April 22, 2014

International Trade

Over than 11,000 tons of food arrived at Puerto Cabello

• 9.118 tons of whole milk powder, pasta, frozen chicken, margarine and frozen beef from Uruguay's Conaprole, Pastificcio Selmi, Bunge Alimentos, Minerva, BRF, Granja Tres Arroyos and Frigorífico de Aves Sochuy, for state company CASA
• 2.495 tons of frozen beef and chicken, whole milk powder, rolled oats, milk and cream concentrated milk from Matadero Nuevo Carnic, Nestlé Argentina, Setrading and Centrolac, for CASA, Nestlé Venezuela and, Pdval

Other Charges

• 3.000 tons of prefabricated building materials from Yakima Trading for PDVSA Industrial
• 1.366 tons of aluminum ingots from Spain for Pellizani
• 59 tons of sanitary napkins from P&G
• 55 tons of hygiene products from P&G

More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/99075/ms-de-11-mil-toneladas-de-alimentos-bsicos-arribaron-al-puerto; Notitarde; http://www.notitarde.com/La-Costa/Mas-de-3-mil-toneladas-de-leche-llegaron-al-puerto-2143546/2014/04/15/321348)

Venezuela bought over U$D 176 million in pharmaceutical products from Cuba in 2013, making the Caribbean island one of the main suppliers, according to the National Institute of Statistics (INE). This amount does not include purchases made via the Cooperation Comprehensive Agreement between the two nations. In its 2013 annual report, the Comptroller General’s Office detected several irregularities in these purchases after going over nine contracts between the Venezuelan Health Ministry and Cuban companies. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=38937&idc=3)

Comptroller identifies flaws in the Emergency Supplies program

The National Comptroller's office has found "weaknesses" in purchasing, supervision and controls within the Food Supply Emergency Plan conducted by PDVSA Agriculture, BARIVEN and PDVAL during 2007, 2008 and 2009. The Puerto Cabello Main Customs office was also at fault in losses of up to VEB 160 million. The investigation began in June 2010 when abandoned containers were found with 16,000 tons of spoiled food, and the Comptroller's office says "no documentation was provided by the responsible agencies" during the process. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/contraloria-detecto-faltas-en-el-plan-de-emergenci.aspx#ixzz2zW4ONlKt; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/contraloria-general-jalo-las-orejas-por-comida-pic.aspx#ixzz2zW0a3uhm)

Logistics & Transport

Port services cost adjusted back to prior VEB 6.30/U$D parity

The local Port Authority has backed down on a decision to adjust services it provides to Venezuela's new parity. After numerous complaints by the business community, the government agency has decided to estimate charges for port services at the previous VEB 6.30/U$D. In February it had decided on an upwards adjustments for storage, security, moving and all other services to importers and exporters. More in Spanish: (El Universal; http://www.eluniversal.com/economia/140421/bolipuertos-cobrara-sus-servicios-en-funcion-de-la-tasa-de-630)

Oil & Energy

PDVSA expands Caribbean storage, rents NuStar tanks

Petroleos de Venezuela (PDVSA), which urgently needs space in the Caribbean to store its oil, has emerged as the renter of tanks owned by NuStar Energy, a San Antonio, Texas-based pipeline and terminals company, on the island of Saint Eustatius, where the state-run company will blend crudes. "The company renting the tanks in Saint Eustatius is PDVSA. They will use the facility as a mixing hub to produce blends that can then be exported," one of the sources said. (Reuters, http://www.reuters.com/article2014/04/21/us-oil-venezuela-st-eustatius-idUSBREA3K0X320140421)

Commodities

Massive imports planned to bolster basic industries

The Ministry for Industries is planning to refloat basic industries in the Guayana region with massive imports and fiscal incentives aimed at improving productivity. Steel and aluminum production has dropped as payrolls have swelled. Steel production contracted 3% in 2012-13, while aluminum production plunged 28% due to labor strife and problems importing components and spare parts. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140422/suplen-deficiencias-en-empresas-de-guayana-con-importaciones)

