International
Trade
28 ships are at bay at Puerto Cabello, awaiting dock assignment.
18 are bearing bulk cargo, including 14 carrying food such as yellow corn,
white corn, sugar, rice, wheat and soya, for a total 302,499 tons. Most are
imported by state agency CASA, and one of them has been at bay for almost one
month. There is concern in customs circles over the number of bulk carriers at
bay because their offloading could take several days and could delay the
arrival of general container cargo for the Christmas season. More in Spanish: (El Universal; http://www.eluniversal.com/economia/141024/en-la-bahia-de-puerto-cabello-hay-28-buques-fondeados)
Venezuela to create state run storage facilities for
legal sales to Colombia
President Nicolás Maduro announced the creation of a
system of storage facilities for the legal sale and distribution of Venezuelan
products to Colombia, at international prices agreed to by both governments. He
added they would be set up in border regions. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/ejecutivo-creará-sistema-almacenes-para-venta-y-distribución-legal-productos-colombia;
El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-vendera-alimentos-en-la-frontera-a-preci.aspx;
El Universal, http://www.eluniversal.com/nacional-y-politica/141024/crearan-sistema-para-venta-legal-de-productos-a-colombia)
Logistics
& Transport
Government pays airlines only 15% of the amount
offered
On September 26 the National Foreign Trade Center
announced it would pay international airlines operating here US$ 125 million.
After one month, only LUFTHANSA has received US$ 19 million for its February
2014 operations, the others have received nothing. Total government debt to
airlines is around US$ 3.5 billion and has caused companies to drastically cut
down on flights and seats serving the Venezuelan market. More in Spanish: (El
Nacional; http://www.el-nacional.com/)
Oil &
Energy
PDVSA says it will invest US$20 billion to boost
refining capacity
State oil company PDVSA plans to invest US$ 20 billion
to expand its domestic refining capacity by 20%, a company official said on
Wednesday, without providing a time frame for when the investments would take
place. Refining chief Jesus Luongo said PDVSA would add 265,000 barrels per day
(bpd) of refining capacity to the current 1.3 million bpd. The plans include
doubling the capacity of the 146,000 bpd El Palito facility and boosting
capacity of the 187,000 bpd Puerto la Cruz refinery by 20,000 to 25,000 bpd. (Reuters,
http://www.reuters.com/article/2014/10/22/venezuela-refining-idUSL2N0SH1JA20141022; El
Universal, http://www.eluniversal.com/economia/141023/venezuelas-pdvsa-invests-usd-20-billion-to-increase-oil-refining)
Bolivia to seek oil along with Venezuela's PDVSA in
northern La Paz
PETROANDINA, a joint venture between Bolivian
State-run oil company YPFB and State-run oil holding Petróleos de Venezuela
(Pdvsa), is to continue oil exploration in northern La Paz department, Bolivia,
says Carlos Villegas, President of the Bolivian corporation. "We will start drilling in Lliquimuni in the
first half of December. We are hopeful about finding oil," Villegas
explained. (El Universal, http://www.eluniversal.com/economia/141022/bolivia-to-seek-oil-along-with-venezuelas-pdvsa-in-northern-la-paz)
Commodities
Government seizes warehouses packed with medical
goods, food; raises jail sentences, curtails street vendors
The government said on Thursday it had taken over
warehouses around Venezuela crammed with medical goods and food that "bourgeois criminals" were hoarding
for speculation and contraband. The socialist government says businessmen and
wealthy opponents are trying to sabotage the economy to bring Maduro down,
while also seeking to make profits from hoarding, price-gouging and smuggling
across the border to Colombia. Maduro said "The bourgeois parasites are hurting the people's health",
charging the goods had been bought with dollars obtained from the state's
foreign exchange board and were due to be sold across the border in Colombia. Maduro
also announced he would use decree powers to increase the maximum jail sentence
for smugglers to 14 years, set new "fair
price" controls for basic goods from Nov. 1, and curtail informal
reselling of food and medical essentials on the street. (Reuters, http://www.reuters.com/article/2014/10/24/us-venezuela-economy-idUSKCN0ID00A20141024?feedType=RSS&feedName=worldNews&utm_source=Sailthru&utm_medium=email&utm_term=%2AMorning%20Brief&utm_campaign=2014_MorningBrief.10.24.14)
Coca Cola takes US$ 268 million charge on Venezuela currency
"During the nine months ended September 26, 2014,
the Company recorded charges of US$ 268 million related to the devaluation of
the Venezuelan bolivar, including a write-down of receivables related to
concentrate sales to our bottling partner in Venezuela as well as our
proportionate share of the charge incurred by this bottler, an equity method
investee." (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2357585&CategoryId=10717)
Government subsidy for coffee in Venezuela
The government has authorized the "single, direct, and transitory"
subsidy of the roasted coffee industry manufacturing ground and roasted coffee
produced at home. (El
Universal, http://www.eluniversal.com/economia/141023/government-subsidy-for-coffee-in-venezuela)
Economy
& Finance
2015 budget projects 3% GDP deficit, assigns 20% to
debt service
The 2015 budget law
presented by the government to the National Assembly estimates a fiscal deficit
of 3% GDP, while total government debt by 2014 is estimated at US$ 127.8
billion - not counting PDVSA obligations and Chinese loans. Debt service costs
will double the amount to be spent in the Education and Labor ministries, quadruples that to be spent on higher education,
health and defense. More in Spanish: (El
