May 21, 2013

Economics & Finance

Venezuela faces less growth, increasing shortages and higher inflation

Prices soar meteorically, basic commodities vanish from supermarket aisles, and the economy plunges into recession and reduced growth. Just what is going on? The epicenter of this tremor is none other than the government, which in the midst of elections throughout 2012 and the ones held last April opted to unleash public spending to create a sense of bonanza. Economist Miguel Ángel Santos notes that public spending in 2012 was the highest ever in real terms per capita. The State dished out the equivalent of 51% of the GDP while the rest of Latin America averaged 30%. And spending in the first quarter of 2013 continued to expand. (El Universal, 05-18-2013; http://www.eluniversal.com/economia/130518/venezuela-faces-less-growth-increasing-shortages-and-higher-inflation)

Finance Ministry and Central Bank are adjusting SICAD, domestic debt estimated around U$D 53 billion

The reactivation of SICAD - Ancillary FOREX System - is been further delayed as the Finance Ministry and the Central Bank continue to review it, thus confining FOREX allocation to CADIVI. After meeting with food industry representatives, Central Bank President Edmée Betancourt said "the outflow from SICAD has been slow, and this is what we are trying to improve". Central Bank Director and CADIVI VP José Khan added that "there will be no auction this week". According to ECOANALITICA consulting firm, ECOANALÍTICA, the government would have to disburse U$D 53 billion to meet domestic obligations: U$D 16 billion for expropriations; some U$D 12 billion in dividend repatriations spanning several years, and some U$D 9.5 billion in CADIVI's backlog. On top of this there are U$D 16 billion which PDVSA owes its suppliers and contractors. More in Spanish: (El Universal, 05-21-2013; http://www.eluniversal.com/economia/130521/finanzas-y-bcv-hacen-ajustes-al-sicad-y-dilatan-su-reactivacion and GRUPOSOLUCIONES).

Government seeks private support to reduce shortages

The government has resorted to the private sector to fight widespread shortage of staples. Meetings are beginning this week between the business sector and the government in order to overcome hurdles to production. Finance Minister Nelson Merentes has conceded that delays in the apportionment of foreign currency at the official exchange rate are among the causes for shortages. (El Universal, 05-20-2013; http://www.eluniversal.com/economia/130520/socialism-trapped-at-this-moment-in-time)

An agro-industrial state struggles with food production

The first four months of the year show a 16.24% inflation in foods and a 21.3% shortage in basic staples as food demand soars above supply constrained by restricted access to currency, labor strife and 20 month old price controls on several items. Although the government warns that it will not allow companies to lower production, the truth is that the Venezuelan agro-industrial sector, which had prices climb 20% in 2013, is not only in the hands of private businesses. Luis Vicente León, director of consulting firm DATANÁLISIS, explains that in October 2012 the government, particularly Minister Jorge Giordani (then head of the Planning and Finance Ministry) "significantly deepened its economic revolution. Giordani felt it was time to take control of the economy and reacted to what he deemed impossible, imports reaching U$D 59 billion, not being required by the economy because resources are deviated and inefficiency and corruption abound." (El Universal, 05-18-2013; http://www.eluniversal.com/economia/130518/an-agro-industrial-state-struggles-with-food-production)

Commodities

Venezuela may allow oil joint ventures to manage funds

Petróleos de Venezuela SA will allow joint ventures with China National Petroleum Corp. and Chevron Corp. to manage U$D 6 billion in loans designed to reverse oil output declines, said a PDVSA official. The state-owned producer reached agreements on terms of a U$D 2 billion credit from Chevron for the PETROBOSCAN venture and a U$D 4 billion loan from China Development Bank for SINOVENSA, said the official who was briefed on the negotiations. The transactions probably will be signed by the end of June, said the person, who isn’t authorized to speak publicly. PDVSA is allowing the joint ventures to handle the funds directly for oil infrastructure rather than being channeled through the state company or the government, said the official. PDVSA is also working on arrangements with oil service providers to pay as much as U$D 2 billion in overdue payments and for new cash flow mechanisms. Venezuela, which channels oil earnings into social programs and regional fuel subsidies, is depending on the ventures with foreign partners to tap more of the world’s largest oil reserves. PDVSA is in talks for similar funding with companies including REPSOL and Royal Dutch Shell Plc as it targets output capacity of 3.5 million barrels a day by the end of 2014 from about 3 million at the end of 2013, the official said. PDVSA reported daily oil and natural gas liquids production of 3.03 million barrels last year from 3.13 million in 2011. (Bloomberg; 05-17-2013; http://www.bloomberg.com/news/2013-05-17/venezuela-said-to-allow-oil-joint-ventures-to-manage-fund.html)

20% price increases for chicken, beef, milk and cheese are now official, due to a joint resolution by the Nutrition, Agriculture and Land, Trade, and Finance Ministries. The resolution says the Government aims to "attain strategic supply levels and compensate disadvantages present in agriculture". More in Spanish: (AVN, 05-21-2013; http://www.avn.info.ve/contenido/publicados-gaceta-oficial-nuevos-precios-del-pollo-carne-leche-y-queso; El Universal, http://www.eluniversal.com/economia/130521/regularon-cortes-de-pollo-sazonados-y-la-carne-molida)

Caracas water service to be restored

Water service should be restored today after a three-day outage in parts of Caracas, the state news agency AVN said.

