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)

January 24th, 2012

Economics & Finance

Venezuela among lowest in poverty rates in Latin America

According to the UN Economic Commission for Latin America (ECLA), Venezuela ranks third among nations with the lowest poverty rates in Latin America. In a report called “Social Outlook on Latin America 2011” it says that in 2010 the number of Venezuelans ranked as poor was 27.8%. It also says that from 2002 to 2010 poverty went from 48.6% to 27.8%; and extreme poverty fell from 22.2% to 10.7%. More in Spanish: (Ultimas Noticias, 01-23-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-es-uno-los-menos-pobres-de-latinoamerica.aspx)

Venezuela ranks high on initiatives

The Global Enterprise Monitor (GEM) has again ranked Venezuelans among those with the highest vocation for initiative. The study shows 15.4% of the population is undertaking new initiatives, which places Venezuela in 11^th place among 54 nations analyzed. Although the index has deteriorated in the past few years, the report says “Venezuela continues to be one of the nations with the highest TEA rates worldwide”. More in Spanish: (El Universal, 01-23-2012; http://www.eluniversal.com/economia/120123/venezuela-entre-los-paises-con-mayor-emprendimiento)

Where has the money gone?

Over USD 22 billion should have been received by the Venezuelan Bank for Economic and Social Development (BANDES) from the Chinese Fund; and it is still unclear where that money has gone after being directly handled by the National Executive. Vice-President Elías Jaua and Minister of Energy and Petroleum Rafael Ramírez are due to pay a visit to the National Assembly in order to explain how this credit scheme works and render accounts on how they have invested it. (El Universal, 01-21-2012; http://www.eluniversal.com/economia/120121/where-has-the-money-gone)

Venezuela rebuffed by U.S. High Court on BANDAGRO bond suit

The U.S. Supreme Court refused to block an Ohio investor group from suing Venezuela over potentially U$D 900 million in bank notes that the South American country says are forgeries. The justices today turned away an appeal from Hugo Chavez’s Venezuelan government, which sought to invoke a U.S. law that immunizes foreign sovereigns from some lawsuits in American courts. The Supreme Court acted after the Obama administration urged rejection of the appeal. (Bloomberg, 01-23-2012; http://www.bloomberg.com/news/2012-01-23/venezuela-rebuffed-by-u-s-high-court-on-bandagro-bond-suit.html)

The first Venezuelan branch of the Spirito Santo Bank, BES Universal Bank, opened its doors in Caracas. The Portuguese bank, headed by Antonio Ramírez is one of the international financial institutions from which PDVSA has borrowed money in the last five years. (Veneconomy, 01-20-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29093&idc=2)

Since 1985, Venezuela has failed to take inflation to one digit

Inflation in Venezuela has two stages: a stable period in 1950-1978 that contributed to create wealth; another stage where the way was lost, to such an extent that since 1985, the governments of Presidents Jaime Lusinchi, Carlos Andrés Pérez, Rafael Caldera, and Hugo Chávez have failed to prevent prices from increasing less than 10% in one year. (El Universal, 01-21-2012; http://www.eluniversal.com/economia/120121/since-1985-venezuela-has-failed-to-take-inflation-to-one-digit)

Commodities

Declining oil production mirrors low investment

Venezuela has the world's largest oil reserves in the Orinoco Oil Belt and the price of oil has increased by 17% since 2008. However, these two facts have not led to a steady increase in oil output. Both delayed implementation of the 2010-2015 Oil Sowing Plan and the global economic crisis have hit PDVSA's oil production. José Guerra, former economic research manager at the Central Bank of Venezuela (BCV) says: "PDVSA's investment level is very low. Investments in oil exploration and production do not even reach 1% of revenues, whereas oil giants spend between 2% and 3% of their revenues" in that area. (El Universal, 01-23-2012; http://www.eluniversal.com/economia/120123/venezuelas-declining-oil-production-mirrors-low-investment

