International Trade
Cargo that has arrived at Puerto Cabello:
- Over 1,000 tons of black beans from China for state
agency Corporación
de Abastecimientos y Servicios Agrícolas (CASA)
- Over 27,000 tons of fireworks from Liuyang
Ressing Fireworks for Distribuidora Triki-Traki
- Over 200 tons of fabric roll from Multi Trade
Export for Agata
- Other arrivals include clothing and footwear, as
well as toiletries, cordless phones, accessories for vehicles and
motorcycles
Venezuela restricts nighttime border crossings to
combat smuggling
Venezuela will further restrict nighttime border
crossings to try to stop the widespread smuggling of fuel and food that have
contributed to shortages of basic goods in the country's reeling economy. The
government has announced it will restrict crossings at Venezuela's land,
maritime and air borders with Brazil and Guyana between 10 p.m. and 5 a.m. In
addition, delivery trucks must stay off the roads in Venezuelan border towns
between 6 p.m. and 5 a.m. as part of a crackdown on contraband. The government
had previously ordered the night closure of the country's border with Colombia,
where heavily subsidized Venezuelan goods often end up. (Reuters,
http://www.reuters.com/article/2014/12/15/us-venezuela-borders-idUSKBN0JT1WM20141215; El
Universal, http://www.eluniversal.com/nacional-y-politica/141215/venezuela-restrains-access-on-all-its-borders-at-night)
Logistics & Transport
Construction of the third bridge over the Orinoco
River, located between Bolívar and Guárico
states, is currently at 67%, says Surface Transport and Public Works Minister
Haiman El Troudi. He pointed out the main south tower of the bridge, 225 meters
high and 90 meters deep, has been concluded. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42270&idc=3)
Low supply and frequency of flights hits sale of air
tickets
After several attempts to bring international flights
back to normal, figures show a steady decline in sales here throughout 2014. Venezuelan
authorities have held several meetings with representatives from international
airlines to find stability in the market. However, to date, unavailability of
plane tickets continues, high prices in bolivars persist, and sale of tickets
in foreign currency by some airlines is still a requirement. The sale of air tickets
in January-November plummeted 41% from 2013. Meanwhile, tickets for national
flights have slowed 15% in 2013-2014. (El Universal, http://www.eluniversal.com/economia/141215/low-supply-frequency-of-flights-hits-sale-of-air-tickets)
Oil &
Energy
Venezuelan crude oil is down to US$ 57,53, and its
average price for 2014 is US$ 90.50, which is a 7.7% drop from last year. More in Spanish:
(Dinero, http://www.dinero.com.ve/din/destacados/crudo-venezolano-baj-5753#sthash.kH2r4plb.dpuf)
Low oil prices continue to hurt Venezuela
The Venezuelan economy continues its downward spiral
as 2015 approaches. Faced with rising domestic expenses that it can no longer
meet through dollar income from oil exports alone, Caracas has accelerated
measures to increase its money supply since 2012. The central bank has also
printed more bolivars to keep up with spending obligations. Caracas will
continue making increasingly desperate adjustments to its economic policy
throughout 2015, all carried out in the hopes of forestalling social unrest or
eventual decisions that could result in regime change. The government could
move to devalue the bolivar or cut public spending in 2015. State oil company
Petroleos de Venezuela and the Venezuelan government will also likely continue
their attempts to restructure US$ 12.5 billion in debt payments that are due in
2016 and 2017 with the goal of reducing its debt burden and likelihood of
default. Measures such as selling large sums of gold from the central bank
reserves or even defaulting on foreign creditors to continue satisfying
domestic constituents would indicate increasing desperation from the
government. (Stratfor, http://www.stratfor.com/sample/analysis/low-oil-prices-continue-hurt-venezuela)
Venezuela wants to expand oil diplomacy despite
falling prices
President Nicolas Maduro has told his leftist allies
from Latin America that he wants to expand the PETROCARIBE program of providing
oil at preferential terms, even as falling oil prices add more stress to the
Venezuelan economy. Speaking in Cuba at a summit of the leftist ALBA bloc of
nine countries from Latin America and the Caribbean, Maduro did not mention the
impact of a 46% decline in oil prices since June. Instead, the leader of the
OPEC country spoke of expanding the 18-nation PETROCARIBE, even as PETROCARIBE
has struggled to keep up supplies. Shipments fell 11% in 2013 to the lowest
level since 2007, forcing beneficiaries to turn to other sources. (Reuters: http://www.reuters.com/article/2014/12/14/us-cuba-venezuela-summit-idUSKBN0JS0RS20141214)
CITGO says CONOCO probe may ‘freak out’ potential buyers
ConocoPhillips’s bid for a court order to probe
Venezuela’s effort to sell CITGO Petroleum Corp. might scare off any potential
investors, CITGO’s lawyer said in urging a judge to reject the request. “I’m not representing one way or the other
there’s a sale,” John Zavitsanos, the lawyer, said at a hearing in state
court in Houston today. “But if there is,
this is going to spook off any potential buyer” because they’d “be totally freaked out about being brought
into” the court case. ConocoPhillips claims Venezuela’s state-owned oil
company Petroleos de Venezuela
is trying to sell CITGO, its primary U.S. holding, as part of a plan to hide
the proceeds and avoid paying compensation for assets that were nationalized by
former President Hugo Chavez in
2007. (Bloomberg, http://www.bloomberg.com/news/2014-12-15/citgo-says-conoco-probe-may-freak-out-potential-buyers.html)
Commodities
Cargill's top prop trader leaves commodities firm
Cargill's head of proprietary trading for emerging and
developed markets, Alejandro Russo, left the US commodities giant on December
1. Two market sources who monitor the country's bonds said Cargill was
understood to have sold off more than US$ 200 million of bonds issued by
Venezuela, and state-owned oil company PDVSA, since Russo's departure.