A water pipeline failure that the state company HIDROCAPITAL said was caused by valves at La Guairita treatment plant cut supplies to southeast and northeast areas of the nation’s most populous city for much of the weekend. Water supplies yesterday were 37% lower than normal, HIDROCAPITAL said in a website statement.(Bloomberg; 05-20-2013; http://www.bloomberg.com/news/2013-05-20/venezuela-capital-water-service-to-be-restored-after-three-days.html)

International Trade

Brazil trapped by Argentina and Venezuela economic mismanagement

Under the heading of “Brazil and the neighbors’ crises, just next door” columnist Sergio Leo exposed growing concern and disenchantment in the cabinet of President Rousseff with the economic situation of Argentina and Venezuela, MERCOSUR partners. “Ideology sympathy was strong, geopolitical proximity also but what sends the shivers down the backs of President Rousseff and her advisors and inspires the recent good-will gestures towards Argentina and Venezuela is the economic deterioration of the two countries with which Brazil has its largest trade surpluses in Latinamerica”, writes Leo. Regarding Venezuela, he says there is no positive climate for Brazilian investors since many Brazilian corporations have cancelled their operations and projects in the country. “As the Brazilian authorities cautioned the Venezuelans, Maduro will need a less troublesome political climate, to at least begin to attempt a reduction of the non functionalities of the Venezuelan economy” says Leo and recalls the meeting of Dilma with Chavez successor, during his first official round of MERCOSUR member countries visit. “Forced to revert some of the decisions that made Chavez popular, to avoid a recession of the economy, Maduro is appealing to rhetoric in an effort to minimize the impact on his not so popular public image. In Brasilia however there was satisfaction with the slight change in the tone of Maduro’s speeches, still full of triumphalism rhetoric and conspiracy theories, but now also with calls for conciliation including with business people and the business community”. (MERCOPRESS; 05-20-2013; http://en.mercopress.com/2013/05/20/brazil-trapped-by-argentina-and-venezuela-economic-mismanagements)

Minister says 26,000 tons of food arriving daily

Nutrition Minister Felix Osorio says a average of 26,000 tons of food has been arriving daily since last week, in order to strengthen reserves, thanks to agreements made with Uruguay, Argentina and Brazil. Osorio said that among other staples arriving next week there is: edible oil, powdered milk, beef, chicken, tuna and sugar. More in Spanish: (AVN, 05-20-2013; http://www.avn.info.ve/contenido/26000-toneladas-alimentos-llegan-diariamente-venezuela-para-fortalecer-reserva; El Universal, http://www.eluniversal.com/economia/130521/ejecutivo-abastece-supermercados-para-atender-la-escasez; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/26-000-toneladas-de-alimentos-llegan-a-diario-a-ve.aspx)

Politics

Opposition: Audio suggests Cuba meddling, conspiracies

Venezuela's opposition has released an audio recording that it said contains a prominent member of the ruling party discussing political strategy with a Cuban intelligence officer. Opposition lawmaker Ismael Garcia said Monday that the recording captures a phone conversation between state TV personality Mario Silva, a staunch government ally, and a Cuban identified as Lt. Col. Aramis Palacios. At a news conference, Garcia didn't say when the conversation was recorded or how he obtained it. In it, a man identified as Silva is heard discussing a split in the ruling socialist party between parliament leader Diosdado Cabello and President Nicolas Maduro, the late President Hugo Chavez's successor. The man says he worries that Cabello, a former army officer, is conspiring against the president, who narrowly defeated Capriles in an April 14 election that the opposition refuses to accept, claiming fraud. For example, the voice says, Maduro's opponents in the party want to remove Defense Minister Diego Molero. Silva first dismissed the recording on Twitter as a "montage" and suggested U.S. and Israeli intelligence agencies were behind it, and pledged his support to both Maduro and Cabello. However, he later announced he will take leave of absence from his TV show for health reasons. Cabello also dismissed the recording, calling on the opposition to present real evidence, "not a show." In a speech broadcast Monday on state TV, Maduro called for an end to "intrigues" against his administration and the armed forces but didn't specifically mention the recording. Capriles had urged his supporters to pay attention to the news conference in which the recording was released. "Every corrupt and illegitimate government always implodes!" he tweeted later Monday. (ABC NEWS, 05-20-2013; http://abcnews.go.com/International/wireStory/venezuela-opposition-audio-suggest-cuban-meddling-19219169#.UZuXQ7W1HHR; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/130521/cabello-califico-de-fiesta-mal-hecha-audio-presentado-por-opositores, and http://www.eluniversal.com/nacional-y-politica/130521/mario-silva-dice-ponerse-a-derecho-de-la-justicia-para-investigaciones)

