November 06th, 2012

Economics & Finance

Chávez says Venezuela's foreign indebtedness is only 25% of GDP, and points out that US foreign indebtedness is 300%. More in Spanish: (AVN, 11-06-2012; http://www.avn.info.ve/contenido/chávez-deuda-externa-venezuela-apenas-llega-al-25-sobre-producto-interno-bruto)

"Public and private enterprises working jointly are one way to build socialism", according to President Chavez, who added: "Venezuelan socialism includes all: professionals, media, businessmen. Do not listen to those crying wolf, I call upon all to work with us as many already are." More in Spanish: (AVN, 11-06-2012; http://www.avn.info.ve/contenido/quottrabajo-conjunto-entre-empresa-pública-y-privada-es-una-vía-para-construcción-del-soci)

SITME transactions rose by 56%, as CADIVI operations remain stagnant

According to the Síntesis Financiera publication, CADIVI approved U$D 22.9 in foreign exchange operations, only 4.6% above the same time frame in 2011; wile SITME approved U$D 6.8 billion, rising by 56%. This trend indicates imports are moving toward the SITME system, which uses VEB 5.30 to the U$D as a reference. More in Spanish: (El Universal, 11-06-2012; http://www.eluniversal.com/economia/121106/56-subieron-aprobaciones-de-divisas-por-medio-del-sitme)

Formal employment slowing down in Venezuela, according to the Labor Situation Report for Latin America and the Caribbean, prepared jointly by the UN Commission for Latin America and the International Labor Organization. The report shows a slight drop in formal employment during the first half of 2012. More in Spanish: (El Universal, 11-06-2012; http://www.eluniversal.com/economia/121106/reportan-desaceleracion-de-empleos-formales-en-el-pais)

Commodities

Gasoline imports from the US jump to 34,000 bpd in August

Data released by the US Department of Energy shows that Venezuela purchased gasoline made in the US consistently from December 2011 through August 2012. March was the only exception. Most recent information from August this year, indicates that the US dispatched 34,000 gasoline barrels per day to Venezuela in that month. It was the highest figure since February 2003, when Venezuela imported 36,000 barrels of gasoline from the US amid a temporary halt in the operations of the oil industry caused by a national civic strike. (El Universal, 11-05-2012; http://www.eluniversal.com/economia/121105/venezuelas-gasoline-imports-from-the-us-jumps-to-34000-bpd-in-august)

Fuel imports from Colombia rose by 91% this year, according to Colombia's National Statistics Department (DANE), which indicates Venezuela imported U$D 402.5 million in fuel this year, and are the top trade item between both countries.  Venezuela also imported U$D 214 million in animal stock and related products, and U$D 199 million in chemicals. More in Spanish: (El Universal, 11-06-2012; http://www.eluniversal.com/economia/121106/aumento-91-compra-de-combustibles-a-colombia)

PDVSA also comes up empty off Cuba

A well drilled by state oil giant PDVSA in Cuban waters of the Gulf of Mexico also has turned up dry, the Communist-ruled island’s official media reported Friday. This latest well, drilled with the Chinese-built Scarabeo 9 rig, “offers no possibility for commercial development,” the press reported Friday, citing a statement by Cuban state oil firm CUBAPETROLEO. (Latin American Herald Tribune, 11-02-2012; http://www.laht.com/article.asp?ArticleId=626006&CategoryId=10717;

Veneconomy, 11-04-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32656&idc=4)

TNK-BP production up in Venezuela

Russian energy company TNK-BP said oil production from its joint venture in Venezuela increased 18% during the first nine months of the year. PETROMONAGAS, a joint venture between TNK-BP and Venezuelan state energy company Petroleos de Venezuela, or PDVSA, was 35.5 million barrels through September, an 18% increase from the same time last year. Boris Zilbermints, a vice president for international projects at TNK-BP, said Venezuela is key to the company's overseas portfolio. (UPI, 11-01-2012; http://www.upi.com/Business_News/Energy-Resources/2012/11/01/TNK-BP-production-up-in-Venezuela/UPI-48151351768587/)

Aluminum industry operates at 29% capacity

Primary aluminum output in Guayana, south Venezuela, continues to dwindle. Aluminum makers Venalum and CVG Alcasa comprise 1,301 cells, yet only 387 cells are operative. Both companies are running at 29% of their installed capacity. Operating problems are due to unsolved shortages of spare parts and raw material. Moreover, nearly 40% of personnel is absent amid poor transportation. In CVG Alcasa, low availability of cranes is accountable for production decline. (El Universal, 11-05-2012; http://www.eluniversal.com/economia/121105/venezuelas-aluminum-industry-operates-at-29-of-capacity)