PDVSA fails to provide guarantees for a refinery with PETROBRAS

In a new setback for the delayed project, Venezuela's state-run oil company Petróleos de Venezuela (PDVSA) has not provided acceptable guarantees to obtain financing that would ensure its share along with Brazilian federal oil company Petroleo Brasileiro (PETROBRAS) in a USD 14 billion refinery in the Brazilian state of Pernambuco, accorgint eo Brazilian media. PDVSA would need a U$D 10 billion loan from state-owned Brazilian National Development Bank (BNDES) to fund its 40% stake in the Abreu e Lima refinery in the northeastern state of Recife, according to Brazilian newspaper Valor Económico said. (El Universal, 01-20-2012; http://www.eluniversal.com/economia/120120/pdvsa-fails-to-provide-guarantees-for-a-refinery-with-petrobras)

PDVSA’s Luongo says Amuay Refinery operating normal after fire

Petroleos de Venezuela SA’s Amuay refinery is operating normally after a small fire at a distillation unit yesterday, Jesus Luongo, general manager of the complex, said in a statement on the company’s website.

The fire was extinguished within 10 minutes and is a “routine incident” in refining activities, Luongo said, according to the statement. (Bloomberg, 01-22-2012; http://www.bloomberg.com/news/2012-01-22/pdvsa-s-luongo-says-amuay-refinery-operating-normal-after-fire.html)

Aluminum: Minister admits VENALUM and ALCASA in terrible shape

For many years VENALUM and ALCASA sold raw materials to local manufacturers at a small discount. Now multinationals get all of the advantages and domestic industry has all of the problems. During a recent visit to VENALUM, Ricardo Martínez, Minister for Industries responsible for Guayana and its industries, declared that “I did not know this was as bad, with so many problems; I thought it was exaggerated opposition propaganda”. He made the statement to a group of workers during a plant tour with company president Rada Gamluch. Workers had pointed out almost 400 inactive reduction cells, the lack of raw material needed to produce high quality aluminum, and the staggering debts to labor. More in Spanish: (Tal Cual, 01-24-2012; http://www.talcualdigital.com/index.html)

Venezuela gas deal to boost local power generation

As gas prices plunge to their lowest for a decade, Venezuela will pay over the odds to tap one of Latin America's biggest fields wanting to boost power generation and even help revive stagnant oil production. Venezuela is among the top 10 nations in terms of gas reserves, but has yet to begin any commercial production. Instead, it imports supplies from neighboring Colombia. (Reuters, 01-20-2012; http://www.reuters.com/article/2012/01/20/us-venezuela-gas-idUSTRE80J1SI20120120)

Government admits to high idle capacity in industry

The Venezuelan government will try to capitalize on the domestic industry installed capacity in 2012, says Minister of Industry Ricardo Menéndez. "In a country which is seeking production of rebars, production of inputs, obviously there should not be idle capacity in the production apparatus," Menéndez said in a press conference. The senior official conceded that idle capacity in some businesses, including state-owned companies, is very high. "In the case of (steel maker) SIDOR, we are have 66% of used capacity versus installed capacity, but some other companies are at 39% of their utilized capacity." (El Universal, 01-21-2012; http://www.eluniversal.com/economia/120121/venezuelan-government-admits-high-idle-capacity)

Logistics & Transport

Venezuela to buy EMBRAER, Airbus jets to expand state airline CONVIASA

President Hugo Chavez announced his government plans to buy new Embraer jets from Brazil as well as used Airbus jets to expand his country’s state airline Conviasa. Chavez said Venezuela will negotiate credit with the Brazilian Development Bank to buy up to 20 Embraer jets from Brazil. Chavez thanked Brazilian President Dilma Rousseff “for the credit they’re going to give us.” He said the estimated cost of 20 jets would be $814 million. He also approved a million dollar investment to purchase four five -year-old Airbus 340-500 from the United Arab Emirates. (Washington Post, 01-22-212; http://www.washingtonpost.com/business/chavez-says-venezuela-to-buy-embraer-airbus-jets-to-expand-state-airline-conviasa/2012/01/22/gIQALz3AJQ_story.html and Veneconomy, 01-23-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29103&idc=3)

