International
Trade
Venezuelan imports heading for 60% slide
Venezuela’s
imports have plunged 40% in the past year, according to estimates by Bank of
America Merrill Lynch. The country is on course for a 60% slump in imports over
a four-year period, close to being biggest contraction seen in Latin America
since comparable records began in 1970, the bank says. The crash in imports is
the latest indignity to strike a country that this week was forced to implement
a two-day working week in the public sector to combat a critical shortage of
power. “The contraction is of a much
higher order of magnitude than what had been observed until 2015. It is hard to
find precedents for it in contemporary Venezuelan or Latin American economic
history,” says Francisco Rodriguez, an economist at BofA. Their numbers
suggest imports fell 50.1% year-on-year in the fourth quarter of 2015 and by an
average of 41% in January and February this year, as the first chart shows. If
this is sustained for the rest of the year, the resulting rate of import
contraction of 60% since 2012 “will be
the highest observed in Venezuelan history since the start of our data set in
1943”, says Mr. Rodriguez, who argues that the slide in public spending,
allied to the collapse in imports, potentially points to a way in which Venezuela
can rebalance its economy. If current trends were to continue, Mr. Rodriguez
says Venezuela’s current account and budget deficits would fall to “the low single digits” as a share of gross
domestic product this year. As a result, he says, “the data suggest a significant ongoing adjustment that is bringing
fiscal and external accounts into equilibrium at the cost of a large recession
and decline in living standards.” Russ Dallen, who heads LATINVEST, a
boutique investment bank, is less sanguine however. Among the potential
endgames he foresees is a “Somalia-type
breakdown of civil order, where you just have gangs”. (Financial Times: http://www.ft.com/cms/s/3/4ccbeb90-0e11-11e6-b41f-0beb7e589515.html#axzz47FrjFpuy)
Oil & Energy
How does Venezuela spell relief? oil prices above US$
45
The oil
rally that has lifted U.S. crude prices above US$ 45 a barrel is providing some
relief to the cash-strapped Venezuelan government. But analysts say oil prices
at this level are probably not high enough to turn around its struggling
economy. Venezuela’s benchmark bonds due in 2027 gained 6% to 43.5 cents on the
dollar on Thursday, as WTI crude prices rose 1.5% to settle at US$ 46.03 a
barrel. These bonds traded around 33 cents in mid-February. Forty-five dollars may
be a functioning oil price for some of the more efficient oil producers like
Saudi Arabia, “but not for Venezuela,” said Russ Dallen, managing partner at
LATINVEST. “The country is on the abyss
of chaos; the worst is not over.” (The Wall Street Journal: http://blogs.wsj.com/moneybeat/2016/04/29/how-does-venezuela-spell-relief-oil-prices-above-45/)
Venezuela oil price up 6%
The
price Venezuela receives for its mix of medium and heavy oil rose for a third
consecutive week as oil prices around the world continued strengthening. According
to figures released by the Ministry of Petroleum and Mining, the average price
of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week
ending April 29 was US$ 34.43, up US$ 2.04 from the previous week's US$ 32.39.
(Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2411118&CategoryId=10717)
ENI sees Venezuela payment delays amid country's
economic crisis
ENI
warned it expects payment delays from Venezuela as the Italian energy explorer
faces the same challenges that forced SCHLUMBERGER Ltd. to cut back activity in
the country with the world’s largest oil reserves.
