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.

June 03rd, 2011

Economics & Finance

Special Indebtedness Law said to include two new bond issues, one by PDVSA

Treasury sources say the National Assembly will next week discuss a Special Indebtedness Law that authorizes two dollar denominated bond issues. They say authorities will not establish dates in order to surprise markets. British investment firm Barclays Capital projects most of the new bonds will be sold in the domestic market. The company adds that PDVSA will issue most of the US dollar-denominated securities. The investment bank believes the government will issue about U$D 12 billion in US dollar-denominated bonds this year. Barclays predicts that U$D 9 billion will be issued by the state oil company and the remaining U$D 3 billion offered by the central government in the fourth quarter of the year. (El Universal, 06-02-2011; http://english.eluniversal.com/2011/06/02/barclays-estimates-pdvsa-is-to-issue-more-us-dollar-denominated-bonds.shtml) Additional information in Spanish: (El Nacional; http://www.el-nacional.com/www/site/p_contenido.php)

PDVSA may be liable for U$D 4-5 billion compensation to EXXON, could turn over Chalmette refinery

According to Credit Suisse and Goldman Sachs, EXXON-MOBIL will win its 4 year old lawsuit against PDVSA over project takeovers in Venezuela, and the state owned company will be required to pay compensation estimated at U$D 4-5 billion. PDVSA has reserved U$D 1-1.5 billion, which would cover only 30-40% of liability if arbitration confirms the EXXON claim. As a contingency PDVSA is contemplating contingency option of turning over its stock in the Louisiana Chalmette refinery, which is owned jointly with EXXON. Another option might be to use future oil sales. CONOCO PHILLIPS is undertaking similar action against Venezuela for a much larger amount. More information in Spanish at: (Noticiero Digital, 06-03-2011; http://www.noticierodigital.com/2011/06/pdvsa-tendria-que-pagar-entre-4-000-y-5-000-millones-de-dolares-si-pierde-demanda-de-exxon/)

Reports indicate Lula came to collect for ODEBRECHT

Reports claim former Brazilian President Luiz Inacio Lula Da Silva came to Venezuela mainly to protect the interests of Brazilian companies.  Construction industry sources report the Venezuelan government owes Brazilian construction company NORBERTO ODEBRECHT between U$D 1 billion and 1.5 billion, and the company is currently developing projects in Venezuela for a total of about U$D 5.4 billion. Among others, it is building the Tocoma hydroelectric plant in Bolivar state, which is scheduled for completion by 2012. Work could grind to a halt if debts with the company are not honored. Venezuela is ODEBRECHT’s largest client outside Brazil, for a total of 21% of its total business by year end 2010. It is reported company President Emilio Odebrecht will join talks between Lula and President Chavez. More information in Spanish at: (America Económica, 06-02-2011; http://www.americaeconomica.com/index.php?noticia=10490&name=POL%C3%8DTICA and Entorno Inteligente, 06-02-2011; http://www.entornointeligente.com/articulo-completo/1122839/VENEZUELA-Lula-gestionara-ante-Chavez-pago-a-Odebrecht)

State controlled basic industries require U$D 1 billion to meet housing goals set by President Chavez

Reuters reports key Venezuelan industries require U$D 1 billion in order to provide material for 2 million new housing units announced by President Chavez. The amount adds petitions to the Government from companies such as MINERVEN, ALCASA, VENALUM and BAUXILUM, in order to cover needs ranging from payroll to purchasing raw material.  More information in Spanish: (El Universal, 06-03-2011; http://www.eluniversal.com/2011/06/03/$1-millardo-requieren-empresas-basicas-para-operar.shtml)

Government seizes glass manufacturer

President Hugo Chávez ordered the forced acquisition of the all property pertaining to Vidrios Venezolanos Extras (VIVEX), a glass manufacturer located in the state of Anzoátegui. The government says action is in order to "consolidate public sector industrial capacity for manufacturing laminated safety glass and tempered glass used by the automotive industry."  The Ministry of Science, Technology and Intermediate Industries will be responsible for the company. (El Universal, 06-01-2011; http://english.eluniversal.com/2011/06/01/venezuelan-government-seizes-glass-manufacturer.shtml)