Venezuela says it is taking steps to restore U.S. diplomatic ties

Venezuela's recent designation of an acting head of its diplomatic mission in the United States shows it's desire to restore full diplomatic relations, says Foreign Minister Elías Jaua. "This is a message for U.S. politicians so they understand Venezuela's desire to normalize relations ... via the designation of the highest diplomatic authorities," he said. "Why? Because the United States remains our top trade partner." (Reuters, 05-19-2013; http://www.reuters.com/article/2013/05/20/venezuela-usa-idUSL2N0E101X20130520; El Universal, 05-20-2013; http://www.eluniversal.com/nacional-y-politica/130520/venezuela-wants-to-reinstate-ambassadors-with-the-us)

State Dept. report notes increase in anti-Semitism in Venezuela

The State Department released its 2012 annual report on religious freedom around the world, stating expressions of anti-Semitism by government officials, religious leaders were of great concern, particularly in Venezuela, Egypt and Iran. At times, such statements led to desecration and violence, the report said. The report mentions the "numerous" anti-Semitic statements in government controlled media against opposition Presidential candidate Henrique Capriles, a Catholic of Jewish ancestry. "The government harassed and intimidated critical religious groups", and expresses "special concern" over "instances of anti-Semitism in government controlled media". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/130521/washington-dice-que-el-gobierno-acoso-a-grupos-religiosos; The Washington Post, 05-20-2013; http://www.washingtonpost.com/politics/state-dept-report-notes-increase-in-anti-semitism-special-envoy-named/2013/05/20/9e271e86-c16d-11e2-9aa6-fc21ae807a8a_story.html)

Government releases ex-general jailed in post-election crackdown on opposition

Authorities have released a dissent ex-general who was jailed on charges of inciting unrest after the country’s disputed presidential election. Retired Gen. Antonio Rivero said he would “take care of my health” as he was freed late Friday. Opposition leaders said he was hospitalized Saturday with a respiratory infection and digestive problems following a 16-day hunger strike he undertook to protest his arrest. (The Washington Post, 05-18-2013; http://www.washingtonpost.com/world/the_americas/venezuela-releases-ex-general-jailed-in-post-election-crackdown-on-opposition/2013/05/18/2231e880-c008-11e2-b537-ab47f0325f7c_story.html; Fox News, http://www.foxnews.com/world/2013/05/18/venezuela-releases-ex-general-jailed-in-post-election-crackdown-on-opposition/)

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.

February 07th, 2012

Economics & Finance

International reserves down 8% due to transfers to FONDEN

International reserves have dropped 8% so far this year due to fund transfers from the Central Bank to the National Development Fund (FONDEN). Bank reports show it transferred U$D 500 billion to FONDEN, which adds up to U$D 1 billion this year. Reserves now stand at U$D 27.5 billion, down from U$D 29.8 billion at the close of 2012. More in Spanish: (El Universal, 02-07-2012; http://www.eluniversal.com/economia/120207/caen-8-las-reservas-internacionales-por-traspasos-al-fonden)

Venezuelan dollar bonds outperform region as yields plunge

Venezuela’s bonds gained, pushing yields relative to Treasuries to the lowest level in a year, as signs U.S. economic growth is accelerating fueled demand for higher-yielding emerging-market assets. The extra yield that investors demand to hold Venezuelan dollar debt instead of Treasuries shrank 56 basis points, or 0.56 percentage point, at 4:58 p.m. in New York to 1,073 basis points, the lowest since Feb. 8, 2011, according to JPMorgan Chase & Co.’s EMBI Global index. The yield differential has narrowed 80 basis points in the past week, compared with 33 for Latin American government debt, the index showed. (Bloomberg, 02-03-2012; http://www.bloomberg.com/news/2012-02-03/venezuelan-dollar-bonds-outperform-region-as-yields-plunge-caracas-mover.html)