The
affected payments shouldn’t be “huge
numbers,” Chief Financial Officer Massimo Mondazzi says, adding that
current outstanding receivables are below US$ 100 million. (Bloomberg, http://www.bloomberg.com/news/articles/2016-04-29/eni-sees-venezuela-payment-delays-amid-country-s-economic-crisis)
Water level of Venezuela's major dam stops dropping
Recent
rainfall on the headwaters of the Caroní River in southeastern Bolívar state has
stopped the drop in water levels of Venezuela’s major Guri dam. According
to unofficial sources, the dam’s water level has stopped decreasing for the
first time in months. Guri increased to 241.42 meters above sea level, a
7-centimeter surge from the previous day when it hit 241.35 meters above sea
level. (El
Universal, http://www.eluniversal.com/noticias/daily-news/water-level-venezuelas-major-dam-stops-dropping_307647)
Commodities
Venezuela's top beer maker halts output in dispute
with government
Venezuela's
largest beer maker halted the last of its four production plants on Friday in a
spat with the government over access to foreign currency, threatening a
shortage in a nation already hit by severe scarcities of food and other
products. Empresas POLAR, the largest private company in Venezuela, had warned
it would end production on Friday because President Nicolas Maduro's socialist
government was refusing to release it dollars to import malted barley under
strict exchange controls. Operations at POLAR's plant in San Joaquin, which had
been its last still in production, were stopped on Friday morning, a company
spokeswoman said. "With this,
activities at the four plants of Polar Brewery are halted," she added.
(Reuters, http://www.reuters.com/article/venezuela-empresaspolar-idUSL2N17W0W3;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2411107&CategoryId=10717)
Maduro again threatens to take over inactive plants
In
an inflamed speech, President Nicolas Maduro has ordered his followers to “take over” inactive industries. “He who paralyzes a plant, industry or factory
will be punished by law. And any inactive plant will be taken over by the
working class…Rebel against the open conspiracy, rebel, revolution!”, he
exclaimed amid chants against POLAR enterprises. More in Spanish: (El Nacional,
http://www.el-nacional.com/politica/Maduro-reitero-tomara-plantas-paralizadas_0_839916103.html)
Economy & Finance
Venezuela’s woes are mounting as it turns the lights
off
Venezuela's
economic problems hit a new peak this week as rolling blackouts and a two-day
working week were introduced to alleviate an energy crisis. The government here announced earlier in the
week that it was cutting public sector employees' working hours down to two
days a week for at least two weeks in order to reduce electricity
consumption. The country's president,
Nicolas Maduro, had already decided Venezuela's 2.8 million state workers would
have Fridays off through April and May. Daily four-hour power cuts around the
country were also planned to further save energy. The plans are a response to a
drought that has left the country's largest hydroelectric dam near its minimum
operating level. But according to Michael Henderson, lead economist at risk
consultancy VERISK MAPLECROFT, the plans indicate just how poorly the country
is doing as a whole. "Venezuela is
in the final throes of a downward social and economic spiral borne out of a
legacy of terribly misguided policymaking," he says. "The announcement of a two-day working week
for public sector employees lays bare just how ill-equipped the economy is to
deal with temporary supply shocks." Most of the blame for Venezuela's
problems has been pinned to the government and its mishandling of the economy,
and that's unlikely to change any time soon.
"There's very little chance
of a change of policy direction under Maduro," explained Henderson.
"The opposition's new legislative
powers have been systematically undermined by the executive, resulting in a
stalemate which has stymied the prospects of meaningful reforms to get economy
back on track." (CNBC: http://www.cnbc.com/2016/04/28/venezuelas-woes-are-mounting-as-it-turns-the-lights-off.html)
Maduro hikes minimum wage 30% amid raging inflation
President
Nicolas Maduro has increased the country's minimum wage 30%, amid rampant
inflation that has destroyed purchasing power in the crisis-hit country. As of
May 1, the minimum wage will jump to 15,051 bolivars per month - US$ 1,505 at
the strongest official exchange rate but just US$ 13.50 at the black market
rate. Maduro also increased a monthly food ticket to 18,585 bolivars - around US$
17 at the black market rate. The president celebrated that the rise would be
the twelfth since he was elected president in April 2013. (Reuters, http://www.reuters.com/article/us-venezuela-economy-idUSKCN0XS0RD; El Universal, http://www.eluniversal.com/noticias/daily-news/salary-rise-venezuela-benefits-military-govt-employees_307660)
Venezuela sets clocks up 30 minutes
The
Venezuelan government on Sunday moved local time up 30 minutes, to four hours
behind UTC, with an eye toward dealing with the emergency caused by the ongoing
severe drought. The time change will enter into effect as of May 1 and brings
Venezuela back to the time schedule that prevailed until 2007, when the
government shifted the nation’s clocks back by half an hour. The measure is
part of a government plan to attend to the electrical and water emergency
caused by the drought, aggravated by this year’s El Niño weather phenomenon.
(Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2411200&CategoryId=10717)
Politics and International Affairs
Opposition delivers almost 10 times the number of
signatures needed to launch a recall to oust Maduro
Venezuela’s
DEMOCRATIC UNITY (MUD) opposition coalition has delivered 1.850 million
signatures to the National Elections Board (CNE) here, to initiate proceedings
for a recall referendum to end President Nicolas Maduro’s term of office this
year. Although Venezuelan law requires that such a petition needs the signature
of 1% of all registered voters (close to 200,000 signatures), signatures
collected and delivered to the CNE number almost 10 times that amount were
collected in barely 4 days. According to MUD Secretary General Jesús Torrealba,
the opposition delivered “80 boxes, each
containing 2,500 forms, for a total 200,00 forms bearing 1.850 million
signatures”, that must now be validated by the CNE, which has previously
delayed approving the requisite official signature form for over one and a half
months. According to the Venezuelan Constitution, after the signatures are
validated by the CNE, the opposition must the collect close to 4 million
signatures – 20% of all registered voters – for the recall vote to be actually
implemented. Following a statement by Tania D’Amelio, one of four pro-regime
members in the 5 person Elections Board, intended to create additional delays,
opposition leader Henrique Capriles warned: “We will not accept CNE efforts to block a democratic way out…we do not
want short cuts, we do not want a social explosion, we seek the constitutional
route for the people to decide whether Maduro remains as president or not”.
Capriles has insisted: “if there is no
recall vote this year it will make no sense. We are not interested in keeping
the same regime. It will take place this year or there will be no referendum”.
(Bloomberg, http://www.bloomberg.com/news/articles/2016-05-02/venezuela-s-lawmakers-gather-2-million-signatures-to-oust-maduro;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2411119&CategoryId=10717;
El Universal, http://www.eluniversal.com/noticias/daily-news/opposition-hands-over-signatures-for-recall-vote-venezuela_307746;
and more in Spanish: INFOLATAM: http://www.infolatam.com/2016/05/02/oposicion-venezolana-consigna-mas-18-millones-de-firmas-para-pedir-referendo/)
Maduro advocates “popular
revolt” against the “oligarchy”
President
Nicolas Maduro has called upon nationals to stage a “popular rebellion” and decree an “indefinite general strike” should the opposition manage to make an
attempt against his life or remove him from office. “In the name of peace, if someday the oligarchy plotted against me and
managed to take over the (Miraflores Presidential) Palace in one way or
another, I instruct you, workers, to spark off an uprising and go on indefinite
general strike until defeating the oligarchy,” he said during an event to
celebrate Labor Day. (El
Universal, http://www.eluniversal.com/noticias/daily-news/maduro-advocates-peoples-revolt-against-the-oligarchy_307699)
Legislators ask OAS to oversee recall vote here,
dismiss Maduro’s threats
Luis
Florido, Chairman of the National Assembly’s Foreign Affairs Committee, and a
group of opposition legislators have asked OAS Secretary General Luis Almagro
for this institution’s oversight in the recall referendum process against
President Nicolas Maduro. “The government
has delayed the timing of the recall and could eventually carry it into 2017,
when it would be useless”, he said. Florido dismissed President Maduro’s
threats of charging them with “treason”
due to their visit to Washington, and said that “the only thing that Maduro does well is to threaten.” More in
Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/oposicion-solicita-que-oea-observe-proceso-referendo-revocatorio_307157;
http://www.eluniversal.com/noticias/politica/diputados-desestiman-acusacion-maduro-sobre-traicion-patria_307783)
Ramos Allup reports that the military brass told Maduro
they will not engage in suppression
Henry
Ramos Allup, President of Venezuela’s Parliament, reports that the generals and
admirals that make up the high command here have told President Nicolas Maduro
that they will not suppress the opposition of there are popular outbursts. At
an “emergency meeting” held last
week, they warned him “they would not
bear the cost of suppressing the people if there are outbursts or disturbances
due to looting, and much less political demonstrations, because that is what the