(Reuters, http://www.reuters.com/article/2014/12/15/moves-cargill-ltd-idUSL6N0TZ3UB20141215)
Economy
& Finance
Maduro says that economic adjustments are necessary
President Nicolás Maduro says that "a number of necessary adjustments to
economic balance" will be made in 2015 in order to come out of the
crisis. He says he will work full time on economic recovery, and leave
political and social affairs to others. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/maduro--hay-que-hacer-ajustes-de-equilibrios-neces.aspx#ixzz3M3bwJdoe; El Universal, http://www.eluniversal.com/nacional-y-politica/141216/maduro-delegara-agenda-politica-y-se-centrara-en-tema-economico)
No official data on inflation for the past 3 months
September 9th was the last time Venezuela's Central
Bank updated its consumer price index on its web page, with August data.
Neither has it updated the scarcity index, the GDP or the balance of payments. Last
Friday it did not publish oil prices for the first time in 50 years. Rather
than reassure, the lack of statistics is increasing negative expectations. More
in Spanish: (El Nacional; http://www.el-nacional.com/)
Venezuela has US$ 21 billion in reserves and owes US$
21 billion, but Maduro says default is not the strategy
According to a Bloomberg
report, Venezuela's FOREX reserves can only cover two years debt service. The
government and state owned PDVSA owe US$ 21 billion in bond payments through
the end of 2016, and amount that equals total
reserves. This explains why market experts say a default is almost certain,
probably before a year is up. On the other hand, President Nicolás Maduro
continues to deny any possibility that Venezuela will default: "There is no possibility of declaring a
default, unless we decide to interrupt payments as a strategy for development -
and that is not the strategy", he says. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/mercados/bloomberg--venezuela-tiene--21-000-millones-y-debe.aspx#ixzz3LxkxTYvg; http://www.elmundo.com.ve/noticias/economia/mercados/video---gobierno-descarta-un-default-en-venezuela.aspx#ixzz3LxliCB3s)
Maduro in 'no
rush' to hike world's cheapest gasoline
Nicolas Maduro says there is "no rush" to hike the world's
cheapest gasoline prices, suggesting the increasingly unpopular president has
shied away from implementing the risky domestic reform in the near future amid
an economic crisis. "I've considered, as head of state, that the
moment has not arrived," he says. "The moment will come, maybe in 2015, there's no rush, we're not going
to throw more gasoline on the fire that already exists with speculation and
induced inflation." (Reuters,
http://www.reuters.com/article/2014/12/14/us-venezuela-gasoline-idUSKBN0JS0MG20141214;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42274&idc=4; El
Universal, http://www.eluniversal.com/economia/141215/president-maduro-2015-budget-does-not-rely-on-gasoline)
Venezuela bonds fall below 40 cents as Maduro affirms
subsidies
Venezuelan bonds
dropped to a 16-year low as President Nicolas Maduro said he has no plans to
curb fuel subsidies while not ruling out the possibility of default. The government’s benchmark bonds due in 2027 fell 8.5% to 37.74
cents on the dollar, the lowest on a closing basis since 1998, as of 2:07 p.m.
in New York.