Economy & Finance

Venezuelan government debt now up to USD 158 billion

Even as oil prices last year were over U$D 90, the Venezuelan government sped up indebtedness, up 9% in the same one-year term. In 2012, debt by the Venezuelan government and state-run oil holding Petróleos de Venezuela (PDVSA) closed at U$D 144.8 billion. In 2013, it climbed to U$D 158.5 billion. (El Universal, http://www.eluniversal.com/economia/140421/venezuelan-govt-debt-amounts-to-usd-158-billion)

Central Bank withholds March inflation and scarcity data; yearly inflation now running close to 60%

23 days into April, Venezuela's Central Bank has not revealed March inflation and scarcity data which it is required to provide within the first 10 days of each month. Bank president Nelson Merentes has said the inflation rate is not positive and the Venezuelan economy is undergoing low growth. He blamed ongoing political antagonism for inflation. José Guerra, the Bank's former research director, says March inflation was 4.1% and the yearly rate is almost up to 60%. Merentes says a new "economic offensive" announced by President Maduro aims to increase productivity jointly with private and state companies since we are in a "low economic growth" stage. He says meetings are being held with the private sector and that ways will surely be found to solve current difficulties. (El Universal, http://www.eluniversal.com/economia/140421/central-banks-president-venezuela-is-facing-low-growth; and more in Spanish: La Verdad: http://www.laverdad.com/economia/50639-inflacion-de-marzo-es-un-misterio.html; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/merentes-estamos-en-una-fase-de-bajo-crecimiento-e.aspx#ixzz2zbtiR0vD; El Universal, http://www.eluniversal.com/economia/140422/bcv-dice-que-economia-esta-en-fase-de-bajo-crecimiento)

Bank of America predicts Venezuela will align exchange rates

According to Bank of America, next year Venezuela will replace its three legal foreign-exchange rates with a single valuation of VEB 45/U$D1, which would be a devaluation around 86%. “The government faces no major electoral constraint to a large devaluation of the currency,” says Francisco Rodriguez, senior Andean economist at the bank. “Most of the economic and political costs of such an adjustment were already paid". The government provides 80% of foreign currency to companies and citizens at the official rate of 6.3 per dollar, Economic Affairs Vice President Rafael Ramirez reiterated last month. The remaining 20% is sold through secondary systems, known as Sicad I and Sicad II, for VEB 10 and 49.3 per dollar. Companies and individuals who cannot access to the legal currency mechanisms pay much moe on the black market. (Bloomberg, http://www.bloomberg.com/news/2014-04-17/venezuela-will-align-exchange-rates-bofa-says.html)

Rigid economic model hits Venezuela's state-owned firms

Annual reports from state-owned corporations unveil failures, and show that the straitjacket imposed by the socialist model hurts the public sector as much as it does the private sector. Lack of foreign currency, restrictions on imports, low stocks, outdated technology, and prices falling behind are the hurdles reported not only by entrepreneurs, but also state-owned corporations in 2013. (El Universal, http://www.eluniversal.com/economia/140421/rigid-economic-model-hits-venezuelas-state-owned-firms)

Coke takes U$D 247 million loss from Venezuela devaluation

Coca Cola’s first quarter 2014 earnings fell 4.2% from last year, with an 8% drop in net income and the company reporting U$D 10.58 billion in revenue. Coca Cola attributed the lower results to global factors including a devaluation of Venezuela’s bolivar currency, lower volume in Europe, and the sale of bottling operations in Brazil. Still, the figure was above the U$D 10.55 billion analysts had been guided to expect. Coca-Cola said that it would take a charge of U$D 247 million from Venezuela’s continuing currency woes. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1946445&CategoryId=10717)

Brink's writes-off U$D 400 million due to Venezuela devaluation

"Since Brink's has been able to obtain U.S. dollars at the SICAD II rate (approximately 50), and is not eligible to apply for exchange at the official rate (6.3), and does not expect to be able to access the SICAD rate (11), it is adopting the SICAD II rate for reporting Venezuela results," the company said. Applying the SICAD II rate, Brink's says 2013 revenue of U$D 447 million from Venezuela would have been reduced to about U$D 56 million. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1943359&CategoryId=10717)

SPECIAL PRESENTATION ON VENEZUELA's ECONOMY - ATTACHED: Attached is a special presentation on Venezuela's economy by Russ Dallen, Editor in Chief of the Latin America Herald Tribune.