Universal, http://www.eluniversal.com/economia/141024/gobierno-calcula-deficit-de-3-del-pib-para-el-2015; http://www.eluniversal.com/economia/141024/finanzas-estima-deuda-del-gobierno-central-en-1278; and El Nacional; http://www.el-nacional.com/)
Maduro seeks to avoid costly foreign borrowing,
announces "banking revolution"
President Nicolas Maduro says the country will avoid
more borrowing on international markets because of rising costs as a result of
worsening credit risk perceptions. "We
are not going to use or ask for credit, in those conditions the global
capitalist banks want to impose," Maduro said. "We're not going to do it. We have other
(financing) sources, fortunately." He said there is a "sort of financial, credit, international
blockade" on the country, repeated earlier statements that Venezuela
was prepared for volatility on global energy markets, and added that he would shortly
announce a “banking revolution to
democratize resources”. He offered no further details. (Reuters, http://www.reuters.com/article/2014/10/22/us-venezuela-economy-credit-idUSKCN0IB2PM20141022;
El Universal, http://www.eluniversal.com/economia/141023/venezuelan-president-maduro-increases-funds-for-regions-by-61; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41580&idc=2)
Maduro accuses foreign media of spreading Venezuela default
fear
President Nicolas
Maduro has denounced Thomson Reuters Corp. (TRI),
saying its news agency is part of a foreign media campaign to spread fears that
Venezuela will default on debt. “I
denounce the Reuters news agency because of the damage it causes with its
international cables,” Maduro said. “They
run, they go to the experts, they sound alarms.”
Reuters, along
with other news agencies, has reported this month that investors are concerned
Venezuela won’t pay its sovereign debt obligations. (Bloomberg, http://www.bloomberg.com/news/2014-10-22/maduro-accuses-foreign-media-of-spreading-venezuela-default-fear.html)
Government vows payment of US$3 billion bond, says it
is ready for oil volatility
Finance Minister Rodolfo Marco says the nation is
"fully prepared" to cope
with price volatility on the global oil market and would honor a US$ 3 billion
bond payment due next week. (Reuters, http://www.reuters.com/article/2014/10/21/venezuela-oil-idUSL2N0SG1YA20141021; El
Universal, http://www.eluniversal.com/economia/141022/venezuelan-minister-of-economy-oil-price-falls-to-usd-7673)
Barclays: Economic adjustment unavoidable amid ebbing
oil prices
Economic research firm Barclays says that under the
current scenario, the slide in oil prices makes Venezuela think adjustments are
unavoidable. Beyond a drop in oil revenues, the government will face more
difficulties to access financial markets to finance its deficit. In its latest
report, entitled "Venezuela: the
perfect storm," Barclays outlines that every dollar oil price declines
means a US$ 728 million-drop in the country's revenues. "This has raised the pressure on Venezuela's
hard currency cash flow." (El Universal, http://www.eluniversal.com/economia/141023/barclays-economic-adjustment-unavoidable-amid-ebbing-oil-prices)
Foreign investment down 54% in Venezuela during the
first half of 2014
A report by the UN's
Economic Commission for Latin America and the Caribbean (ECLAC) shows foreign
investment into Venezuela dropped 54% during the first half of 2014, for a
total US$ 1.761 billion. At the same time, Venezuelan direct investment abroad
rose by 29%. More in Spanish: (Notitarde,
http://www.notitarde.com/Economia/Cepal-Inversion-extranjera-en-Venezuela-cayo-54-en-2014-2265524/2014/10/23/374519;
El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/cepal--cae-54--inversion-extranjera-directa-en-ven.aspx#ixzz3H3cGfp7Q;
El Universal, http://www.eluniversal.com/economia/141024/cepal-reporta-caida-de-54-en-inversion-extranjera-en-el-pais;
Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/cepal-cae-54-inversion-extranjera-directa-en-venez.aspx;
El Nacional; http://www.el-nacional.com/)
Venezuela pays for expropriation mistakes
Venezuela today is paying for the irresponsible and
insatiable wave of expropriations which, on the one hand, has taken national
production to critical levels and led the country to rely on imports for its
livelihood; and on the other, has discouraged investment capital while making
the State go to arbitration courts so it can respond to complaints from
international companies whose rights have been violated. (Latin American Herald
Tribune, http://www.laht.com/article.asp?ArticleId=2357436&CategoryId=10717)
Politics and
International Affairs
Maduro faces rough months ahead
Significant financial trouble, such as defaults on
foreign debt or significant social spending cuts, is not yet imminent, but a
long period of depressed oil prices will make such problems more likely. President
Nicolas Maduro's administration will continue trying to stem inflation and
shortages, but a likely cut in spending could affect the ruling party's
popularity. If low oil prices last more than a few months, Venezuela will try
to shore up its precarious foreign currency reserves. It can sell part of its
gold reserve to raise more cash, but this would likely be a desperate move. Venezuela
also will continue relying on the National Development Fund and Chinese loans,
though declining oil production puts these under an increasing threat. Over the
next year, Venezuela will take some tentative steps toward straightening its
financial situation. PDVSA will begin offering a restructuring plan to bondholders
holding debt that will mature in 2016 and 2017. If PDVSA does not restructure,
it will have to pay US$ 18.5 billion in debt payments and interest from 2015 to
2017. If Caracas cannot successfully carry out the debt swap, then the
possibility of difficult domestic decisions concerning spending will become
more likely. According to an unconfirmed report, the government is trying to
mitigate the fallout from its declining popularity by rescheduling legislative
elections originally slated for November 2015 to April or July of that year.