ECONOMETRICA projects scenarios for Venezuela’s economy in 2012

The ECONOMETRICA economic analysis firm is projecting three scenarios for Venezuela’s economic performance in 2012. The base or average scenario says GDP will grown 2.1% in 2012, with oil averaging U$D 100 per barrel. A more positive scenario would have oil prices at U$D 120 per barrel and GDP at 2.7%. It says a negative scenario is unlikely. It also expects an increase in oil exports to be between 1.3% and 2.3%, More in Spanish: (El Mundo, 02-07-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/posibles-escenarios-para-la-economia-venezolana-en.aspx)

Food production stalled because of expropriations

Based on the numbers supplied by the Executive Office, from 2004 to date, government authorities have requisitioned around 3,600,000 hectares, which does not translate into raising food output. (El Universal, 02-04-2012; http://www.eluniversal.com/economia/120204/claims-of-arrested-production-because-of-expropriations)

Ten companies per week were expropriated during 2011

El proceso de expropiaciones emprendido por el Gobierno no corresponde con el número de indemnizaciones a los que obliga la Ley de Expropiaciones. The estimation was made by the National Council of Industry (CONINDUSTRIA), the National Association of Property Owners, the Federation of Spanish Centers in Venezuela, the National Confederation of Agricultural Producers and other NGO’s, which indicate only 10% of expropriated assets, have seen any sort of compensation. More in Spanish: (El Mundo, 02-07-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/diez-empresas-por-semana-expropio-el-gobierno-en-2.aspx)

Minister Ramirez: 86% of housing estimated this year to be ready in the first half of 2012

Rafael Ramirez, territorial vice-president and coordinator of the High Authority of the National Housing And Habitat System, claimed that 86% of construction projects currently in execution are expected to be finished in 2012 shall be ready in the first half of the year. This is estimated to benefit about 25,722 families currently living in about 572 makeshift shelters. (AVN, 02-06-2012; http://www.avn.info.ve/contenido/minister-ramirez-86-housing-estimated-year-be-ready-first-half-2012)

Commodities

PDVSA faces a growing challenges and mounting responsibilities

State oil- company PDVSA has seen its production and exports decrease as debt obligations and other commitments mount. It now faces the challenge of raising the volume of extraction to 3.5 million bpd, up from the current average of 2.9 million bpd, in the face of declining oilfields, a cut in the output by the Organization of Petroleum Exporting Countries (OPEC) and issues concerning the crude oil upgraders at Orinoco oil Belt. (El Universal, 02-04-2012; http://www.eluniversal.com/economia/120204/pdvsa-faces-a-growth-challenge-with-multiple-responsibilities-to-meet)

PDVSA oil pipeline explosion, leak shut down services

A Petroleos de Venezuela, S.A. oil pipeline at Monagas state’s Jusepin complex suffered an explosion and leak, which reached a dam and forced the shut-down of a water plant and power station, reducing the electricity supply, the Monagas governor’s office said. The “crude oil leak” reached the San Vicente dam and forced the indefinite stoppage of the Bajo Guarapiche water plant, the Monagas governor’s office said on its Twitter account. The leak also forced the stoppage of the Jusepin power station. (Bloomberg, 02-04-2012; http://www.bloomberg.com/news/2012-02-04/pdvsa-controls-jusepin-oil-pipeline-crack-company-says.html)

SIDOR rudderless and without support for the past 18 months

Steelmaker SIDOR –the second largest company in Venezuela - has gone without a stockholder meeting since September 10, 2009, and the latest Board of Directors meeting was August 5, 2010, 18 months ago, and even then most directors – political appointees – did not show, nor have most of them ever set foot in SIDOR. The company’s Executive President, Carlos D’Oliveira, continues to act without having his signature validated, while the Chairman of the Board still appears to be Rodolfo Sanz, current Ambassador to Ecuador, who left his position in April 2010. More in Spanish: (Tal Cual, 02-06-2012; http://www.talcualdigital.com/index.html)

Politics

ALBA Summit closed with new special members, stressing defense of sovereignty

The 11^th Summit of the Bolivarian Alliance for the Peoples of America (ALBA), held this weekend in Caracas, closed stressing the defense of sovereignty and people's self-determination, besides the adhesion of Suriname and Saint Lucia as special members of the bloc and Haiti as full member. "We have changed from three to six Caricom members in the ALBA and, though we did not realize it, they represent more than half the population (of that Caribbean organization)," said Prime Minister of Saint Vincent and the Grenadines, Ralph Gonsalves. The next ALBA meeting will take place in Dominica next August. (AVN, 02-05-2012; http://www.avn.info.ve/contenido/alba-summit-closed-new-special-members-stressing-defense-sovereignty; http://www.avn.info.ve/contenido/suriname-saint-lucia-request-full-alba-membership; and http://www.avn.info.ve/contenido/next-alba-summit-take-place-dominica)