Politics

Protesters fight police, burn Maduro puppets in Venezuela

Masked youths battled police, protesters burned and hung from lamp-posts effigies of President Nicolas Maduro and marchers demanded the "resurrection" of democracy on a volatile Easter Sunday in Venezuela. Though millions of Venezuelans have headed for Caribbean beaches and family gatherings over the Easter period, student demonstrators have sought to keep a nearly three-month protest movement going with religious-themed demonstrations. After a barefoot walk and a "Via Crucis" march in the style of Jesus' tortured walk towards crucifixion earlier in the week, hundreds of demonstrators began Sunday with a rally denominated "Resurrection of Democracy." (Reuters, http://www.reuters.com/article/2014/04/21/us-venezuela-protests-idUSBREA3J0IP20140421; http://www.reuters.com/article/2014/04/18/us-venezuela-protests-idUSBREA3G2I020140418; More in Spanish: CNN, http://cnnespanol.cnn.com/2014/04/20/opositores-marchan-por-la-resurreccion-de-la-democracia-en-venezuela/?iref=allsearch)

Tear gas and barricades as protests start anew in Lara, Táchira and Carabobo states

Authorities attempted to disperse renewed protests in Lara, Táchira and Carabobo states using tear gas bombs. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140422/jornada-de-gases-y-barricadas-en-lara-tachira-y-carabobo)

Pope calls for end to war and to violence in Venezuela

Pope Francis, in his Easter address before a huge crowd called for an end to conflicts in Syria, Ukraine and Africa. He also asked for an end to violence in Iraq, Venezuela, South Sudan and the Central Africa Republic. (Reuters, http://www.reuters.com/article/2014/04/20/us-pope-easter-idUSBREA3I0F920140420; More in Spanish: CNN; http://cnnespanol.cnn.com/2014/04/20/francisco-pide-fin-de-todas-las-guerras-y-reconciliacion-en-venezuela/?iref=allsearch; Fox News, http://www.foxnews.com/world/2014/04/20/pope-easter-message-urbi-et-orbi/; El Universal, http://www.eluniversal.com/nacional-y-politica/140421/pope-prays-for-reconciliation-in-venezuela)

Opposition calls for freeing  political prisoners before continuing talks with the government

The seven major political parties that take part in the Democratic Unity Conference (MUD) are discussing the formation of the working groups it may jointly set up with the government before they continue holding weekly meetings with officials. All opposition groups will consider this matter, along with the proposed Amnesty Law, naming new judicial and election authorities, and taking part in "peace keeping plans". Delsa Solorzano, of Un Nuevo Tiempo says they "want to work for freeing the political prisoners, whether by amnesty, pardons, or stays". Opposition legislator Edgar Zambrano has expressed optimism about the approval of an Amnesty Law to release prisoners, allow the return of those in exile, and stop persecution against political leaders. In his 44th request to President Nicolás Maduro for a hearing to address the issue, the opposition legislator claimed that a new Amnesty Law was likely to be drafted, and said it would be different from those previously presented. (El Universal, http://www.eluniversal.com/nacional-y-politica/140421/opposition-deputy-new-amnesty-law-is-possible-during-talks; and more in Spanish: El Nacional; http://www.el-nacional.com)

Machado appeals to Supreme Court for her parliamentary rights. Opposition leader María Corina Machado, who was stripped of her parliamentary rights by National Assembly President Diosdado Cabello for attempting to speak at the Permanent Council of the OAS as an alternate representative for Panama, has appealed to Venezuela's Supreme Court on the grounds that Cabello's decision is unconstitutional. The decision was subsequently supported by the Court itself, which ruled that her parliamentary mandate had been extinguished. Machado says the decision deprives her of due process and is not allowed within Venezuela's legal system. Her lawyers point to similar cases, such as that of pro-Government legislator Abdel-e-Zabayar, who went to fight for the Syrian regime and later returned to his parliamentary bench. More in Spanish: (Infolatam)

