March 26, 2013

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)

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.

December 28, 2012

Economics & Finance

Economy grew 5.5% in 2012

Nelson Merentes, President of Venezuela's Central Bank reports that gross domestic product (GDP) is expected to grow 5.5% by the end of the year, above the level estimated in the budget for fiscal year 2012. The strongest sector was construction sector with 16.8% growth which is 1.2% of total GDP. Expansion in this sector is attributed to the Great Housing Mission. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/central-bank-venezuelas-economy-hikes-55-in-2012; AVN, http://www.avn.info.ve/contenido/gdp-grew-55-2012)

Merentes calls inflation a problem

Central Bank President Nelson Merentes says that although price increases have slowed down, "inflation continues to be a problem for the economy", and calls for an increase in public and private production, as well as more efficiency in food distribution. This year's inflation goal had been projected between 20- 22% and year to date inflation was 18% by November: Final results for the year have not been announced. More in Spanish: (El Universal; http://www.eluniversal.com/economia/121228/merentes-admite-que-la-inflacion-es-una-dificultad)

Inflation reported at zero for 19 controlled items

Inflation was zero for 19 items controlled by the Superintendent for Fair Costs and Prices (SUNDECOP) since April 2012, which includes basic bathroom, cleaning, and drink products. Karlin Granadillo, head of SUNDECOP says the consumer price index (CPI) dropped by 13% last April on 19 controlled products, and there was no change in prices for the remainder of the year. She claimed that increasing prices due to alleged devaluation is just speculation. (AVN, 12-26-2012; http://www.avn.info.ve/contenido/inflation-rated-zero-19-regulated-items)

Domestic debt service projected at U$D 22 billion in 2013-2014

Information from the Planning and Finance Ministry shows that total debt service payments in 2013-2014 will be U$D 33.9 billion, 65% of which (U$D 22 billion) is domestic debt, which has risen by 306% from U$D 14.1 billion at the end of 2008 to U$D 57.3 billion by September 2012. (El Universal, 12-25-2012; http://www.eluniversal.com/economia/121224/venezuelas-domestic-debt-service-at-usd-22-billion-in-2013-2014)

Difficulties in acquiring FOREX and obtaining raw materials hit manufacturing

Central Bank figures show Venezuela's industrial sector has had a constant lackluster performance, and lags behind production levels recorded in 2008. The future looks bleak, with looming stagnation due to difficulties in obtaining foreign exchange and raw materials. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/obstacles-to-buy-us-dollars-and-raw-materials-lash-manufacturing)

Banking intermediation dropping

Banking is among the best performing sectors this year, with real annual profits increasing equity by 30%. However, intermediation has been under 55% throughout the year, and dropped to 50.88% in November, according to the Banking Superintendent's office (Sudeban). (El Universal, 12-26-2012; http://www.eluniversal.com/economia/121226/banking-intermediation-lashed-by-matured-bonds-payable)

Government extends standing ban on workforce reduction to all of 2013

The Government has again extended the standing ban on dismissing public and private sector employees to all of 2013. Under current rules no worker can be fired without just cause previously approved by a local Inspector from the Labor Ministry. More in Spanish: (AVN, 12-28-2012; http://www.avn.info.ve/contenido/gobierno-nacional-extiende-inamovilidad-laboral-durante-todo-2013;  El Universal, http://www.eluniversal.com/economia/121228/decretan-inamovilidad-laboral-durante-todo-2013)

49.4% of all unemployed are aged 24-44

Historically, the youngest population (Age 15-24) has been the hardest hit by unemployment. However, official data shows that in November those aged 25-44 faced more difficulties getting a job. According to data from the National Statistics Institute (INE), some 873,513 were unemployed last month, of which 431,411 (49.4%) were aged 25-44. (El Universal, 12-26-2012; http://www.eluniversal.com/economia/121226/out-of-the-total-unemployed-494-are-aged-24-44)