Expropriations scare off private investment

According to Luis Vicente Leon, director of the DATANALISIS polling firm 'the threat of expropriation, price controls and the persecution of business scares away private sector investment." He also asserted that half of the population believes the government cannot meet the goal of 2 million houses in six years. 50% distrust or do not believe that they can achieve the goal, 36% think it possible and the remainder did not answer, he added. (Enfoques 365; 06-01-2011; http://www.enfoques365.net/N23357-datanlisis--las-expropiaciones-espantan-a-inversiones-del-sector-privado.html)

An estimated 300,000 jobs lost in industry; 22.500 more jobs believed killed by farm expropriations

The Executive President of the National Industrial Association reports that some 300,000 jobs have been lost since 1998 by closing down about 40% of the nation’s industry. The President of the National Cattle Association, Manuel Cipriano Heredia, estimates that expropriation of 900 productive farms has destroyed some 22,500 jobs. “Many of those rural workers are now enlarging the slum belts in cities”. More information in Spanish: (El Nacional; http://www.el-nacional.com/www/site/p_contenido.php)

A first-quarter drop in construction this year was driven by diminished resources as private investment fell 30%, according to Venezuelan Construction Chamber President Juan Francisco Jiménez. He added the goal of building 153,000 units this year is difficult considering there are persistent supply problems with materials, especially steel products. (Veneconomy, 06-01-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=26193&idc=3)

Venezuela's inflation rose 2.5% in May

The Central Bank of Venezuela (BCV) reported that the Consumer Price Index (CPI) advanced by 2.5% in May and accrued inflation for the first five months of 2011 adds up to 10.3% versus 14.2% percent for the same period of 2010.Prices have grown 22.8% from May 2010 and May 2011. (El Universal, 06-02-2011; http://english.eluniversal.com/2011/06/02/venezuelas-inflation-rises-25-percent-in-may.shtml)

Imports from Brazil and Uruguay on the rise, diminish from Colombia

Exports from Brazil to Venezuela grew significantly over the past 12 years. By 2010, sales totaled U$D 3.8 billion, according to the Ministry of Industry and Foreign Trade of the country. This is a growth of 445% from 1998-year when President Hugo Chavez came to power. Venezuelan imports from Uruguay over the first five months of 2011 totalled U$D 91.81 million, up 34% from last year. At the same time imports from Colombia fell 15.2% during the first quarter of 2011, accumulating U$D 322.49 million by the end of March, according to data released by the Colombian National Bureau of Statistics (DANE). (El Nacional; 06-02-2011; http://www.el-nacional.com/www/site/p_contenido.php; El Mundo, http://www.elmundo.com.ve/Noticias/Economia/Internacional/Importaciones-venezolanas-desde-Uruguay-suben-34-.aspx; http://www.elmundo.com.ve/Noticias/Economia/Internacional/Importaciones-desde-Colombia-cayeron-15,2--en-el-p.aspx)

Commodities

CITGO receives26% of crude oil shipped by PDVSA to the U.S.

According to PDVSA offices, exports to the United States by the end of the first quarter of 2011 remained at 1 million barrels a day (BPD), a volume that was similar to last year. Of that, CITGO received 26% for processing and the remaining 74% was went to another 12 other oil companies operating in the US. Data from the Information Agency of the US Department of Energy shows that the PDVSA subsidiary received an average of 275,935 barrels per day by the end of March, which amounts to just over a quarter of exports to the US. (El Nacional; 06-01-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Declining oil production in Lake Maracaibo's hinders PDVSA output