China supports Venezuela's "model" and dialogue for solving problems. China's Foreign Minister Chang Yi, currently in Caracas, has expressed his country's support for Venezuela's "21st century socialism" and called for "political dialogue" to resolve internal discrepancies. He said China "understands and supports" the system proposed by the late Hugo Chavez. China is one of Venezuela's key trade, energy and financial partners. It receives around half a million barrels of oil per day from Venezuela and maintains two important open funds with this nation for over U$D 35 billion for economic and social development. Chang Yi met with President Nicolás Maduro, who announced they have agreed to create new China-CELAC (Community of Latin American and Caribbean States) Fund. More in Spanish: (La Vanguardia, http://www.lavanguardia.com/politica/20140422/54406022425/china-respalda-modelo-de-venezuela-y-el-dialogo-para-resolver-los-problemas.html; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/maduro-recibe-a-canciller-chino-en-miraflores.aspx#ixzz2zbnxg7vZ)

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.

August 02, 2013

Economics & Finance

FOREX distribution is assigned arbitrarily at 10-12 VEB to the U$D

According to financial and market sources, the second FOREX tender held by Venezuela's Central Bank has made it very clear that it is only willing to deliver FOREX at a pre-set rate between 10-12 VEB to the U$D, even though average bidding in orders tendered was 16 VEB to the U$D during the previous exercise. As a result, most participants in the tender that ended yesterday put in orders at 10-12 VEB and dollars ran out sooner. In the case of individuals, the Bank disregarded all bids above a pre-established ranking of 6.30 to 13 VEB to the U$D. More in Spanish: (El Universal, http://www.eluniversal.com/economia/130802/senalan-que-hay-un-reparto-discrecional-de-las-divisas; and El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/bcv-dejo-por-fuera-posturas-mayores-a-bs--13-por-d.aspx#ixzz2aoC1U86g)

PDVSA to increase U$D sales to the Central Bank, lower contributions to FONDEN. PDVSA President Rafael Ramírez says the state owned company plans to sell the Central Bank an additional U$D 2,47 billion (6.3%) more than it did in 2012, for a total U$D 41.867 billion by the end of the year. He also said PDVSA contributions to the National Development Fund (FONDEN) will be lowered by U$D 2.968 billion; and added that PDVSA will create no further dollar debt: "It is much easier for us to pay in Bolivars than dollars", he said. More in Spanish: (Ultimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/pdvsa-le-vendera-mas-dolares-al-bcv.aspx; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa-le-vendera--41-867-millones-en-divisas-al-bc.aspx; El Universal, http://www.eluniversal.com/economia/130802/venta-de-divisas-de-pdvsa-al-bcv-estuvo-por-debajo-de-2012)

China's economic slowdown concerns partners

Very discouraging economic forecasts on China are leading their government to cut down public spending in order to speed up adjustments, and this will impact global markets. The world's economic motor (12% of the world GDP) is putting the brakes on, and their growth rate closed 2Q 2013 at 7.5%, down 0.2% from 1Q - with billion dollar losses to the government. (El Universal, http://www.eluniversal.com/internacional/130802/el-freno-de-la-economia-de-china-inquieta-a-sus-socios)

FITCH  upgrades Banco Occidental de Descuento to ‘B’, withdraws Banco de Venezuela ratings

FITCH Ratings has upgraded the long-term IDRs of Venezuela-based Banco Occidental de Descuento (BOD) to ‘B’ from ‘B-’. The Ratings Outlook has been revised to Stable from Positive. FITCH has also upgraded the bank’s national long-term rating. They have also withdrawn all of Banco de Venezuela’s (BdV) ratings at their current levels and Outlooks. FITCH does no longer provide analytical coverage of government owned Banco de Venezuela. The entity has no outstanding capital market debt. (Latin American Herald Tribune, 07-31-2013; http://www.laht.com/article.asp?ArticleId=905225&CategoryId=10717; http://www.laht.com/article.asp?ArticleId=905198&CategoryId=10717)

Commodities

PDVSA needs private industry support in order to increase production. Rafael Ramírez, Minister for Petroleum and Mining, and also President of PDVSA has said the state owned company "will not be able to increase production capacity without the support of an industrial sector". PDVSA plans to increase 4 million BPD in 2014; 4.386 million BPD in 2015; 4.869 million BDP in 2016; 5.293 million BPD in 2017; 5.711 million BDP in 2018 and 6.251 million BPD in 2019. He explained that over the past six months they have been working on "a new stage of petroleum policy" in order to "stabilize oil income" and are "concentrating on increasing our production capacity", and for this they expect to rely on private domestic companies. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa-requiere-apoyo-industrial-para-aumentar-prod.aspx