ALBA economic independence depends on Venezuelan oil

During the second session of the 11th Summit of Heads of State of the Bolivarian Alliance for the Peoples of Our America (ALBA), President Hugo Chavez said the Orinoco Oil Belt "is the main engine for the integral development of Venezuela and to cooperate with the economic independence" of the members of the regional bloc. Chavez warned his counterparts that the United States wants to take possession of the Orinoco Oil Belt "because it has oil for 200 years." The President estimated crude oil production to 2014 at 4 billion barrels per day. According to him, it would allow "more flexibility in all these programs" of cooperation with Caribbean countries. (AVN, 02-05-2012; http://www.avn.info.ve/contenido/venezuela-boost-alba-economic-independence-oil)

Giordani ranked the worst Finance Minister in Latin America

A survey carried out by Chilean magazine America Economía ranked Jorge Giordani last among Finance Ministers in 18 Latin American nations. The magazine says Giordani “is considered responsible for the lowest institutional development in Venezuela´s economic management, least transparency, the promotion of policies that stifle investment and the creation of wealth, creating an economy that is ever more dependent on the price of oil and State decisions”. The best ranked minister was Juan Carlos Echeverry, of Colombia. More in Spanish: (Ultimas Noticias, 02-06-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ponen-a-giordani-como-el-peor-ministro-de-finanzas.aspx)

Opposition angered as Chavez celebrates coup

President Hugo Chavez mounted a lavish celebration on Saturday to mark the 20th anniversary of the failed coup that helped launch his political career, as opposition leaders slammed the event as a blemish on the country's democracy. (Reuters, 02-05-2012; http://www.reuters.com/article/2012/02/05/us-venezuela-chavez-idUSTRE8130RA20120205)

American oil worker murdered in Venezuela

A U.S. citizen employed by Intermoor Inc., a closely held Houston-based oil-services provider, was fatally shot in Venezuela on Jan. 27, according to the attorney general’s office. Craig Dwayne Cormier, 36, was caught in crossfire at 11:30 p.m. in the city of Carupano in eastern Sucre state, the attorney general’s office said in a statement today. He had arrived in Venezuela two days earlier to conduct repair work on the Turquoise vessel that services an offshore platform owned by state-oil company Petroleos de Venezuela SA, according to the statement. The murder rate has almost tripled to 67 per 100,000 inhabitants, the highest in South America, since President Hugo Chavez took power in 1999, according to the Venezuelan Violence Observatory. (Bloomberg, 02-06-2012; http://www.bloomberg.com/news/2012-02-06/american-oil-worker-murdered-in-venezuela-government-says.html)

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.

September 02nd, 2011

Economics & Finance

Chavez says speed up takeover of Irish company's land

Venezuelan President Hugo Chavez urged his agriculture minister on Wednesday to speed up the government takeover of land owned by Ireland's Smurfit Kappa in Venezuela. In 2009, Chavez ordered the seizure of a eucalyptus tree farm owned by Smurfit Kappa. Now he says: "We have to take the last square meter of land from Smurfit. ... Let's move more quickly, that's an order". It was not immediately clear if Chavez's comments suggested he planned to seize more land belonging to Smurfit Kappa or accelerate the takeover of the tree farm. The land seizure ordered two years ago involved 3,700 acres, which analysts said represented a small part of the company's landholdings. The Agriculture Minister said Smurfit Kappa still owned 29,650 acres. (Reuters, 08-31-2011; http://www.reuters.com/article/2011/09/01/us-venezuela-chavez-smurfit-idUSTRE7800HE20110901)

Expropriation of Smurfit Carton de Venezuela made official

The order issued on Tuesday by President Chavez to accelerate takeover land in possession of the Smurfit Kappa became official today. The Minister of Agriculture now says the company has 12 000 remaining hectares left in Portuguesa and Lara States. More information in Spanish: (Tal Cual, 09-02-2011; http://www.talcualdigital.com/index.html)

Local industry barely using 52.77% capacity

The industrial sector remains stagnant and barely used 52.77% of installed capacity, according to a joint survey taken ​​by the Venezuelan Confederation of Industries (CONINDUSTRIA) during the second quarter 2011. Although the national economy has registered some growth, use of installed capacity remains virtually the same as last year, when the economy was mired in recession. Their poll indicated "There were no significant changes over the same period last year". More information in Spanish: (El Universal, 09-02-2011; http://www.eluniversal.com/2011/09/02/capacidad-utilizada-de-las-industrias-apenas-llega-a-5277.shtml)