Government seeks to consolidate a communal system in 2013

Although little progress has been made in implementing a system that calls for communities to take part in producing goods and services - so little that in October President Chavez showed his disappointment and even threatened to eliminate the Ministry of the Communes - government and party leaders continue to call for full implementation during 2013. (El Universal, 12-26-2012; http://www.eluniversal.com/economia/121226/venezuela-aims-at-consolidating-the-economic-communal-system-in-2013)

Venezuela stock market up 298%

After rallying sharply in the week ahead of the Gubernatorial elections, Caracas stocks lost 1.9% the week ending December 21 to close at 465,336 on little volume. Only four stocks changed price: Mercantil Servicios Financieros A lost 3.6% at Bs. 135, while the class B shares lost 4.3% at Bs. 135. Banco Provincial lost 0.6% at Bs. 164, while CANTV was the only gainer, rising 0.6% at Bs. 17.1. (Latin American Herald Tribune, 12-24-2012; http://www.laht.com/article.asp?ArticleId=658459&CategoryId=10717)

Commodities

Domestic hydrocarbon market is plagued by distortions and subsidies

Venezuela's growing domestic hydrocarbon market is plagued by distortions and subsidies that show up in high demand and fitful supply. Neither the Petroleum and Mining Ministry or state-run oil company PDVSA provide in-depth reports on the size of the domestic market during 2012, but a few weeks ago, PDVSA's chairman, Rafael Ramírez, remarked that gasoline demand is at 298,000 barrels per day (bpd) and that this year the power sector's demand has been tremendous. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/venezuelas-oil-domestic-market-accumulates-distortions-and-subsidies)

International Trade

Venezuela will comply with MERCOSUR trade agreements next month

Trade Minister Edmée Betancourt reports Venezuela has reached tariff nomenclature agreements within MERCOSUR and had moved ahead in reducing tariffs on several products. She reported firm agreements had been reached with Argentina in 609 sensitive items and with Brazil on another 777 items. More in Spanish: (AVN, 12-28-2012; http://www.avn.info.ve/contenido/venezuela-acuerda-c%C3%B3digos-arancelarios-pa%C3%ADses-miembros-del-mercosur; El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/3-acuerdos-arancelarios-con-el-mercosur-comenzaran.aspx)

Venezuela is Spain's main weapons client

Venezuela was reported at the top of the list of countries buying arms from Spain during the first half of 2012 and has held this position for two consecutive years, according to Spain's Economy Ministry. From January-June, Hugo Chávez's Government purchased U$D 217.54 million in weapons, which is 26.5% of total arms exports reported by Spain. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/venezuela-is-spains-main-buyer-of-weapons)

Logistics & Transport

Guanta Port modernization reportedly advancing

Port authorities report the Government has invested over VEB 70 million through the Bolivarian Port Authority (BOLIPUERTOS), in order to improve Guanta's port infrastructure, which include refurbishing docks and roadways within the port, storage facilities, electric repairs, medical offices and other facilities. More in Spanish: (Bolipuertos, 12-28-2012 http://www.bolipuertos.gob.ve/noticia.aspx?id=6559)

Politics

Chavez delegates administrative responsibilities to his vice president

Hugo Chavez has delegated some administrative responsibilities to Venezuela's vice president, allowing his close confidant to make decisions related to the budget, expropriations and government debt. Chavez passed on the duties to Vice President Nicolas Maduro on Dec. 8, three days before the socialist leader underwent cancer-related surgery in Cuba. The measure took effect Wednesday upon its publication in the Official Gazette. (Fox News, 12-26-2012; http://www.foxnews.com/world/2012/12/26/venezuela-chavez-delegates-administrative-responsibilities-to-his-vice/#ixzz2GCF1CYfV; El Universal, 12-26-2012; http://www.eluniversal.com/nacional-y-politica/121226/venezuelas-vice-president-bestowed-economic-decision-making-capacity; Bloomberg, http://www.bloomberg.com/news/2012-12-26/venezuela-s-maduro-can-issue-debt-expropriate-assets.html; http://www.bloomberg.com/news/2012-12-25/chavez-gives-venezuela-economic-orders-in-christmas-eve-call.html; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-delegates-administrative-responsibilities-to-his-vice-president/2012/12/26/c1270bd4-4f81-11e2-835b-02f92c0daa43_story.html)