PDVSA revenues at U$D 60.6 billion in first half of 2013

Venezuelan oil revenues in the first half of 2013 were U$D 60.6 billion, says Rafael Ramírez, Minister of Petroleum and Mining and President of PDVSA. Although the senior official did not elaborate on income variation, the oil basket averaged U$SD 101.8 in January-June, which is a significant drop from the same period last, year when the oil basket averaged U$D 107.6. Ramírez said oil revenues may exceed those of 2012. (El Universal, 08-01-2013; http://www.eluniversal.com/economia/130801/venezuelas-pdvsa-revenues-at-usd-606-billion-in-first-half)

Oil exports to the US down 16% in May

The US Department of Energy reports Venezuelan oil exports to the United States reached their lowest level in 10 years in May: 720,000 barrels per day (BDP), 16% below the figure recorded in May 2012 (861,000 BDP). Further, oil exports to the US in May were 17.6% down as against April, when they hit 847,000 BPD. The bulk of Venezuela's exports continue to be crude oil, which is 93% of all shipping. In May, the country dispatched 674,000 BDP, almost 18% below the 821,000 BPD exported to the US in May 2012. At the same time, in May Venezuelan imports of US byproducts rose to 74,000 barrels, 155% over May 2012, most of it liquefied petroleum gas (23,000 BPD, the highest volume in 20 years); and Diesel, 19,000 BPD. (El Universal, 08-01-2013; http://www.eluniversal.com/economia/130801/venezuelan-oil-exports-to-the-us-down-16-in-may)

China may assist in Venezuela's land planning for oil production

As per the Venezuela-China Cooperation Agreement on Hydrocarbons, Petrochemicals, and Mining, which became effective on July 30, 2013, China will be allowed to cooperate in land planning in Venezuela within the framework of the projects on hydrocarbons, petrochemicals, and mining. The agreement provides for joint participation in oil prospecting and production, and joint projects in the Orinoco Oil Belt, "covering all elements of the oil and gas value chain." (El Universal, 08-01-2013; http://www.eluniversal.com/economia/130801/china-may-assist-in-venezuelas-land-planning-for-oil-production)

Guayana basic industries are in the red, crumbling amid corruption

According to a report by El MUNDO daily the operating, administrative and labor foundations of Guayana's basic industries have been weakened. Unheard of corruption has ravaged each industry from the inside. Among the causes for their death rattles one finds lack of investment, assigned resources that never arrive, an enormous payroll burden, nonexistent spare parts, debts among industries and with contractors and suppliers, low productivity, lacking materials, lack of law and order, and the electricity crisis. (El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/las-industrias-basicas-se-desmoronan-entre-cifras-.aspx#ixzz2aoDEz1eb)

International Trade

Honduras to receive Venezuelan oil, starting September. Honduran businessman Gerardo Meraz, who owns a gas station in San Pedro Sula, says that "starting September we will be ready to buy" oil from Venezuela under the PETROCARIBE agreement. Meraz explained "we have to make the space to store the product", as they do not currently have storage facilities. He said the first shipment would be some 330,000 barrels. More in Spanish: (Ultimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/mundo/honduras-recibira-petroleo-venezolano-desde-septie.aspx; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/industria/honduras-recibira-petroleo-venezolano-desde-septie.aspx; El Universal, http://www.eluniversal.com/economia/130802/honduras-recibira-el-proximo-mes-petroleo-de-venezuela)

Logistics & Transport

Executive office declares state of emergency in Venezuelans roadways

President Nicolás Maduro has declared a state of emergency in Venezuelan roadways and established a 90-day term to carry out relevant works. The Ministry of Land Transport is responsible for the construction, repair, and maintenance of freeways, highways, and other roads across the country. (El Universal, 08-01-2013; http://www.eluniversal.com/economia/130801/executive-office-declares-state-of-emergency-in-venezuelans-roadways)