goon squads and paramilitary groups, trained and equipped by Cubans, are there
for”. Ramos reported the meeting was held to evaluate “the effect and impact” of the massive turnout to sign in favor of a
recall election. More in Spanish: (Infolatam: http://www.infolatam.com/2016/05/02/presidente-del-parlamento-revela-militares-dijeron-a-maduro-que-no-reprimiran/)
Opposition leader attacked by goon squad at
demonstration in Caracas
Jesus “Chuo” Torrealba, the executive secretary
of Venezuela’s opposition alliance known as Democratic Unity (MUD), says he
was unhurt after
being attacked during a protest against government power cuts on Friday in
Caracas. “I accompanied neighbors who
were protesting and I was attacked by a violent group,” Torrealba said in a
statement published on the MUD’s website. A video published on
MUD’s website shows Torrealba throwing punches in self-defense after he was
attacked by a group of men who later threw rocks in the direction of the
camera. (Bloomberg, http://www.bloomberg.com/news/articles/2016-04-29/venezuela-opposition-leader-attacked-at-demonstration-in-caracas)
Pope Francis sends President Maduro a letter on the
Venezuelan case
Pope
Francis has forwarded a letter “of a
personal character” to President Nicolas Maduro tackling some interesting
matters on the state of affairs in Venezuela, disclosed spokesperson Federico
Lombardi, who gave a group of journalists accredited to the Vatican details
about the letter. The letter deals with the “country situation,” in a context where the Holy See “acknowledged the seriousness” of the
events in Venezuela, the daily noted. “In
this context, I can affirm that the Pope wrote a personal letter to President
Maduro in reference to the country situation,” Lombardi said. (El Universal, http://www.eluniversal.com/noticias/daily-news/pope-francis-sends-president-maduro-letter-the-venezuelan-case_307670)
Maduro again defies legislature over censure of
Nutrition Minister
After
the National Assembly voted to censure Nutrition Minister General Rodolfo Marco
Torres, ignoring a Supreme Court order against such its constitutionally
mandated authority to censure and remove cabinet members, President Nicolas
Maduro has defiantly responded that “no
one removes Nutrition Minister General Rodolfo Marco Torres”, rejecting a
letter he received from National Assembly President Henry Ramos Allup. The
Constitution here provides that Cabinet members must be removed if censured by
the legislature. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/maduro-al-ministro-de-alimentacion-no-lo-remueve-n.aspx#ixzz47DIU6b4O)
The Washington Post: “We ignore Venezuela’s imminent implosion at our peril”
Venezuela
has descended into a dystopia where food, medicine, water and electric power
are critically scarce. Riots and looting broke out in several blacked-out
cities last week, forcing the deployment of troops. A nation that 35 years ago
was the richest in Latin America is now appealing to its neighbors for
humanitarian deliveries to prevent epidemics and hunger. The regime that
fostered this nightmare, headed by Hugo Chávez until his death in 2013, is on
the way out: It cannot survive the economic crisis and mass discontent it has
created. Yet rather than concede or negotiate with a coalition of opposition
parties that won two-thirds of the seats in the National Assembly, the Chavista
government has dug in. At its direction, a constitutional tribunal stacked with
party hacks has issued annulments of every act by the new assembly. Gangs of
regime thugs now roam the streets on motorcycles and attack opposition
gatherings. Meanwhile, the government is essentially shutting itself down: Last
week Maduro ordered that state employees, who make up more than 30% of the
workforce, would henceforth labor only two days a week, supposedly in order to
save energy. The question is whether the change will come relatively peacefully
or through an upheaval that could turn Venezuela into a failed state and
destabilize much of the region around it. Most of the Western hemisphere is
studiously ignoring this meltdown, but Carlos Vecchio, an exiled leader of the
Voluntad Popular party, says “The moment
has arrived when you can no longer ignore this. Because what happens in
Venezuela is going to affect the whole region.” (The Washington Post, https://www.washingtonpost.com/opinions/we-ignore-venezuelas-imminent-implosion-at-our-peril/2016/05/01/f8e33d96-0d50-11e6-a6b6-2e6de3695b0e_story.html)