Officials claim Chavez improving after surgery

President Hugo Chavez is improving after a cancer operation in Cuba and has started exercising, officials said on Monday, amid doubts over whether the former soldier is in good enough health to continue governing. Vice President Nicolas Maduro said he had spoken by phone with Chavez, who was walking and doing exercises as part of his treatment. "We've gotten the best present we could get this Christmas: a phone call from our commander president," Maduro said on state television. Information Minister Ernesto Villegas said earlier in the day that Chavez had "shown a slight improvement in his condition," without providing details. (Reuters, 12-25-2012; http://www.reuters.com/article/2012/12/25/venezuela-chavez-idUSL1E8NO59620121225; AVN, 12-25-2012; http://www.avn.info.ve/contenido/chavez-greets-venezuelan-children-thank-people039s-prayers; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=658652&CategoryId=10717; Fox News, http://www.foxnews.com/world/2012/12/25/vp-says-spoke-with-chavez-who-is-up-walking/)

Cabello says he supports Maduro

National Assembly President Diosdado Cabello said he will carry out orders from President Chavez, and added that "the opposition thinks that January 10th is the day they will be rid of Chavez" and hope that "Diosdado and Nicolás are fighting. Let them continue to believe I am going to disobey an order from the Commander - The Commander was so clear and explicit, besides, orders must be followed by all who call ourselves "chavistas". The Commander said that if for some reason, any reason, he should become unable to lead, the Commander designated comrade Nicolás Maduro, in the knowledge that the revolution will not be lost."  More in Spanish:  (El Universal, 12-28-2012; http://www.eluniversal.com/nacional-y-politica/121228/cabello-con-maduro-no-se-perdera-la-revolucion)

Chavez has spent 201 days in Cuba and there has been no medical report

National Assemblyman Carlos Berrizbeitia charges that President Chavez has spent 201 days in visits and rest in Havana due to cancer treatment and that there has been no medical report. Berrizbeitia says the President has made 11 trips to Cuba, made 6 requests to the National Assembly for permission to leave the country, and has spent 106 days convalescing and 95 resting in Cuba. More in Spanish: (El Universal, 12-28-2012; http://www.eluniversal.com/nacional-y-politica/121228/chavez-lleva-201-dias-en-cuba-y-no-hay-informe-medico)

Colombia's Santos reaffirms support for Chavez

Colombian president Juan Manuel Santos reaffirmed his support for President Hugo Chavez, who is recovering after a surgery in Havana. Santos called vice-president Nicolas Maduro, and expressed Colombia's willingness to collaborate with Venezuela under any circumstance. (AVN, 12-25-2012; http://www.avn.info.ve/contenido/colombia039s-santos-reaffirms-support-chavez; El Universal, http://www.eluniversal.com/nacional-y-politica/121225/santos-gets-ready-to-attend-chavezs-inauguration)

Uruguayan president foresees a big question mark for Venezuela without Chávez

Uruguayan President José Mujica says he cannot provide "a sensible, categorical answer" about what may happen in Venezuela if Hugo Chávez does not recover from cancer. Mujica stated that he rather has "questions" regarding the future of the country in the event that the president steps down. "I have questions, as any person would, because Chávez has exerted a tremendous influence on low-income Venezuelans and the Armed Forces, and finding a person able to do so is yet to come. Questions arise," the Uruguayan leader said. (El Universal, 12-26-2012; http://www.eluniversal.com/nacional-y-politica/121226/uruguayan-president-sees-a-big-question-mark-in-venezuela-without-chav)



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.