Politics

Government bloc stripped opposition (PJ) Deputy Richard Mardo of his legislative immunity, using its majority and in a blatant violation of the Constitution that establishes the procedure can only be passed with two thirds of the votes. The opposition bloc abandoned the Parliament in support of Mardo. Opposition legislator Hiram Gaviria said "Richard was not allowed the right to a legitimate defense by the Assembly's Comptroller Committee nor by the Attorney General...and now we are faced with a request from the Supreme Court which carries with it Richard Mardo's suspension and political disqualification". Pro government PSUV legislator Tania Díaz said Mardo cannot explain where he got some U$D 550,000 which he admitted he had used to carry out social work at an Assembly session on February 5th. Mardo said “if by helping the poor, I’m given a life sentence, let them do it.” (Veneconomy, 07-31-10213; http://www.veneconomy.com/site/index.asp?ids=44&idt=35692&idc=5; and more in Spanish: INFOLATAM)

Colombia and Venezuela renew bilateral talks, Holguín to propose group to deal with border incidents

Colombia's Foreign Minister María Ángela Holguín has arrived in Caracas with a high level delegation to renew bilateral talks, amid charges by Colombian authorities over alleged incursions by Venezuela's National Guard into Colombian territory. Holguín has told media that "There are many working groups and matters pending, there are complex affairs, for example we expect the creation of a Commission on Border Incidents, we are worried about some incidents". Colombia's Finance, Mining and Energy; Transportation; Trade, Industry and Tourism; Communications and Information Technology Ministers are part of the delegation; and Colombian Defense Minister Juan Carlos Pinzón will join the group tomorrow. President Nicolás Maduro publicly welcomed the delegation and said the Venezuelan government has eight proposals to make during the impending talks. He said he had reached an agreement with President Santos to "combat all delinquency, all forms of crime at the borders" and said they deal specifically with smuggling. (El Universal, http://www.eluniversal.com/nacional-y-politica/130802/colombia-propondra-comision-de-incidentes-fronterizos; http://www.eluniversal.com/nacional-y-politica/130802/la-agenda-del-encuentro; and more in Spanish: INFOLATAM)

Maduro creates a Military-Civilian Border joint staff

President Nicolás Maduro has announced he is creating a Military-Civilian Border joint staff under the direction of the Major General Wilmer Barrientos, who is Minister for the Presidency. He said the group will "direct Venezuelan borders with very strong and special powers to govern life at frontiers". He said a Military-Civilian task force will attack, persecute and neutralize mafias that commit crimes at frontier areas. (El Universal, http://www.eluniversal.com/nacional-y-politica/130802/maduro-crea-estado-mayor-civico-militar-fronterizo; http://www.eluniversal.com/economia/130802/gobierno-prepara-junto-a-colombia-una-ofensiva-contra-el-contrabando)

Cabello says Uribe and Posada plot Maduro's assassination. Venezuela's National Assembly President Diosdado Cabello is insisting there is a plan to murder President Nicolás Maduro that is being hatched by former Colombian President Álvaro Uribe and anti-Castro activist Luis Posada Carriles, from Miami. He told media "the plans to physically eliminate comrade Nicolás Maduro are under way...that is coming from Miami, with connections in Colombia." He said that he was also being targeted.  He also said "there is talk" of an invasion of Venezuela by 400 men from Colombia through the Zulia border state; and added that those ploting "have collected over U$D 2.5 million for this operation". 85 year-old Posada Carriles is a former CIA agent accused by Cuba and Venezuela of plotting the explosion of a Cubana de Aviación aircraft in 1976. More in Spanish: (INFOLATAM)

Argentina probes misappropriated U$D 1.4 billion paid to Venezuela. Argentina's justice department has opened an investigation into charges economic officials illegally diverted some U$D 1.4 billion to pay off its fuel bill in Venezuela, authorities said. The economic officials are alleged to have used funds intended for the social security agency ANSES in order to pay a debt with Venezuela, and of only reporting the transfer eight months late. Opposition politicians brought a complaint, saying in a statement the delay in publishing the details of the operation "flagrantly reveals an irregular maneuver." ANSES denied the charges. (THE DAILY SUN: http://www.thesundaily.my/news/784939; and El Universal, 08-01-2013; http://www.eluniversal.com/economia/130801/argentina-denies-deviation-of-funds-towards-pdvsa)