According to industry sources the rapid decline of oil production in Lake Maracaibo, formerly the main area of extraction, is hindering government efforts to revive a stalled PDVSA amid the price boom. Extraction of crude oil in 2010 dropped to its lowest level since a prolonged strike hit the local production in 2002-2003, averaging 2.78 million barrels per day (BBD) according to the Ministry of Energy. More information in Spanish. (Noticias 24, http://www.noticias24.com/actualidad/noticia/259857/declinacion-de-la-produccion-de-crudo-en-el-lago-entorpece-los-esfuerzos-de-pdvsa/)

Power rationing sacrifices provinces, benefits Caracas

A power-rationing program is saving the Venezuelan capital city from outages, but hits most of the provinces, as the Planta Centro complex, one of Latin America's largest thermal power plants, is now working at full capacity. The Ministry of Electricity and the National Electrical Corporation (CORPOELEC) report that due to maintenance in Unit 8 of TACOA thermal power plant on the Northern coast of central Venezuela, power-rationing has been implemented in most of the country. Igor Gavidia, head of the National Center for Electric Power Supply of the National Electricity System (SEN), announced that power-rationing began on Tuesday. (El Universal, 06-01-2011; http://english.eluniversal.com/2011/06/01/venezuelas-provinces-are-sacrificed-for-the-sake-of-caracas.shtml)

Production of 10 of 19 basic food staples will decrease according to a poll taken by the Venezuelan Food Chamber (CAVIDEA). Drops in production projected are: Pasteurized milk, by -12.54%; margarine, -10.88%; oil -10.49%, and sardines -9.63%. (Veneconomy, 06-01-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=26194&idc=3)

Politics

Opposition launches 2012 primary campaign

The Electoral Committee of the Democratic Union Movement was formally installed and assured Venezuelans it will publish all information relating to the opposition voting base. "We are committed to transparency and reliability. We guarantee a clean process, conducted by independent persons, said Committee Chairperson Teresa Albanes said. (El Nacional; 06-01-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Police corruption blamed for kidnapping epidemic

Official data states there were 895 kidnappings in Venezuela last year; but  a government survey suppressed by president Hugo Chavez suggests that the real figure may be closer to 17,000 - 48 daily abductions - with policemen among the principal kidnappers. "I would say that in Caracas eight out of every ten kidnappings have some levels of police involvement," said Joel Rengifo, a former head of the investigative police's anti-kidnapping division. An unpublished survey by the National Institute of Statistics estimated that 16,917 kidnappings over a 12-month period between 2008 and 2009. Caracas is now ranked as one of the most dangerous cities in the world, and crime is now the number one concern for Venezuelans and the main issue in next year's presidential elections. (News Scotsman, 05-31-2011; http://news.scotsman.com/world/Venezuela-Police-corruption-blamed-for.6777031.jp?articlepage=1)

US names new DCM in Caracas

The US State Department has named Kelly Keiderling as Deputy Chief of Mission in Venezuela, in the absence of an ambassador. Keiderling is scheduled for a three year tenure starting right after July 4th, and will replace John Caulfield. She has served in Cuba, Zambia, Ethiopia, Dominican Republic, Kirguizistan and Botswana. More information in Spanish: (El Nacional; http://www.el-nacional.com/www/site/p_contenido.php)

Venezuela and United Arab Emirates sign agreement to avoid double taxation and fiscal evasion

Venezuela and the United Arab Emirates have signed a treaty to avoid double taxation and prevent fiscal evasion on income and capital. This Agreement builds on the model of the United Nations and the OECD model The Convention applies to all persons, natural or legal persons who are residents of one or both Contracting States, in terms of Income Tax and Tax on Companies (the second in the case of the UAE) and the identical or similar, to add or replace these existing taxes after the signing of this Agreement and any Taxes on income and capital that never applied in the future contracting parties. More information in Spanish, by Torres, Plaz & Araujo law firm (http://www.tpa.com.ve/editor/detailtemplate.asp?item_id=1087)

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.