Politics

Spanish journal reports Chavez has less than a year to live unless treated intensively

Spanish newspaper ABC reports it has had access to reports by his medical team that show President Chavez has 9-12 months to live if he insists in refusing treatment that would force him to temporarily leave office. The information says “his health seems to be deteriorating more quickly; there has clearly been metastasis in the bones and spine”. A most recent report – dated January 12 – says “during the last month he has received an increase in dosage of pain killers and stimulants, which explains the extensive public activity he has been carrying out.” A December 30th report, says ABC, reveals “a new cancerous lesion approximately 2x1.5 mm in the upper segment of his colon”. More in Spanish: (ABC de Sevilla, 01-23-2012; http://www.abcdesevilla.es/20120123/internacional/abcp-chavez-queda-vida-menos-20120123.html)

Chavez opponents pledge no shock therapy if they gain power

Opponents of Venezuelan President Hugo Chavez won’t apply “shock” adjustments to reverse policies such as currency and price controls if they unseat the self-declared socialist in October’s election, according to two advisers for the opposition alliance.  Six candidates competing in an opposition primary next month will sign a 164-page policy platform Jan. 23 committing them to a plan of action should they defeat Chavez. The document, which has not yet been made public, calls for a slow phasing out of currency controls to prevent capital flight and a depreciation of the bolivar, said Ronald Balza, the Democratic Unity Table’s coordinator of economic and oil policy. (Bisiness Week, 01-19-2012; http://www.businessweek.com/news/2012-01-19/chavez-opponents-pledge-no-shock-therapy-if-they-gain-power.html)

Chavez blames U.S. in Venezuelan Consulate closing, Venezuelans in Miami protest closing

President Hugo Chavez on Sunday rejected the criticism in Miami over the closing of the Venezuelan Consulate in that city after the expulsion of Consul Livia Acosta, and he said that in this case the Venezuelan government had been “run over by the empire.” “Now that we are closing the consulate administratively over threats against the personnel, they’re accusing me now that it’s a plan to sabotage the primary elections (of the opposition), that it’s an outrage against the Venezuelans who live in Miami,” Chavez told Televen. At a park in downtown Miami, alongside a statue of their country’s liberator, Venezuelans gathered Saturday to protest the closing of their consulate, an action they say will cause major problems for the thousands of Venezuelans living in Florida, Georgia and the Carolinas. (Latin American Herald Tribune, 01-23-2012; http://www.laht.com/article.asp?ArticleId=464694&CategoryId=10718; The Washington Post, 01-21-2012; http://www.washingtonpost.com/national/venezuelans-in-us-protest-closure-of-miami-consulate-following-diplomats-expulsion/2012/01/21/gIQAXLFrGQ_story.html)

HRW has its eyes on Cuba and Venezuela

Human Rights Watch (HRW) signaled Cuba as the only Latin American nation that represses all dissent, denounced weakened human rights in Venezuela and warned that repressing organized crime is increasing violence in Mexico. In its worldwide report on 2011 human rights, HRW also pointed out that powers given to Ecuadorian President Rafael Correa can damage freedom of expression and the independence of the judiciary. More in Spanish: (Tal Cual, 01-24-2012; http://www.talcualdigital.com/index.html)

Venezuela prepares new ALBA Summit

President Hugo Chavez announced his Administration is working on the next summit of the Bolivarian Alliance for the Peoples of Our America (ALBA).  Chavez said that "we have played a role in all this process of Latin America. We have to recognize that in a fair dimension, in the awakening of the peoples of Latin America." (AVN, 01-23-2012; http://www.avn.info.ve/contenido/venezuela-prepares-new-alba-summit)