Private exports fell 42% over the past 12 years

Exports from the non oil private sector fell 42% over the past 12 years, mainly due to exchange controls and negative incentives to domestic manufacturing, along with strengthened imports. Currency overvaluation has turned Venezuela more expensive, which makes it difficult to compete in the international market, according to Francisco Mendoza, en expert on exports. Central Bank statistics show that the level of non-oil exports remains exactly the same as 1999, when U$D 1.09 billion were sold abroad and imports amounted to U$D 1.6 billion. More information in Spanish: (El Nacional, 09-02-2011; http://www.el-nacional.com/www/site/p_contenido.php)

International reserves closed at U$D 29.066 billion in August

By the end of August, international reserves were back up to U$D 29.066 billion, according to the Central Bank of Venezuela (BCV), despite transfers of U$D 500 million to the FONDEN special fund. More information in Spanish: (El Mundo, 09-02-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/reservas-internacionales-cerraron-agosto-en-$29-06.aspx)

Is Hugo Chavez ahead of the investment curve?

Martin Hutchinson of Reuters says Venezuelan President Hugo Chavez may not be alone seeking alternatives as he plans to move billions of dollars of cash reserves from developed to developing countries, given the budget and bank woes afflicting the United States and the European Union. He adds that following the Chavez playbook is rarely a good idea, but in this case investors might be wise to take an asset transfer cue from him. (Reuters, 08-17-2011; http://blogs.reuters.com/columns/2011/08/17/is-hugo-chavez-ahead-of-the-investment-curve/)

Commodities

Grain export quotas: Dreyfus is still leading the ranking

In the first two days this week, the Interior Ministry of Commerce released wheat export permits bread (ROEs) for a total of 176,418 tons, of which LDC Argentina (Dreyfus), CARGILL and NIDERA Argentina received 50,000 tons each.

This August, the local affiliate of Dreyfus was one of the most favored in the granting of export quotas for wheat. In the first week it had received 69,465 tons from 74,952 tones distributed between 1 and 5 August, while last week (23 to 26 August) was 167 113 tons of the 248,157 released. More in Spanish: (Info Campo, 08-31-2011; http://infocampo.com.ar/nota/campo/27166/cupos-de-exportacion-de-cereales-dreyfus-sigue-liderando-el-ranking-)

Oil workers at joint ventures in the Orinoco Oil Belt held several meetings outside PDVSA’s facilities as they coordinate demands that the state oil company comply with different labor commitments. (Veneconomy, 09-01-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27406&idc=4)

Politics

President Chavez to finish third chemo cycle this Friday

Venezuela’s President Hugo Chavez said that he would finish his third cycle of chemotherapy treatment this Friday.

He said: “We’re doing well. We’re finishing, with tomorrow’s journey (Friday), the third cycle of postoperative chemotherapy treatment”, and added that his medical treatment will be continued at the Carlos Arvelo Military Hospital, in Caracas. (AVN, 09-02-2011; http://www.avn.info.ve/node/75380)

Venezuela contrasts with the rest of the region for its support to Gaddafi

The Venezuelan government has tried to support to the regime of Libyan strongman Muammar Gaddafi at two Latin American summits. On both occasions, it has failed. Carlos Romero, an expert in international relations, thinks that the support of the Venezuelan government for the Libyan leader "is aimed at the world opinion." In other words, "it seeks to draw attention and disturb the international community which in its majority has closed ranks against Gaddafi." (El Universal, 08-31-2011; http://www.eluniversal.com/2011/08/31/venezuela-contrasts-with-the-rest-of-the-region-for-its-support-to-gaddafi.shtml)

Protests in Caracas up 124%

According to the half-yearly report prepared by non-governmental organizations (NGOs) Espacio Público (Public Space) and human rights watchdog Venezuelan Program of Education-Action in Human Rights (PROVEA), public protests in the Capital District during the first half of 2011 more than doubled total demonstrations in the first half of 2010. 348 demonstrations were held in the first half of the year in Libertador (Central Caracas) municipality alone, a 124% increase compared to 155 in the first half of 2010. (El Universal, 08-31-2011; http://www.eluniversal.com/2011/08/31/protests-in-caracas-up-124.shtml)

Chavez urges recovery of idle land to increase food production

President Chavez said Wednesday that the Bolivarian government must recover all vacant land in the country to go into production and service of the Venezuelan people. In view of famines currently underway in several countries, he invited producers to partner with the government, under the guise of joint ventures. More in Spanish: (AVN, 09-01-2011; http://www.avn.info.ve/node/75142)

Reuters: Opposition faces primary test

According to an analysis of opposition candidates that will participate in the primaries scheduled for 12 February 2012 published by the Reuters news agency, the Venezuelan opposition will have it’s best chance to defeat President Chávez in next year's presidential elections, but they must first group around a single candidate. More information in Spanish: (Ultimas Noticias, 09-02-2011; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/reuters--oposicion-enfrentara-prueba-en-primarias.aspx)

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.