April 29th, 2011

Economics & Finance

Venezuela oil tax to net billions before Chavez vote

New Venezuelan taxes on windfall oil revenue will let socialist President Hugo Chavez boost spending on popular social programs by billions of dollars ahead of his re-election bid next year. They set a top rate of 95 percent on some oil income and are Chavez's latest move to increase the state's share of the OPEC member's main export. During 12 years in power he has nationalized most of the South American nation's oil industry. His government predicted on Tuesday the new tax rates will bring in between $9 billion and $16 billion this year if oil prices keep rallying. Chavez has earmarked the money for a social spending fund and is already splashing it around. "This is justice," he said as he unveiled pay rises of up to 66 percent for public sector workers. (Reuters, 04-27-2011; http://www.reuters.com/article/2011/04/26/us-venezuela-oil-idUSTRE73P6Z920110426)

Wage hike expected to boost Venezuela's inflation

President Hugo Chavez's decision to increase the minimum wage 25 percent is expected to elevate Venezuela's already high inflation, economists and opposition lawmakers said Wednesday. Chavez's decree involves a 15 percent boost in pay at the beginning of May, then a 10 percent rise Sept. 1. The wage hike announced Tuesday will benefit more than 6 million people, who will earn $360 a month once the full increase is phased in. Chavez also gave public employees a 45 percent raise. Government officials said they hope to keep inflation in check despite wage hikes. Labor Minister Maria Iglesias suggested greedy businessmen are partly responsible for Latin America's worst inflation, accusing them of unjustifiably inflating prices. (Forbes, 04-27-2011; http://www.forbes.com/feeds/ap/2011/04/27/general-lt-venezuela-inflation_8438194.html)

PDVSA transfers U$D1.37 Bln to Venezuela's National Development Fund

Petroleum Minister and PDVSA President Rafael Ramírez said the state-owned Petróleos de Venezuela (PDVSA) has transferred $1.37 billion to the Venezuela’s National Development Fund (FONDEN) in the first quarter of this year, to be invested in socioeconomic development projects. The announcement was made during the presentation of the Law that creates a special tax on windfall and exorbitant oil prices in international oil markets. (AVN, 04-27-2011; http://www.avn.info.ve/node/54954)

JP Morgan criticizes lack of transparency in government figures

In a report, the U.S. firm JP Morgan described a "puzzling" lack of transparency in government figures in regard to the surplus oil which is obtained by rising oil prices. It notes that it has become difficult to make accurate estimates due to the opacity in the official numbers. The document also points to a drop in international reserves pegged at U$D 3.6 billion to date this year. The firm claims that U$D 2 billion are attributable to transfers to the National Development Fund and the rest may have been used by the Ministry of Planning and Finance for repayment of some of the titles of the Republic, which became due on April 20 2011. (El Nacional, 04-28-2011;

http://www.el-nacional.com/www/site/p_contenido.php)

Tariffs could be reduced by 6 points once Venezuela enters MERCOSUR

Eduardo Porcarelli, executive director National Council for Investment Promotion (CONAPRI) says that once Venezuela becomes a full member of MERCOSUR, the common external tariff – which currently averages 13%  - should drop by 3 percentage points. "In the specific case of agricultural and agroindustrial products, the existing tariff which is 16.66% on average, would decrease more than six percentage points, because MERCOSUR has a 10% tariff for third countries, "said the expert. Juvenal Arvelaez, chief executive of the Venezuelan Chamber of the Food Industry (CAVIDEA) agrees with Porcarelli that "the entry of Venezuela into Mercosur will mean an average 40% reduction in the protection of agricultural and agribusiness sector in Venezuela in relation to third countries." (El Mundo, 04-27-2011; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=19&Id_Noticia=54171)

Businessmen warn that entering MERCOSUR now is harmful

Private sector spokesmen say it is the worst time for Venezuela to enter into MERCOSUR. "At this time, accession to MERCOSUR would be really harmful for the country's industry," said Ismael Pérez Vigil, the executive president of the Venezuelan Confederation of Industries (CONINDUSTRIA). After withdrawal from the Andean Community of Nations (CAN), government authorities' priority is to enter the Common Market of the South (MERCOSUR)