Alleged corruption in PDVSA, CORPOELEC and CVG aired in the US courts

The New York District Court has admitted a racketeering and defamation lawsuit filed by US former ambassador Otto Reich against the partners of Derwick Associates over contracts for the installation of electrical system by Petróleos de Venezuela (PDVSA), electricity utility CORPOELEC and the Venezuelan Guayana Corporation. As per the lawsuit filed by Reich the defendants manage "a simple scheme offering multimillion-dollar kickback" to Venezuelan officials in exchange for lucrative energy contracts." (El Universal, 08-01-2013; http://www.eluniversal.com/economia/130801/presumed-corruption-in-pdvsa-and-cvg-aired-in-the-united-states)

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 04th, 2012

Economics & Finance

Venezuela headed for economic adjustments despite oil boom

The last thing one expects from someone who has won a lottery is that after six years their debts are higher, they are having difficulties to meet daily expenses, and they have slightly reduced poverty. Yet, Venezuela may well be an exception. Despite the six-year oil boom, Hugo Chávez's performance on social affairs is quite poor with respect to his first term in office. Key indicators have clearly dropped. In fact, when he starts his new term (2013-2019) on January 10, he will be leading a country that is headed for major adjustments, including devaluation and a cut in expenditure. (El Universal, 12-03-2012; http://www.eluniversal.com/economia/121203/venezuela-is-headed-for-economic-adjustments-despite-oil-boom)

Devaluation and spending cuts are likely to curb consumption in Venezuela

Consumption in Venezuelan households' consumption hit its highest level ever since 1998 during the 3rd quarter 2012, with a 7.8% leap over the same period in 2011, according to data from the Central Bank of Venezuela (BCV). Consumption has skyrocketed amid increased government spending on subsidies and welfare programs, wage increases, lower unemployment and cheap imports. However, a bleak outlook is forecast for 2013. Analysts believe that the Government will be forced to cut expenses and devaluate the Venezuelan bolivar. Both moves may have a negative impact on people's purchasing power. A likely reduction of spending would translate into fewer subsidies, modest wage raises and an economic slowdown. In turn, devaluation would lead to more expensive imports and boost inflation. (El Universal, 12-01-2012; http://www.eluniversal.com/economia/121201/likely-devaluation-and-spending-cuts-are-to-curb-consumption-in-venezu)

After the presidential election, inflation coming back up

In an effort to raise purchasing power, government authorities reined in price adjustments on regulated goods and services during presidential elections. Now that the political objective is past, staples will inevitably become more expensive if serious shortages are to be avoided. (El Universal, 12-01-2012; http://www.eluniversal.com/economia/121201/after-the-presidential-election-inflation-comes-to-the-fore)

Venezuela stock market rises 248% on optimism for political change from Chavez illness

Venezuela's stock market rose sharply the week ending November 30, with the Caracas Stock Index up 6.3% at 407,593, with investors betting that once again there is an increased probability for political change after President Hugo Chavez returned to Cuba for more cancer treatment. (Latin American Herald Tribune, 12-03-2012; http://www.laht.com/article.asp?ArticleId=653722&CategoryId=10717)

Pro government assemblyman says private industry grew by 6.1% late in 2012

According to Jesús Faría, a pro-government member of the National Assembly's Finance Committee, the nation's private industry grew by 6.1% during the last quarter of 2012. Faría made a contrast between his numbers and information that private industry "is allegedly besieged (by the Government) and afraid of expropriation." (AVN, 12-03-2012; http://www.avn.info.ve/contenido/private-industry-grew-61-cent-late-2012)

Commodities

Basic industries run at 40% capacity despite higher staff costs

Industrial production in the Guayana region has failed as an alternative to oil; and has rather become a burden on public finances. The Central Bank reports that metal manufacturing fell 35.3% during the third quarter. As a result, basic industries resorted to borrowing money from the government to pay their staff. (El Universal, 12-01-2012; http://www.eluniversal.com/economia/121201/basic-industries-run-at-40-of-their-capacity-despite-higher-staff-cost)

