two people. (The
Guardian)
Number of departing Venezuelans on
the rise
Venezuelans are leaving. In 2005-2010, the number of
Venezuelan residents abroad climbed from 378,000 to 521,000. The figures are
shown in "Emigration from Venezuela
in the last decade," by Anitza Freitez, Director of the Economic and
Social Research Institute, Andrés Bello Catholic University (IIES-UCAB).
Freitez arrived at this number by reviewing estimates by the United Nations Population Division and the World Bank. "In Venezuela, there is no access to national statistical sources that allow making some approach of the quantification of international emigration of people born in Venezuela," said the scholar. (El Universal, 01-13-2014; http://www.eluniversal.com/nacional-y-politica/140113/number-of-outgoing-venezuelans-on-the-rise)
Freitez arrived at this number by reviewing estimates by the United Nations Population Division and the World Bank. "In Venezuela, there is no access to national statistical sources that allow making some approach of the quantification of international emigration of people born in Venezuela," said the scholar. (El Universal, 01-13-2014; http://www.eluniversal.com/nacional-y-politica/140113/number-of-outgoing-venezuelans-on-the-rise)
Economy related ministries
overhauled
President Nicolás Maduro is revamping the central public
administration to adapt it to a socialist model. Changes include new
deputy-ministries at the Ministry of Agriculture and Lands, and the Ministry of
Food.
The Ministry of Agriculture will now comprise the Office of the Deputy Minister of Agriculture; Office of the Deputy Minister of Livestock Production; Office of the Deputy Minister of Vegetable Farming; Office of the Deputy Minister of Fishing and Aquaculture Production; and the Office of the Deputy Minister of the Agro-industry. (El Universal, 01-13-2014; http://www.eluniversal.com/economia/140113/venezuelan-economy-related-ministries-overhauled)
The Ministry of Agriculture will now comprise the Office of the Deputy Minister of Agriculture; Office of the Deputy Minister of Livestock Production; Office of the Deputy Minister of Vegetable Farming; Office of the Deputy Minister of Fishing and Aquaculture Production; and the Office of the Deputy Minister of the Agro-industry. (El Universal, 01-13-2014; http://www.eluniversal.com/economia/140113/venezuelan-economy-related-ministries-overhauled)
Iranian Deputy FM planning to visit
Venezuela
Iranian Deputy Foreign Minister for European and American Affairs Majid
Takht Ravanchi plans to pay a three-leg tour of Latin America in the next few
days. He is to visit Cuba, Venezuela and Bolivia to hold talks with officials
of those countries to pave the way for boosting ties. Iran's strong and rapidly
growing ties with Latin America, especially with Venezuela, have raised
eyebrows in the US and its western allies since Tehran and Latin nations have
forged an alliance against the imperialist and colonialist powers and are
striving hard to reinvigorate their relations with the other independent
countries which pursue a line of policy independent from the US. (Fars, http://english.farsnews.com/newstext.aspx?nn=13921022000474)
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.