December 21th, 2012

Economics & Finance

Foreign debt payments projected to increase by 48% in 2013

The ECOANALÍTICA think tank is saying that next year's oil income will not be enough to cover foreign debt obligations and imports. "Considering our U$D 104 estimated average oil price and projected 2.22 million BPD exports, we see that oil income will be insufficient to meet the economy's FOREX needs." Increased debt service in 2013 will call for U$D 18.425 billion outflows, which is a 48% jump over 2012. More in Spanish: (El Universal, 12-21-2012; http://www.eluniversal.com/economia/121221/pagos-por-concepto-de-deuda-externa-aumentan-48-en-2013)

Serious devaluation required in view of large fiscal deficit

According to a report on Venezuela's economic outlook compiled by economists José Guerra, Sary Levy, Luis Bruzco, Isaac Mencía, and Luis Oliveros, "size of the (Venezuelan) fiscal deficit will require a serious revision of the foreign exchange rate" in 2013  They explained that the gap between income and expenditure stands at 17% of the gross domestic product (GDP). Also, Venezuela's debt is escalating rapidly, so the country will have no other choice but to devaluate in order to obtain more bolivars per each dollar. (El Universal, 12-19-2012; http://www.eluniversal.com/economia/121219/serious-devaluation-needed-in-venezuela-amidst-large-fiscal-deficit)

Average cost of regulated food basket was Bs.1,989.09 in November, up 2.69%. Accrued variation through November 2012 is 14.23%, down from 24.76% posted for the same period in 2011. (Veneconomy, 12-20-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33273&idc=3)

Government says unemployment dropped to 6.4% in November, claims inflation will be under 20%

Unemployment rates in Venezuela rated 6.4% during t November 2012, according to a monthly report on the workforce drafted by the National Statistics Institute (INE). The report claims 115,714 people found a paid job, so unemployment registered a month-to-month drop since October, when it was 7.3%. The Institute also said inflation may be under the 20% goal for the year. (AVN, 12-20-2012; http://www.avn.info.ve/contenido/unemployment-dropped-64-cent-november and more in Spanish: Últimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ine-desempleo-subio-a-6-4-en-noviembre.aspx)

Communes to receive more funding than mayor's offices

Venezuela's Budget Law for fiscal year 2013 provides some U$D 4.9 billion to the Inter-territorial Compensation Fund (FCI) for the projects and plans submitted by states and municipalities, as well as communal councils. However, in distributing the funds, authorities benefit so-called communes over the rest. As per the Budget Law, U$D 1.6 billion will be allocated to states; U$D 1.2 billion to municipalities, and U$D 2.04 billion to the "people's power" and community based plans. Funding for communal councils and communes exceeds that allocated to municipalities by 69% and to states by 25%. (El Universal, 12-19-2012; http://www.eluniversal.com/economia/121219/venezuelan-communes-to-get-more-funds-than-mayors-offices)

Commodities

Sugar import tariff set at 50%, by the Nutrition Ministry and the Planning and Finance Ministry. The ruling establishes 132,013 tons of sugar will be purchased abroad, through companies that guarantee imports and distribution into the local market. (El Nacional, 12-21-2012; http://www.el-nacional.com/)

International Trade

Venezuela-Colombia trade up 32.9%

Venezuela-Colombia trade rose 32.9% in January-November compared to the same period time last year, according to data from Colombia's National Tax and Customs Agency (DIAN), based on estimates from the Venezuelan-Colombian Chamber of Economic Integration (CAVECOL). The information shows that total bilateral trade was U$D 2.68 billion, compared to U$D 2.02 billion last year.  (El Universal, 12-19-2012; http://www.eluniversal.com/economia/121219/venezuela-colombia-trade-up-329)

Venezuela became Guyana's second largest trading partner during the first half of 2012, due largely to energy exchanges within PETROCARIBE. According to the Guyanese statistics department Guyana imported U$D 147.6 million, which is 15.6% of all imports, and exported U$D 62.7 million to Venezuela, which includes around 60% of Guyana's rice production. More in Spanish: (El Nacional, 12-21-2012; http://www.el-nacional.com/)