Venezuela to invest U$D18 billion in oil by year end

Eulogio del Pino, PDVSA's Vice President for Exploration and Production says the state oil company, will invest U$D 18 billion this year and expects to invest a similar amount next year. He claims PDVSA is producing 3 million barrels a day, including 2.5 million barrels daily in the Orinoco belt. Del Pino also commented that Venezuela expects verdicts soon in some international arbitration cases. (Bloomberg, 12-02-2012; http://www.bloomberg.com/news/2012-12-02/venezuela-to-invest-18-bln-in-oil-by-year-end-panorama-says.html)

Domestic gasoline consumption grew 13% in one year, up to 83,000 barrels daily during the third quarter, according to a report by OPEC. At this rate, Venezuela's growing gasoline consumption will only be second to Brazil. More in Spanish: (El Nacional, 12-04-2012; http://www.el-nacional.com/)

Venezuela produces world class chocolate, despite having to deal with difficulties presented by the Chavez administration. Chocolates El Rey is producing some of the best chocolate in the world, which is exported to the United States, Europe and Japan. More in Spanish: (El Mundo, 12-04-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-produce-chocolate-de-clase-mundial.aspx)

International Trade

Venezuela, China reach agreements on electric, energy & oil

During high level bilateral meetings under way in Beijing, Venezuela and China entered into new agreements for cooperation on electric power and oil. Oil Minister Rafael Ramírez announced:"An agreement for the development of 900 megawatts of oil coke-based and carbon-based electric power has been entered into. New areas set for exploration, namely Junín 10 Sur, and the development of current fields have been agreed upon." (El Universal, 12-03-2012; http://www.eluniversal.com/economia/121203/venezuela-china-reach-agreements-on-electric-energy-amp-oil)

8,000 tons of powdered milk arrived into Puerto Cabello

317 containers bearing over 6.32 tons of powdered milk have arrived into Puerto Cabello from Argentina, sent by SANCOR UNIDAS to the CASA government agency. The same agency also received over 2,210 tons of frozen beef from SADIA and FERRERO DO BRASIL. More in Spanish: (El Carabobeño, 12-04-2012; http://www.el-carabobeno.com/impreso/articulo/41262/al-puerto-carabobeo-arribaron-cerca-de-ocho-mil--toneladas-de-leche-entera-en-polvo)

Politics

Nicolas Maduro calls for respect for President Chavez's life

Nicolás Maduro, Venezuela's Executive Vice President demanded respect for the life of the president of the Republic, Hugo Chavez, who is in Cuba undergoing a medical treatment. He criticized opposition leader’s use of President Chavez's health "to launch biased campaigns and demoralize the population". (AVN, 12-02-2012; http://www.avn.info.ve/contenido/nicolas-maduro-demands-respect-president-chavez039s-life; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=653639&CategoryId=10717)

Chavez expected at MERCOSUR summit in Brasilia

Jose Antonio Marcondes, Brazil's Ambassador to Venezuela says President Hugo Chavez is expected at a MERCOSUR summit meeting scheduled for this coming Friday in Brasilia. Another Brazilian government source says "There is the expectation that Chavez will take part in the summit, but there is yet no confirmation". The meeting will be Venezuela's first as a full member of the regional group, and will also consider the entry of Ecuador and Bolivia. More in spines: (El Nacional, 12-04-2012; http://www.el-nacional.com/ and AVN; http://www.avn.info.ve/contenido/cumbre-mercosur-tratar%C3%A1-avances-ingreso-venezuela-al-bloque; El Universal, http://www.eluniversal.com/internacional/121204/ingreso-a-mercosur-es-estrategico-para-chavez)

15 new ambassadors have been appointed

According to an announcement by Communications and Information Minister Ernesto Villegas, President Chavez has named 15 new Ambassador by making use of his electronic signature in Havana. The report says new ambassadors have been posted to Belize, Dominica, Grenada, Mexico, Nicaragua, Dominican Republic, Iran, Iraq, Mozambique, Congo Republic, Gambia, Benin, Kenya, the Arab League, and MERCOSUR/ALADI. More in Spanish: (El Universal, 12-04-2012; http://www.eluniversal.com/nacional-y-politica/121204/presidente-hugo-chavez-designa-a-15-nuevos-embajadores; AVN; http://www.avn.info.ve/contenido/presidente-hugo-ch%C3%A1vez-firm%C3%B3-designaci%C3%B3n-15-nuevos-embajadores) 


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.