(El Universal, 04-27-2011; http://english.eluniversal.com/2011/04/27/businessmen-warn-that-membership-in-mercosur-is-harmful.shtml)

Minister of Labor: Wages for 21% of workers still do not cover the cost of the basic food basket

María Cristina Iglesias, the Minister of Labor and Social Security, said that 21% of the working population earns the minimum wage, compared with about 65% 11 years ago. There are about 2.7 million workers earning the minimum wage, according to data reported by the Minister of Labor. From May 1, they will be paid VEB 1,407.4 (U$D 327.30), after a 15% increase in a first tranche and an additional 10% raise from September 1. (El Universal, 04-27-2011; http://english.eluniversal.com/2011/04/27/minister-of-labor-21-percent-of-workers-still-fail-to-cover-the-cost-of-food-basket.shtml)

Canary Islands seek solution for seizure of companies in Venezuela

The local parliament of the Canary Islands requested the Spanish government to seek negotiations to work out the "unresolved" serious problems due to the seizures of Spanish companies in Venezuela, undertaken by Venezuelan authorities. The resolution shows all political groups are aware of the difficulties faced by Spanish companies seized by the Venezuelan government and the implications for those involved. (El Universal, 04-27-2011; http://english.eluniversal.com/2011/04/27/canary-islands-seek-solution-for-seizure-of-companies-in-venezuela.shtml)

Commodities

Venezuela sets oil windfall tax for oil price at U$D 40-70

The Venezuelan government set an additional 20% tax on oil windfall revenues by state-run oil company Petróleos de Venezuela (PDVSA) and its joint ventures whenever oil prices fluctuate between U$D 40 and U$D 70 per barrel, as per decree No. 8,163, published in the Extraordinary Gazette No. 6,022 with the Law that creates a special tax on windfall and exorbitant oil prices in international oil markets. "When the monthly average of the Venezuelan basket of liquid hydrocarbons in international markets is above the price set in the Budget Law for that fiscal year, but not higher than U$D 70 per barrel, a 20 percent tax will be levied on the difference between both prices," according to the Official Gazette. (El Universal, 04-27-2011;

http://english.eluniversal.com/2011/04/27/venezuela-sets-oil-windfall-tax-for-oil-price-at-usd-40-70.shtml)

Economic emergency was declared in ALCASA

Company president, Elio Zayago, publicly declared a state of "financial and operational emergency”, thus admitting that the situation is untenable in CVG ALCASA. "It is no secret that when this administration, under workers' control took over management of the plant, it received more than 50% of diseased cells, with high temperatures and exceeded nominal life. These conditions, which are joined by strikes that prevented the proper treatment and low cash flow generated (sic) a weakness in terms of acquisition time, coke, tar and fluoride, "he explained Thursday at a news conference. More information in Spanish. (El Universal, 04-29-2011; http://www.eluniversal.com/2011/04/29/fue-declarada-la-emergencia-economica-en-alcasa.shtml)

Venezuela Oil Hits $110.33

Venezuela's Ministry of Energy and Petroleum reports that the average price of Venezuelan crude sold by Petróleos de Venezuela S.A. (PDVSA) during the week ending April 29 rose to U$D110.33 from the previous week's U$D108.29, raising the average for the year to U$D95.04, above the previous high set by 2008's U$D86.49 average. (Latin American Herald Tribune, 04-29-2011; http://www.laht.com/article.asp?ArticleId=392690&CategoryId=10717)

Venezuela's PDVSA Discussing Tech Projects With China Firms

Venezuelan state oil company Petróleos de Venezuela said Thursday that it is discussing possible technological development projects for refining and upgrading of crude oil with an advisory group from the China Development Bank. (The Wall Street Journal, 04-28-2011; http://online.wsj.com/article/BT-CO-20110428-721423.html)