Logistics & Transport

Only four out of 24 docks for commercial trade at La Guaira Port are operational, says Rusvel Gutierrez, head of the Vargas state Industrial and Customs Agents Chamber. He also said the government is investing in two high draught docks through the ALBA ports agreement at a time when there are 20 docks in the area waiting for maintenance. (Veneconomy, 12-20-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33276&idc=3)

Politics

Supreme Court Could Rule on Chavez Inauguration, Officials Say

Top Venezuelan officials have opened the possibility that cancer-stricken President Hugo Chavez may not have to be sworn-in Jan. 10 to start a new six-year term, as stipulated in the country’s constitution. Vice President Nicolas Maduro said yesterday that while he’s praying for the president’s recovery in Cuba, and added that the country’s constitutional court “has a great capacity to interpret the constitution” about the swearing-in date. On Dec. 18 National Assembly President Diosdado Cabello told reporters that there is precedent for delaying inaugurations in Venezuela. These comments raised opposition concerns that the government may try to delay the ceremony and subsequent national elections if Chavez is too ill to take office. “The president should present himself on January 10 and take his oath,” says opposition alliance secretary Ramon Jose Medina. “The date is constitutionally set and can’t be changed for personal opinions or political convenience.” (Bloomberg, 12-20-2012; http://www.bloomberg.com/news/2012-12-19/maduro-says-high-court-can-decide-issue-of-chavez-taking-office.html; El Universal, 12-19-2012; http://www.eluniversal.com/nacional-y-politica/121219/venezuelas-vp-we-work-under-the-premise-of-chavezs-recovery; http://www.eluniversal.com/nacional-y-politica/121219/congress-speaker-hints-possibility-of-adjourning-chavezs-inauguration-; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-has-respiratory-infection-after-cancer-surgery-official-says/2012/12/18/6b8e3528-4971-11e2-8af9-9b50cb4605a7_story.html; http://www.washingtonpost.com/world/the_americas/venezuela-vp-says-government-sticking-to-plan-for-chavez-inauguration-after-cancer-surgery/2012/12/19/89b4693a-4a3b-11e2-8af9-9b50cb4605a7_story.html; Fox News, http://www.foxnews.com/world/2012/12/20/chavez-ally-defends-idea-pushing-back-jan-10-inauguration-if-needed-after/)

Supreme Court President says there are no constitutional doubts over the President's term

Luisa Estela Morales, President of Venezuela's Supreme Court, says there are no constitutional issues over the term of President Chavez. She said: "It is important to know that for the moment there is no constitutional issue to decide. The President has complied with his constitutional duty to seek permission from the National Assembly to be absent for more than 5 days". She added that legal opinions about his stay in Cuba are "out of context", and said this was not "a legal, but rather a constitutional affair. Do not lose sight of this". More in Spanish: (AVN, 12-21-2012; http://www.avn.info.ve/contenido/presidenta-del-tsj-aclara-que-no-hay-duda-constitucional-sobre-ejercicio-del-presidente; El Universal, http://www.eluniversal.com/nacional-y-politica/121221/sobre-asuncion-de-chavez-no-existe-duda-constitucional)

Constitutional experts say President Chávez must take office next January 10

A group of Venezuelan constitutional experts rejected ruling party Diosdado Cabello's proposal for postponing the date reelected President Hugo Chávez should to take office for presidential term 2013-2019. President Chavez has often said: "everything within the Constitution is acceptable, outside the Constitution, it is not"; and today, these same words are used by Chávez's foes to dismiss suggestions of postponing the date (January 10) the Venezuelan president is to take office for presidential term 2013-2019 in order to let him recover from his fourth surgery. (El Universal, 12-20-2012; http://www.eluniversal.com/nacional-y-politica/121220/venezuelan-experts-president-chavez-must-take-office-next-january-10)