July 15th, 2011

Economics & Finance

UN-ECLAC estimates Venezuela’s economy will grow by 4.5%

The economy of Latin America and the Caribbean will move forward by 4.7% this year, a better result than previous estimates, according to a six-month report launched in Santiago by the UN's Economic Commission for Latin America and the Caribbean (UN-ECLAC) on Wednesday. According to the report, Uruguay's GDP would leap by 6.8% in 2011; Colombia's GDP would rise by 5.3%, and Venezuela's GDP would climb by 4.5%. (El Universal, 07-14-2011; http://english.eluniversal.com/2011/07/13/eclac-estimates-that-venezuelan-economy-will-grow-by-45.shtml)

Venezuelan bonds continue on the rise, anticipated conditions calm markets

Conditions for bond issues for BF 45 billion in the local market, published today under the Supplementary Credit Law have quieted international markets. PDVSA and sovereign bond issues continued to rise with expectations of a single sovereign bond issue for U$D 1.7 billion. A US financial analyst says terms do not exclude dollar denominated bonds. More information in Spanish. (El Nacional, 07-15-2011; http://www.el-nacional.com/www/site/p_contenido.php)

Domestic debt increase raises incentives for a devaluation

The administration of President Hugo Chavez has launched debt plan to be implemented primarily by selling bonds in bolivars to the nation's banks, a strategy advantageous to government finances but increases incentives for a devalue and punishes savers. The government has been granted authority to issue bonds for 45 billion bolivars during the remainder of the year, although a portion of this could be placed abroad in dollars using the official exchange rate, the vast majority will be sold in the country by the advantages for the public accounts. More information in Spanish. (El Universal, 07-13-2011; http://www.eluniversal.com/2011/07/13/la-deuda-interna-aumenta-los-incentivos-para-devaluar.shtml)

International reserves down to U$D 30.062 billion

A Central Bank of Venezuela report shows that international reserves fell from U$D 30.159 billion to U$D 30.062 billion. Reserves have been dropping, from U$D 30.547 billion last July 7 to current levels. More information in Spanish. (El Mundo, 07-14-2011; http://www.elmundo.com.ve/Noticias/Economia/Politicas-Publicas/Reservas-internacionales-de-Venezuela-bajan-a--(1).aspx)

U$D 1.5 billion going to FONDEN

Chavez says the National Development Fund (Fonden) will receive excess reserves from Venezuela’s Central Bank (BCV), in order to reinvest in economic growth. He explained these are resulting from excess reserves during the first semester of 2011; and added that optimum reserve levels are set at U$D 27 billion. More information in Spanish. (Agencia Venezolana de Noticias, 07-15-2011; http://www.avn.info.ve/node/67299)

PDVSA now receiving financial aid from the Central Bank

Over the past three years, state-run oil company Petróleos de Venezuela (PDVSA) sought financial assistance from government agencies, and the Central Bank of Venezuela (BCV) has been the institution that has provided financial assistance to PDVSA in 2011. (El Universal, 07-13-2011; http://english.eluniversal.com/2011/07/13/pdvsa-received-financial-aid-from-the-central-bank-in-2011.shtml)

Government claims Venezuela's food production increased 44% in 12 years

National food production increased from 17,160,577 tons (1998) to 24,686,018 (2012) over the past twelve years, an increase of 44%, according to figures released by the Information and Communications Ministry. It claims 1,100,000 tons of foods were produced in 2010. (AVN, 07-14-2011; http://www.avn.info.ve/node/67224)

Caracas is the fourth most expensive city in Latin America

Caracas is the fourth most expensive city in Latin America, surpassed only by Sao Paulo, Rio de Janeiro and Brasilia (Brazil), according to Mercer's 2011 Cost of Living Survey. Venezuela’s capital jumped 49 places in the ranking of most expensive cities in the world, and is ranked 51 in the 2011 ranking. The deterioration was caused by inflationary pressure. "In the case of Venezuela, the official exchange rate has remained unchanged at VEB 4.30 per US dollar. This is the reason why overall inflation exceeds 25% and inflation in foodstuffs is over 34.4%. As a result, Caracas has jumped almost 50 places compared to last year," said Gabriel Regalado, human capital consulting manager in Mercer. (El Universal, 07-14-2011; http://english.eluniversal.com/2011/07/14/caracas-is-the-fourth-most-expensive-city-in-latin-america.shtml)

Special Law on Costs and Fair Pricing enacted

President Chávez has approved a Special Law on Costs and Fair Pricing, designed to regulate, administer, supervise and control prices in order to end speculation and hoarding which it says lead to inflation. More information in Spanish. (Agencia Venezolana de Noticias, 07-15-2011; http://www.avn.info.ve/node/67353; El Universal, http://www.eluniversal.com/2011/07/15/aspiran-a-controlar-inflacion-con-ley-de-costos-y-precios-justos.shtml)