Steel and cement to be imported by "socialist" builders, says Gerson Hernández, head of the Bolivarian Construction Chamber, who indicated housing projects for next year require additional inputs. He indicated negotiations are under way to import 180 thousand metric tons of steel and 100 thousand metric tons of cement from countries such as Argentina, Perú and Italy. More in Spanish: (El Universal, 11-06-2012; http://www.eluniversal.com/economia/121106/las-constructoras-socialistas-importaran-acero-y-cemento; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/camara-bolivariana-de-constructores-preve-edificar.aspx)

Agricultural imports rose 99.6% in one year, according to the National Statistics Institute (INE), which indicated purchases abroad in these items rose to U$D 2.533 billion during the first semester this year, up from U$D 1.269 billion during the first semester 2011. More in Spanish: (El Universal, 11-06-2012; http://www.eluniversal.com/economia/121106/importaciones-del-sector-agricola-crecieron-996-en-un-ano; El Nacional; http://www.el-nacional.com/)

International Trade

"MERCOSUR is a way to increase trade with Northern Brazil", according to President Chavez, who says the area has a population above 60 million, and "of incalculable potential for trade and the development of Venezuela and Brazil". More in Spanish: (AVN, 11-06-2012; http://www.avn.info.ve/contenido/misión-mercosur-amplía-perspectivas-crecimiento-países-región)

Imports from Colombia up 70% in January-August

Venezuela-Colombia bilateral trade has been reactivated, clearly benefiting Colombian entrepreneurs in view of the rapid rise of sales to Venezuela. Data handled by the National Administrative Statistics Department of Colombia (DANE) shows that from January through August this year, Venezuela purchased U$D 1.77 billion in goods from Colombia, that is, 70% above the figure recorded during the same period in 2011 (U$D 1.04 billion). Meanwhile, Venezuelan exports to Colombia are growing at a much slower pace, reporting only a 12.3% increase from January through August 2012. (El Universal, 11-05-2012; http://www.eluniversal.com/economia/121105/venezuelan-imports-from-colombia-up-70-in-january-august)

Logistics & Transport

Incoming cargo processing can take 20 to 30 days due to excessive controls, according to Cipriana Ramos, president of Fedecámaras in Vargas state. She said controls applied by CADIVI, SENIAT, sanitary authorities, the National Guard, Customs and the Agriculture Health Institute also bring on added cost. She says that at La Guaira Port the waiting period can go up to around 30 days. More in Spanish: (Notitarde, 11-06-2012; http://www.notitarde.com/La-Costa/Excesivos-controles-portuarios/2012/11/05/143854; El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/37990/arribo-masivo-de-cargas-graneleras--a-puerto-cabello-agudiza-retrasos)

Politics

A victory by Obama or Romney will not bring change in bilateral relations, says President Chavez who also saluted the Sandinista victory in municipal elections in Nicaragua. More in Spanish: (El Universal, 11-06-2012; http://www.eluniversal.com/internacional/121106/para-chavez-victoria-de-obama-o-romney-no-traera-cambios)

December 22th, 2011

Economics & Finance

BCV chief discards devaluation; experts say it is inevitable

Central Bank (BCV) President, Nelson Merentes denied any devaluation of the official exchange rate, currently pegged at VB 4.30 to the U$D. "That is out, it makes no sense," he said, adding that " income is guaranteed and well balanced with expenses." He also denied the possibility of increasing the currency allocation for individual Internet purchases, and said economic growth will be around 5% by the end of 2011. (El Nacional, 12-22-2011; http://www.el-nacional.com/; El Universal, http://www.eluniversal.com/economia/111222/inflacion-bajara-entre-1-y-3-puntos-por-ley-de-costos; and more in Spanish: Tal Cual, http://www.talcualdigital.com/index.html; El Mundo, http://www.elmundo.com.ve/Noticias/Economia/Politicas-Publicas/Devaluacion-de-23--generara-ingresos-extras-de-3-.aspx)

Tariffs may apply on sensitive products from Colombia

Luis Alberto Russian, President of the Venezuela-Colombia Economic Integration Chamber reports that although the presidents of both countries have signed a Partial Agreement, Andean Community will continue to govern trade between the two countries until January 22 until details are worked out between negotiators from both nations. It is being suggested that Venezuela apply tariffs on “sensitive” products coming from Colombia. (El Universal, 12-22-2011; http://www.eluniversal.com/economia/111222/aplicaran-aranceles-a-productos-sensibles-con-colombia)