Chávez is stabilizing steadily and is fully conscious, says Vice President Nicolás Maduro, who read a medical report out of Havana which claims the President is undergoing a rigorous and constant treatment after his operation two weeks ago. He said a respiratory infection is also being treated. More in Spanish: (AVN, 12-21-2012; http://www.avn.info.ve/contenido/presidente-chávez-agradece-victoria-del-16-diciembre; El Universal, http://www.eluniversal.com/nacional-y-politica/121221/maduro-asegura-que-chavez-esta-bien-y-consciente)

Municipal elections postponed to May 26, 2013. According to an announcement made by Elections Board President Tibisay Lucena. She said the call for elections will be made during the last week of January 2013, when the registry will be opened for 15 days in order to receive new inscriptions, that political organizations may present nominations to each municipal board on February 15-22; and that the campaign will take place from April 25 through May 25 next year.  More in Spanish: (AVN, 12-21-2012; http://www.avn.info.ve/contenido/tibisay-lucena-elecciones-municipales-se-realizar%C3%A1n-26-mayo-2013; El Universal, http://www.eluniversal.com/nacional-y-politica/121221/cne-difiere-hasta-el-26-de-mayo-las-elecciones-locales)

Call for recount made in Bolivar state

Andrés Velásquez, opposition candidate for Governor in Bolivar state has made a formal request for a recount to the local Elections Board, despite the fact that it has certified government candidate Francisco Rangel Gómez's reelection. Velásquez emphasized that invalid votes (18,212) are more than the difference between both candidates. More in Spanish: (El Universal, 12-21-2012; http://www.eluniversal.com/nacional-y-politica/121221/entregan-al-cne-de-bolivar-impugnacion-y-exigen-reconteo)



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 23th, 2012

Economics & Finance

World Bank ranks Venezuela among the most difficult nations for business

In its report on "Doing Business 2013: Smart regulations for small and medium business", prepared jointly with the International Finance Corporation (IFC), the World Bank underlines "encouraging" and "important" efforts to improve business regulation in Latin America, headed by Chile, Perú, Colombia, México and Panama, and points to worsened conditions in other countries such as Argentina and Venezuela. Chile is 37th on the global rating, followed by Perú (43), Colombia (45), México (48) and Panama (61). Venezuela ranks 180th out of 185. More in Spanish: (Ultimas Noticias, 10-23-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-entre-los-paises-mas-complicados-para-ha.aspx)

Minister says there are no plans to devalue currency

Venezuela isn’t studying a devaluation of its currency next year and the government will maintain levels of spending similar to those in 2012, El Nacional reported, citing central bank President Nelson Merentes. The central bank is allowing foreign currency reserves to fluctuate between U$D2 billion and U$F 5 billion, the Caracas-based daily cited Merentes as saying. (Bloomberg, 10-19-2012; http://www.bloomberg.com/news/2012-10-19/venezuela-doesn-t-plan-to-devalue-currency-el-nacional-says.html)

2013 budget premises to be presented to National Assembly, oil projections probably unchanged

Planning and Finance Minister Jorge Giordani is to present the premises for the 2013 Annual Budget and the Special Indebtedness Tax, along with the Annual Operational Plan before the National Assembly today, says Finance Committee Chairman Ricardo Sanguino. According to economist Luis Oliveros premises used for the oil industry will remain basically unchanged, estimating average oil prices at U$D 50 per barrel and production around 3.1 million BPD. (Veneconomy, 10-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32489&idc=2 and more in Spanish: El Mundo; http://www.elmundo.com.ve/)

Economist says Venezuela will have no income problems in 2013

Economist Carlos Quenan estimates that due to tension in the Middle East and China's economic recovery oil prices will remain around U$D 100 per barrel and Venezuela will continue to sail untroubled. More in Spanish: (El Mundo, 10-23-2012; http://www.elmundo.com.ve/noticias/economia/mercados/proyectan-un-2013-sin-problemas-de-ingresos-para-l.aspx)