The extra yield investors demand to hold Venezuela’s overseas notes instead of
Treasuries rose the most in the world. Swaps contracts protecting bond
investors from non-payment imply a 97% chance of default in the next 12 months,
according to CMA data. (Bloomberg, http://www.bloomberg.com/news/2014-12-15/venezuelan-bonds-fall-to-16-year-low-as-maduro-affirms-subsidies.html)
Politics and
International Affairs
Venezuela to face US sanctions over violence against
protesters
The US is poised to impose sanctions on Venezuela over
the sometimes-violent suppression of anti-government protests which racked the
country earlier this year. The US Congress passed a bill this week to punish
officials involved in the February-to-May clashes, which resulted in 43 deaths,
including victims on both sides of the divide. White House aides said Barack
Obama – who had been hesitant to take action during the height of the unrest –
was now ready to sign the bill into law. “We
have not and will not remain silent in the face of Venezuelan government
actions that violate human rights and fundamental freedoms and deviate from
well-established democratic norms,” Josh Earnest, the White House press
secretary, told a news conference on Thursday. The bill will deny visas and
freeze the US assets of current and former Venezuelan officials who ordered “significant acts of violence or serious
human rights abuses against persons associated with the anti-government
protests”. President Nicolas Maduro responded with defiance, describing the
proposed US measure as insolent. “They
can stick the sanctions in their ears or wherever else they’ll fit,” he
said in a televised speech. “If the crazy
path of sanctions is imposed, President Obama, I think you’re going to come out
looking very bad.” (The Guardian, http://www.theguardian.com/world/2014/dec/12/amid-violence-against-protesters-venezuela-to-face-us-sanctions)
Regime organized a march against United States
sanctions
Thousands of government supporters in Venezuela have
marched through the streets of Caracas to denounce the recent approval of
sanctions by the US. Wearing predominantly red, the protesters called on the
United States to respect Venezuela. President Nicolas Maduro addressed his
supporters at the end of the march and accused the US of trying to intervene in
his country's domestic affairs. Addressing thousands of his supporters in
Caracas, Maduro denounced the American government as "arrogant imperialist Yankees". He said Venezuela and other
countries should set up "a committee
of legal experts to investigate all the human rights violations and crimes
against humanity carried out by the United States, which have bombed Libya,
Iraq and Syria". Correspondents say sanctions could lead to a
worsening of relations between the US and Venezuela. (BBC News, http://www.bbc.com/news/world-latin-america-30490393)
ALBA Summit in Cuba condemns US sanctions against
Venezuela
Cuban President Raúl Castro closed the Summit of the
Bolivarian Alliance for the Peoples of Our America (ALBA) by condemning the
sanctions the United States imposed on Venezuela, in the context of the 10th
anniversary of the bloc, created by late President Hugo Chávez and Fidel
Castro. The 11 ALBA Heads of State agreed to "strongly condemn the approval by the United States Congress of
sanctions against the Bolivarian Republic of Venezuela," in a
statement read by President Nicolás Maduro. (El Universal, http://www.eluniversal.com/nacional-y-politica/141215/alba-summit-in-cuba-condemns-us-sanctions-against-venezuela)
Spain terms Maduro's statements on Aznar "unacceptable"
Spanish Foreign Minister José Manuel García Margallo
says statements by Venezuelan President Nicolás Maduro, saying former Prime
Minister José María Aznar was responsible for the death of 1.2 million Iraquis,
are "absolututely and clearly
unacceptable". More in Spanish: (El Nacional; http://www.el-nacional.com/)
Another “conspirator”
to be charged
The Venezuelan Prosecutor General’s Office has subpoenaed
student leader Gaby Arellano to be formally charged with “conspiracy” on December 26. This is the same charge the Public
Ministry brought against María Corina Machado last December 3. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42273&idc=1)
Voluntad Popular was admitted as a full member of the
Socialist International (SI), announced its
Chief George Papandreou, during its recent Annual Council held in Geneva. Also,
on Saturday, the SI unanimously passed a resolution in which they urged the
Venezuelan government to release Leopoldo López and all other political
prisoners. (Veneconomy,
http://www.veneconomy.com/site/index.asp?ids=44&idt=42271&idc=1; El
Universal, http://www.eluniversal.com/nacional-y-politica/141215/socialist-international-supports-release-of-venezuelan-opposition-lead)
Machado: Venezuelan opposition is stronger now
Venezuelan opposition leader María Corina Machado does
not think that the opposition has been unable to capitalize on the country
economic deadlock. "I cannot see any
evidence according to which the opposition has not gotten stronger in all this
process. To the contrary, surveys, even those of pollsters close to the
government, confirm it. The support inherited by (Venezuela's President
Nicolás) Maduro has vanished, not only as a result of the economic debacle
caused by them, but to a greater extent because of how the opposition has
channeled the expectations of those eager for a change in Venezuela," says
Machado. (El
Universal, http://www.eluniversal.com/nacional-y-politica/141215/machado-venezuelan-opposition-is-stronger-now)
Oil-poor and on the brink of default: Is change
imminent in Venezuela?, by Carl Meacham
On Morgan Stanley cut its 2015 forecast, predicting
that prices could average as low as $53 per barrel in 2015. Venezuela in
particular faces interesting challenges with this price drop, as its national
income dwindles and its economy slowly grinds to a halt. These economic
challenges are not necessarily new ones for Venezuela—but unprecedented (and
unpredicted) fall of oil prices could throw a wrench in the gears. The
administration of Venezuelan president Nicolás Maduro has seem largely focused
on keeping the country afloat—and little more—but even that becomes more
difficult as oil prices continue to drop. The resulting heavy cut in export
revenue may force President Maduro to continue economic reforms that will
likely receive a lukewarm reception, at best, from a population accustomed to
extensive social welfare programs enabled by the country’s vast oil wealth. Conclusions:
The country’s economy will likely keep spiraling downward. Scarcity and
inflation will continue to drag down standards of living throughout the
country—and default is more likely than ever as oil prices continue to plummet.
The economy is tanking, dissatisfaction is on the rise, and there’s a long road
until the next presidential elections in 2019. So while the form of change
remains to be determined, it seems that conditions for political overhaul could
be falling into place. (CSIS, http://csis.org/publication/oil-poor-and-brink-default-change-imminent-venezuela)
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.