(Stratfor, http://www.stratfor.com/sample/analysis/venezuelas-maduro-faces-rough-months-ahead)
A power struggle may be emerging in Venezuela
On Oct. 7 Jose Odreman, the leader of the "March
5" colectivo, was killed by the Criminal Investigative Police (CICPC), along
with four other colectivo members following a raid on their headquarters in
Caracas. The events suggest possible fractures within the official and
unofficial security forces that President Maduro will have to rely on to secure
the stability of his government in the coming months and years. Colectivos have
been used to intimidate dissenters and operate beyond the boundaries of the
conventional state apparatus. Regardless of the proximate cause of the conflict
between CICPC and the colectivo, disunity among the state's security forces
comes at a dangerous time for Maduro. If the Odreman killing leads to a
significant portion of the colectivos becoming unavailable to the central
government to deploy against protesters, Maduro will lose a useful tool for
mitigating social unrest. (Stratfor, http://www.stratfor.com/sample/analysis/power-struggle-emerges-venezuela)
The Electoral Nomination Committee was sworn in at the National Assembly. It is made up of 21 people
(13 from the government and eight from the opposition) must now appoint a
chairman and a deputy chairman and draft internal rules within a six-day
deadline. They will then make the call for candidates to the three CNE
positions available. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41563&idc=1; El
Universal, http://www.eluniversal.com/nacional-y-politica/141022/ruling-party-lawmaker-to-lead-electoral-nomination-committee)
Major general terms entry of officials into Colombia a
"misunderstanding"
Major General Efraín Velasco, defense chief for
Venezuela's Andean Region says the recent entry of six Venezuelan military
officers into the Colombian territory during an operation conducted within the
framework of Venezuela's war on smuggling was a due to a
"misunderstanding". The event resulted in a note of protest
sent by Colombia to its neighboring country. (El Universal, http://www.eluniversal.com/nacional-y-politica/141022/major-general-terms-misunderstanding-entry-of-officials-into-colombia)
Venezuela calls the UN request to release López "unreasonable"
The Venezuelan mission at the United Nations in Geneva
has sent a notice to the Office of United Nations Commissioner for Human Rights
(UNCHR) labeling as "unreasonable" the latter's petition to release
Venezuelan opposition leader Leopoldo López. In the letter, the Venezuelan government
claims that UN Commissioner for Human Rights, Zeid Ra'ad Al Hussein, "has overdone his incumbency; has showed
total ignorance of the limits of his scope, and has been unreasonable, to the
extent of urging Venezuelan authorities to release López and (ex mayor Daniel)
Ceballos forthwith". (El Universal, http://www.eluniversal.com/nacional-y-politica/141022/venezuela-terms-unreasonable-un-request-to-release-lopez)
Spain's Rajoy expresses concern over dissenter
Leopoldo López, and is quickly rebuffed
Spanish President Mariano Rajoy also expressed his
concerns over the detention of Leopoldo López, after meeting with Lilian
Tintori, wife of Venezuelan opposition leader. He stressed that the European Union
has been worried about the trial facing López. Further, he highlighted the need
to respect freedom of expression and the right to demonstrate peacefully in
Venezuela. The Venezuelan government quickly rejected Rajoy's "interventionist" comments in a protest
note to the Spanish Foreign Ministry. (El Universal, http://www.eluniversal.com/nacional-y-politica/141022/rajoy-concerned-about-situation-of-dissenter-leopoldo-lopez;
and more in Spanish: AVN; http://www.avn.info.ve/contenido/venezuela-repudia-declaraciones-injerencistas-jefe-gobierno-español)
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.