BCV says Cost-Price Law should be applied to 50 products

The Central Bank of Venezuela (BCV) has recommended that the Government apply the Law on Costs and Fair Prices to 50 products, including beef, dairy, perishable items, cleaning supplies and personal hygiene items. The statement was made by Bank President Nelson Merentes, who said that "we have suggested focusing on the most driving forces of inflation” … as an approach and then extend it "to other products”. (El Mundo, 12-22-2011; http://www.elmundo.com.ve/Noticias/Economia/Banca/BCV-recomienda-aplicar-Ley-de-Costos-a-50-producto.aspx)

ECLAC: predicts Venezuelan economy is to grow 3% in 2012

The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) lowered its estimate of economic growth for the region to 3.7% in 2012, after having projected an economic growth of about 4%, due to an adverse external environment. Due to the adjustment, ECLAC estimates that Venezuela will record a 3% GDP, while in previous reports it projected a 3.5% growth. (El Universal, 12-21-2011; http://www.eluniversal.com/economia/111221/eclac-venezuelan-economy-is-to-grow-3-in-2012)

2011 real official expenditure up 67%

The government initially projected a U$D 47.44 billion budget for 2011, but due to commitments made during the fiscal year, the Venezuelan National Assembly has allocated 67% in additional funds than originally appropriated. Additional loans approved by the Venezuelan Congress came to U$D 32.02 billion. As a result, Venezuela's budgeted expenditures are now at U$D 79.5 billion. (El Universal, 12-21-2011; http://www.eluniversal.com/economia/111221/venezuelas-2011-budget-up-67)

Commodities

Production for seven agricultural items plummeted in 2011

The National Federation of Agricultural Producers (FEDEAGRO( says Venezuelan agriculture did not recover in 2011. Weather, price controls, legal and personal insecurity, land seizures, input shortage s and the steady increase in production costs hit agriculture this year. The Federation reported that domestic agriculture continued "a downward trend noted in previous years" and recorded a significant fall in seven basic food staples. The year-end balance supplied by the farmers association states that the production of corn took a 23.68% plunge. (El Universal, 12-22-2011; http://www.eluniversal.com/economia/111222/seven-agricultural-goods-tumble-in-2011)

Chavez claims Venezuela will boost oil output to 3.5 Million BPD

President Chavez now claims Venezuela will boost its production of crude to 3.5 million barrels per day in 2012.

“We are at 3 million, fluctuating there – a little more, a little less – there we are at 3 million. Now, in 2012, as a result of all the efforts we have made, we should make a leap to 3.5 million,” he said during a Cabinet meeting broadcast on state television. He also predicted Venezuela’s oil output will reach 4 million bpd in 2014, adding that no more than five countries in the world have “the capacity to increase production at a pace like this.” (Latin American Herald Tribune, 12-20-2011; http://www.laht.com/article.asp?ArticleId=454149&CategoryId=10717)

International Trade

MERCOSUR sets up committee to study Venezuela's deferred entry

The presidents of MERCOSUR (the Common Market of the South) set up a high level committee to seek a way to carry out Venezuela's entry into the bloc - which has been halted for five years by the Paraguayan Senate. President Chavez travelled personally to the latest MERCOSUR Summit in Uruguay in order to seek an expeditious way to overcome legal barriers based on the group’s democracy requirements, but came away empty handed as the matter was handed over to a special panel to be appointed by MERCOSUR heads of State. (El Universal, 12-21-2011; http://www.eluniversal.com/economia/111221/mercosur-sets-up-committee-to-study-venezuelas-entry; and more in Spanish: El Nacional; http://www.el-nacional.com/)

Politics

Noam Chomsky pleads with Hugo Chavez to free judge

Hugo Chavez's long-time supporter Noam Chomsky has issued a renewed appeal to the President to free a judge who was controversially jailed two years ago. Maria Lourdes Afiuni, 48, is currently under house arrest in Caracas.  Chomsky, a linguistics professor from the Massachusetts Institute of Technology, urged Chavez to "correct an injustice". Afiuni is a cancer patient who underwent an abdominal hysterectomy while in jail. Afiuni's troubles began on 10 December 2009 when she granted bail to Eligio Cedeño, a businessman and banker who had been jailed on charges that he had evaded currency controls and, on release, fled to the United States. Her ruling triggered a furious public reaction from Chávez, who took to the airwaves claiming the judge deserved 30 years in prison and suggesting that in another era she would have been hauled before a firing squad. (The Guardian, 12-21-2011; http://www.guardian.co.uk/world/2011/dec/21/chomsky-chavez-free-judge-letter)

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.