Commodities

Venezuela in talks to buy Japanese stake in VENALUM

Venezuela’s government said it started talks to acquire a 20% stake in state aluminum producer CVG Venalum from six Japanese companies. The government is seeking to buy the stake from Showa Denko KK (4004), Kobe Steel Ltd. (5406), Marubeni Corp. (8002), Sumitomo Chemical Co., Mitsubishi Materials Corp (5711), and Mitsubishi Aluminum Co., Venezuela’s Ministry of Basic Industries said today in a statement. The ministry expects to have a formal negotiating committee set up in August and aims to have an agreement in place within four months. (Bloomberg, 07-14-2011; http://www.bloomberg.com/news/2011-07-14/venezuela-holding-talks-to-buy-japanese-stake-in-cvg-venalum.html)

Logistics & Transport

Freight operations at Venezuelan ports are twice as costly

Freight operations with Venezuela are the most expensive in the world according to shipping companies that operate at Puerto Cabello, particularly after an announced increase in rates. To illustrate this claim, cargo transfers from China at the Colombian ports such as Cartagena, cost about U$D 2.200 U (10.120 Bolívars), whereas at terminals such as Puerto Cabello, the same operation would cost U$D 4.500 19 350 Bolívars). Both figures are calculated using the official exchange rate BF 4.30 per U$D. More information in Spanish. (El Carabobeño; 07-13-2011; http://www.el-carabobeno.com/impreso/articulo/t130711-sl02/fletes-navieros-hacia-puertos-venezolanos-cuestan-dos-veces-ms)

Politics

Chavez admits “hyper-leadership” was a mistake

In the middle of public reflections on the consequences of having a cancerous tumor removed on June 20, President Hugo Chávez admitted that "hyper-leadership" is one of his "fundamental errors". "He also admitted the need for radiotherapy or chemotherapy in order to "to try to shield the body of new malignant cells." The third stage of the disease has led him to face not only lifestyle but the perception of leadership. More information in Spanish. (El Universal; 07-14-2011; http://www.eluniversal.com/2011/07/14/chavez-acepta-que-su-hiperliderazgo-fue-un-error.shtml)

Moody's: Chavez’s illness raises uncertainties for Venezuela’s future

According to Moody's risk rating, the illness of President Hugo Chavez creates an uncertain future for the country and has mixed implications for debt rating. More information in Spanish. (El Mundo, 07-14-2011; http://www.elmundo.com.ve/Noticias/Economia/Internacional/Moody-s--Enfermedad-de-Chavez-abre-futuro-incierto.aspx)

Venezuelan leader changes his tune

It has appeared repeatedly on Venezuelan state television, government ads, and the even the president's Twitter account. Venezuelan President Hugo Chavez has a new populist slogan.  Chavez, who recently admitted he is battling cancer, is no longer using the slogan that defined his first decade in power: "patria, socialismo o muerte" (fatherland, socialism, or death). He has now changed it for one that is markedly more optimistic. Since he returned from Cuba earlier this month after undergoing cancer treatment that included a surgery, Chavez has been using the slogan "viviremos y venceremos" -- we will live and be victorious. (CNN, 07-14-2011;

http://edition.cnn.com/2011/WORLD/americas/07/14/venezuela.chavez/index.html?iref=allsearch)

Chavez says: "One never undertakes a revolution to become rich"

He made the statement to his followers in a recent public statement. He also called on his cabinet to “advance much more toward our socialism: A socialism within our constitution. Venezuelan style Socialism”. More information in Spanish. (El Universal. 07-15-2011; http://www.eluniversal.com/2011/07/15/una-revolucion-nunca-se-hace-para-volvernos-ricos.shtml and Agencia Venezolana de Noticias; http://www.avn.info.ve/node/67291)

"The US and Venezuela have not started to turn the page"

According to Departing US Deputy Chief of Mission John Caulfield, who adds: "We cannot advance without substantial communication (...) "Drug trafficking concerns us all. There is still minimum cooperation, but it is important”. Caulfield ends his term of service this week and will go to Havana as mission chief; he is being replaced by Kelly Keiderling. More information in Spanish. (El Universal, 07-15-2011; http://www.eluniversal.com/2011/07/15/eeuu-y-venezuela-no-han-empezado-a-voltear-la-pagina.shtml)

Humala meeting with Chávez

Peruvian President-elect Ollanta Humala has arrived in Caracas for a one day visit in order to meet with President Chávez. More information in Spanish. (El Nacional, 07-15-2011; http://www.el-nacional.com/www/site/p_contenido.php)

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.