PDVSA said to be building seven thermoelectric plants to add 1,954 MW by 2012

Electric Energy Minister Alí Rodríguez Araque says Venezuela’s state-run oil company Petróleos de Venezuela (PDVSA) is building seven thermoelectric plants that will add 1,954 MW to the National Electric System in 2012. He has recently said that “In total, 800 megawatts will be added by PDVSA by the end of 2011”. By the end of 2011, the Government claims it will to add 2,568MW in total. In addition, to the 800 MW from PDVSA, the National Electric Corporation (CORPOELEC) expects to add 1,593 MW and the Basic Industries and Mining Ministry other 175 MW for the National Electric System. (AVN, 04-27-2011; http://www.avn.info.ve/node/54975)

Venezuelan steelmaker recovers after power crisis in 2010

Venezuelan state-run steelmaker Siderúrgica del Orinoco (SIDOR) reported an output of 767,000 tons of liquid steel in the first quarter this year, said Pedro Acuña, the main director of Class B shareholders on SIDOR's board of directors.

Production in the same period of 2010 totaled 308,000 tons, amid power rationing implemented in Guayana's basic industries, which undermined SIDOR's regular operating performance. The output of Venezuela's main steelmaker rose 149% in 2011 compared to 2010. (El Universal, 04-29-2011;

http://english.eluniversal.com/2011/04/29/venezuelan-steelmaker-recovers-after-power-crisis-in-2010.shtml)

Politics

Some 25 foreign ministers prepare a summit to set up a "parallel OAS"

Latin American and Caribbean foreign ministers are meeting in Venezuela to prepare a presidential summit to be held in Caracas in July in order to establish a new regional body that excludes the United States and Canada. Ministers and diplomatic representatives from over 25 countries are discussing regional integration and development issues, and will prepare the agenda of the presidential summit to be held in Venezuela on July 5. The Presidents and Heads of State of the region will outline the Charter of the Community of Latin American and Caribbean States (CELAC), which aims to be an Organization of American States that excludes the United States and Canada. (El Universal, 04-26-2011;

http://english.eluniversal.com/2011/04/26/some-25-foreign-ministers-prepare-a-summit-to-set-up-a-parallel-oas.shtml)

Venezuela-Colombia relations benefit the entire region

Colombian Foreign Affairs Minister Maria Angela Holguin has said that bilateral relations with Venezuela will not be “derailed” by any differences because, Colombia is working hard to keep and improve the ties with its sister nation. “The relation, as you well know, has a lot of issues to deal with day after day. Many things happen in the border, which is big, issues are many, and there are many critics. It is not an easy relationship, but the Colombian Government is committed to it, the President Santos and I have placed this relationship as a priority for Colombia. We believe it not only benefits the people of Colombia and Venezuela, but the entire region and we will keep working for such purpose”. (AVN, 04-27-2011; http://www.avn.info.ve/node/54943)

Cardoso urges Rousseff not to be contradictory on Venezuela

Brazil's former President Fernando Henrique Cardoso asked current Brazilian President Dilma Rousseff and Foreign Minister Antonio Patriota to be "sensitive enough" to deal with criticism from the Venezuelan government, without damaging the relationships and the dialogue between the two countries. "It appears that, as regards human rights, she (Rousseff) has been more consistent in her protest, but Brazil has common interests with Venezuela and we cannot all of a sudden have an attitude that could be regarded as contradictory on Venezuela". (El Universal, 04-27-2011; http://english.eluniversal.com/2011/04/27/cardoso-urges-rousseff-not-to-be-contradictory-with-venezuela.shtml)

Chavez announces a Libyan delegation sent by Qaddafi is in Venezuela

President Hugo Chavez has announced that a Libyan delegation sent by Muammar Qaddafi has arrived in here seeking international support for a truce in the Libyan conflict. The delegation will hold talks with Chavez’s government to see if members of the Bolivarian Alternative for the Americas, a trade bloc spearheaded by Chavez, and other Latin America countries can help efforts to restore peace to Libya, said Foreign Minister Nicolas Maduro. (Bloomberg, 04-26-2011; http://www.bloomberg.com/news/2011-04-26/libyan-delegation-sent-by-qaddafi-in-venezuela-chavez-says-1-.html)

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.