Public spending estimated at VEB 528.8 billion by year end

According to ECOANALÍTICA, public spending will continue to grow and close 2012 around VEB 528.8 billion. Original estimates for 2012 were VEB 297.8 billion, but due to special authorizations it will rise by 77.6%, More in Spanish: (El Universal, 10-23-2012; http://www.eluniversal.com/economia/121023/calculan-que-el-gasto-de-2012-terminara-en-bs-5288-millardos)

Gov't seeks stronger State presence in Venezuelan economy

Just a few months before reelected President Hugo Chávez begins his next term, clear signals are being sent that further steps will be taken to deepen the socialist model in Venezuela. The Government's goal is to reinforce the presence of the State in all sectors of Venezuelan economy. As soon as Juan Carlos Loyo was reappointed as minister of Agriculture and Lands, he stressed that he would continue the lands "recovery" policy currently in place. "Moving forward, continuing the lands recovery policy. Thus, it is not expropriation; it is recovery; it is about going back to the very beginning, to the lands of the people and the indigenous tribes. However, this time we are incorporating efficient production and efficient trade. We do not want to see agriculture products ending up in the hands of speculators but in the hands of Venezuelan families," Loyo said recently after being appointed. (El Universal, 10-22-2012; http://www.eluniversal.com/economia/121022/govt-seeks-stronger-state-presence-in-venezuelan-economy)

Venezuelan bonds are good business

Alexis Mena, f the SOFTLINE economic consultant firm says that at first sight taking a position in Venezuelan bonds appears sensible as the nation has never once defaulted on its debt payments. He says prices have held firm and some are even overvalued. More in Spanish: (Tal Cual, 22-10-2012; http://www.talcualdigital.com/index.html)

Unemployment rate in September at 7.3%

Unemployment rate in September stood at 7.3%, a reduction of 1.0% versus September 2011 (8.3%), according to the monthly report on the workforce issued by the government´s National Statistics Institute (INE). In absolute terms, this means 1,010,510 jobless last month. Out of them, 897,417 were laid off and the other 113,093 unsuccessfully looked for their first job. In September 12,795,897 people were working, most of them in the formal sector of the economy (59%). (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/unemployment-rate-in-september-at-73)

Commodities

CVG BAUXILUM stops operations due to lack of inputs

The shortage of polymers used for alumina refining has forced the shutdown of the last operational stage at CVG BAUXILUM, which is the first link in aluminum industry production process. Workers say this is the first time that the plant has been paralyzed by shortages of any of the inputs. In addition, workers at BAUXILUM mines have gone on strike due to delays in wage payments. More in Spanish: (El Nacional, 10-22-2012; http://www.el-nacional.com/; El Universal, 10-23-2012; http://www.eluniversal.com/economia/121023/trabajadores-de-minas-de-bauxilum-inician-paro)

It seems impossible to raise oil production by 522,000 barrels per day (bpd) as planned by PDVSA in its work schedule for the Orinoco Oil Belt for this year, say sources in the local oil industry. Current production is 1.2 million bpd. There is no other known additional pumping besides early production announced last September by joint ventures PETROMIRANDA and PETROMACAREO in the Junín 6 and 2 blocs. (Veneconomy, 10-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32486&idc=4)

Venezuelan oil basket climbs to U$D 102.47

Venezuelan oil prices slightly surged during the week of October 15-19, ending at U$D 102.47 per barrel on average, the Ministry of Petroleum and Mining reported. This means a hike of U$D 0.35 in the value of the Venezuelan oil basket over its price last week. The Ministry explained that "the hikes recorded ending last week allowed the average prices of crude oils to finish this period on the rise, backed by the concern about the supplies due to geopolitical tension in the Middle East and maintenance work in the North Sea." (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/venezuelan-oil-basket-climbs-to-usd-10247)

International Trade

Venezuela-Colombia trade agreement enters info force

Trade relations between Colombia and Venezuela have entered a new stage, following the entry into force of the Partial Scope Agreement (AAP), which will regulate bilateral trade, according to the Colombian Ministry of Trade.