February 25th, 2011

Economics & Finance

Venezuela: Economy shrank 1.4% last year, despite a slight uptick during the last quarter

Venezuela's economy contracted 1.4% in 2010, its second consecutive yearly drop, but the country showed signs of recovery during the final quarter, according to the Central Bank. The drop in gross domestic product, coupled with 27% inflation, made Venezuela end 2010 with Latin America's worst economic indicators. Venezuela has been in recession for two years, and its economic problems have lingered even as other nations in the region have resumed growing. The Venezuelan economy shrank 3.3% in 2009. (AP, 02-22-2011; http://finance.yahoo.com/news/Venezuela-Economy-shrank-14-apf-3058827811.html?x=0&.v=1)

Private sector GDP declines for eight quarters in a row

According to recently released Central Bank figures show that slight economic growth in Q4 2011 is underpinned only by the results of state-run companies and by public spending, as the government increases indebtedness at a rapid pace despite rising oil prices. The country is still far from regaining the ground it lost to recession. In fact, Venezuela's production in the fourth quarter of 2010 declined 5.2% compared with the same period of time in 2008. (El Universal, 02-23-2011; http://english.eluniversal.com/2011/02/23/private-sectors-gdp-declines-for-eight-quarters-in-a-row.shtml)

Overall imports up 33%, and imports by the government rise by 72% in Q4 2010

The Central Bank of Venezuela (BCV) reported that in the fourth quarter of 2010, imports went up 33.1% compared with the same period of time in 2009, to total USD 11 billion. Exports accounted for an income of USD 17 billion, including USD 16.74 billion for oil sales. At the same time, Venezuelan government's imports amounted to USD 3.81 billion in the fourth quarter of 2010, a 72% increase over the same period in 2009. "Imports of food, electrical appliances, machinery and common metals were particularly important," said the BCV report. Public sector's imports, in annual terms, have increased by 42 percent in 2010. (El Universal, 02-23-2011;http://english.eluniversal.com/2011/02/22/imports-up-33-percent-in-fourth-quarter-of-2010.shtml) and http://english.eluniversal.com/2011/02/23/govnt-imports-climb-72-percent-in-q4-2010.shtml)

Venezuela is negotiating a $4 billion financing with China for a joint investment fund, said Venezuelan Planning and Finance Minister Jorge Giordani yesterday. The amount represents the third installment of a financing signed in 2009 in exchange for oil sales in advance. (Veneconomy, 02-25-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25059&idc=2)

Trade Minister claims imports are necessary to bring down inflation

Among the outstanding statements made Economic Sector ministers at their hearings in at the National Assembly, one that stands out is Trade Minister Edmée Betancourt’s testimony that it “is necessary to import” some first-need food staples in order to fight inflation. She added that the measure also allows the government to fight speculation. (Veneconomy, 02-23-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25009&idc=2)

Businessmen decry weakened productive sector in Venezuela

The Venezuelan Federation of Trade and Industry Chambers (FEDECÁMARAS) openly differ with the government on the nation's economic performance. While the Executive Office said that a GDP increase (0.6%) in the fourth quarter of 2010 is an economic recovery and growth, FEDECÁMARAS says the economy continues to shrink. "No one can deny that the private sector continues to decline. It tumbled even in the fourth quarter of 2010," said Noel Álvarez, the president of FEDECÁMARAS. (El Universal, 02-23-2011; http://english.eluniversal.com/2011/02/23/businessmen-decry-fragile-production-apparatus-in-venezuela.shtml)

Venezuelan industrialists forecast drop in sales of six food items

The Venezuelan Chamber of Food Processing Industries (CAVIDEA) predicted a 1.52-10.30% drop in sales of six items of the basic food basket during the first half of 2011. (El Universal, 02-23-2011; http://english.eluniversal.com/2011/02/23/venezuelan-industrialists-forecast-drop-in-sales-of-six-food-items.shtml)

Government claims the growth in agricultural production meets people's needs

According to Agriculture and Land Minister Juan Carlos Loyo, agricultural policies implemented by the Venezuelan Government over the past 12 years have generated a 44% growth in the overall production, which shows an increase of food to satisfy the needs of Venezuelans and guarantee agrifood security and sovereignty. The Minister made the claim during his testimony to the National Assembly upon submitting his annual report. (AVN, 02-23-2011; http://www.avn.info.ve/node/44854)

Heinz announced activities in its San Joaquín plant continue paralyzed by the union, despite a call made by the Labor and Social Security Ministry authorities for a resumption of activities last Wednesday. The plant stopped 24 days ago. (Veneconomy, 02-24-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25033&idc=3)

Commodities

Venezuela does not anticipate an OPEC meeting on Arab unrest

Venezuela does not expect an emergency OPEC meeting in the short term because ample supplies in consuming nations can absorb any disruption from turmoil in the Middle East, a local paper said on Wednesday. Venezuela, which has not diversified from a decades-old reliance on crude as the backbone of its economy, routinely calls for higher prices and says $100 per barrel is fair. Oil Minister Rafael Ramirez said he was consulting his counterpart at top OPEC exporter Saudi Arabia, Ali al-Naimi, and neither of them expected any disruption to global supplies due to the large reserves held by major consuming nations. (Reuters, 02-23-2011; http://www.reuters.com/article/2011/02/23/venezuela-mideast-oil-idUSN2320853820110223)

Venezuela evaluating options for working the Las Cristinas gold mine

Government sources say Venezuela is evaluating the possibility that foreign companies involved in the massive Las Cristinas gold deposit, just weeks after it canceled the contract with the Canadian miner Crystallex. Crystallex (KRY) reported in early February that Venezuela decided to unilaterally terminate its contract to develop Las Cristinas. Immediately afterward, the Russian-Canadian company Rusoro (RML) said it was interested in exploiting the huge gold deposit. (VHeadline, 02-22-2011; http://www.vheadline.com/readnews.asp?id=101272)

Union members hold Chavez responsible for ALCASA aluminum's uncertain future

President Chavez has been held of being responsible for the state of affairs at Alcasa aluminum. Uncertainty seems to be the overriding sentiment at the plant after the government brokered an agreement with the trade unions at the nearby Venalum aluminum plant last week. Members of the Unidad Alcasiana labor group complained that neither Alcasa trade unions nor Basic Industries & Mining Minister, Jose Khan Salamat are coming up with solutions to end the current conflict. (VHeadline, 02-22-2011; http://www.vheadline.com/readnews.asp?id=101265)

Billions of dollars required to expand oil production in Venezuela

Venezuela’s state-owned oil industry must begin an ambitious investment program in oil exploration and production in order to expand its capacity to extract oil throughout the next decade. According to Asdrúbal Baptista, an economist and professor at the Institute of Higher Education in Business Administration (IESA), Venezuelan’s premier management school, the ratio of oil extraction volume to capital allocated for oil exploration and production projects suggest that Venezuela should invest USD 215 billion from 2011 to 2020 to expand production capacity to 4 million barrels a day. This means that Venezuela should be investing approximately USD 20 billion a year. (El Universal, 02-24-2011; http://english.eluniversal.com/2011/02/24/billions-of-dollars-needed-to-expand-oil-production-in-venezuela.shtml)

Construction declines amid lowered investment and input scarcities

Venezuela's construction activity has declined for five quarters in a row, yet during the past three months of 2010 the fall was sharper (-8.6%), according to data published by the Central Bank of Venezuela (BCV). This decrease was due to a slower execution of Venezuelan public spending in the infrastructure sector, lower private investments and failures in the provision of inputs such as cement, rebar’s and aggregates. (El Universal, 02-24-2011;  http://english.eluniversal.com/2011/02/24/construction-declines-amidst-poor-investments-and-scarce-inputs.shtml)

ENI’s appraisal well in Venezuela is successful

Success in the Perla 4 appraisal well in the Cardón IV block in the Gulf of Venezuela brings the Perla gas in place estimate to over 16 tcf. The well is in 60 m (~200 ft) of water and showed 17 MMcf/d of gas and 560 b/d of condensate during a production test. Cardón IV is operated by a joint company owned 50% by ENI and 50% by REPSOL. The venture has concluded the front-end engineering and design for early production of 300 MMcf/d of gas I 2013. (Offshore, 02-24-2011; http://www.offshore-mag.com/index/article-display/1095911294/articles/offshore/field-development/latin-america0/2011/February/eni-appraisal_well.html)

Politics

Venezuela protesters end 3-week hunger strike

Protesting students ended a three-week hunger strike Tuesday, saying they stopped because the Organization of American States is discussing their allegations of human rights abuses by Venezuela's government. Student activist Lorent Saleh said that Venezuelan authorities also agreed to review the cases of people considered political prisoners by the protesters."The government responded to our demands," Saleh said at a news conference. (Americas msnbc, 02-22-2011; http://www.msnbc.msn.com/id/41721815/ns/world_news-americas/)

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.