The AAP will allow the entry of Colombian exports into the Venezuelan market free from tariffs, the ministry explained. The Agreement contains about 4,921 product lines for Colombia and 4,713 product lines for Venezuela, AFP cited. However, the Binational Chamber of Commerce says application of the agreement will be delayed at several customs offices that have not yet adapted to the new system. (El Universal, 10-19-2012; http://www.eluniversal.com/economia/121019/venezuela-colombia-trade-agreement-enters-info-force; and more in Spanish: El Mundo, http://www.elmundo.com.ve/)

Meat imports from Brazil up 25% this year

Venezuela bought 188,000 tons of meat from Brazil for a total of U$D 590 million, as the volume of beef imports rose 25% year to date, above the same period last year. More in Spanish: (El Mundo, 10-22-2012; http://www.elmundo.com.ve/noticias/economia/banca/importacion--de-carne-desde-brasil-sube-25--este-a.aspx)

Rules for Venezuela's adjustment to MERCOSUR will be completed before year-end, according to Isabel Delgado, Executive Secretary of the Presidential Commission for the accession of Venezuela to the Southern Common Market (Mercosur), who announced the new rules "will be largely completed by the end of the year." More in Spanish: (AVN, 10-22-2012; http://www.avn.info.ve/contenido/adecuación-normativa-sobre-ingreso-venezuela-al-mercosur-concluirá-antes-fin-año)

Colombia is an ally in supplying local market, according to statements by the Agriculture and Land Ministers of both nations, Juan Carlos Loyo y Carlos Osorio, who say the doors are open for broader integration. More in Spanish: (Últimas Noticias, 10-22-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/colombia-es-aliada-para-el-abastecimiento-local.aspx)

Logistics & Transport

Venezuela may invest U$D 300 Million to start flights to Beijing and Moscow

Venezuela is considering investments of up to U$D 300 million for the purchase of long-range aircraft to begin intercontinental flights to “allied” countries like China and Russia, according to Elsa Gutiérrez, Minister for Aquatic and Air Transport. She said that after strengthening national and regional connections with the purchase of six Brazilian EMBRAER aircraft at a cost of U$D 270 million, state airline CONVIASA is now working on buying aircraft “to serve different international destinations with direct flights.”“When we say Russia and China, we’re not talking just about Russia and China and nothing else – we want to be able to offer Venezuelans and businessmen access and connection facilities in a competitive but not an unregulated way,” she said in stressing the importance of connecting Caracas with the capitals of those two countries. (Latin American Herald Tribune, 10-19-2012; http://www.laht.com/article.asp?ArticleId=613896&CategoryId=10717)

Politics

Gubernatorial election campaign starts on November 1

Sandra Oblitas, the Vice-President of the National Electoral Council (CNE), reported on Friday that the election campaign for state governors starts on December 16. She explained that the regulations have been endorsed and the whole election process is being assessed.

She informed that the CNE system got a positive score of the "highest turnout" in the presidential election of October 7. The senior officer remembered that around 15 million voters cast their ballots on October 7. (El Universal, 10-19-2012; http://www.eluniversal.com/nacional-y-politica/121019/gubernatorial-election-campaign-starts-on-november-1)

Mitt Romney charges Obama with weakness toward Chavez

During the last of three debates, Republican presidential candidate Mitt Romney charged that President Barack Obama showed weakness internationally by coming closer to Hugo Chávez, Fidel Castro and Mahmud Ahmadinejad. More in Spanish: (El Universal, 10-23-2012; http://www.eluniversal.com/internacional/estados-unidos-2012/121023/mitt-romney-obama-mostro-debilidad-al-acercarse-a-chavez)