May 18th, 2012

Economics & Finance

Venezuela´s economy grew 5.6% in the first quarter 2012, according to a joint announcement by Jorge Giordani, Minister for Planning and Finance, and Central Bank President Nelson Merentes. Giordani says this shows growth for six consecutive semesters and the highest level in the last 15 quarter and stressed that the growth estimate in this year's budget was 5%. Petroleum industry growth was pegged at 2.2%. More in Spanish: (AVN, 05-18-2012; http://www.avn.info.ve/contenido/economía-venezolana-creció-56-primer-trimestre-2012; http://www.avn.info.ve/contenido/crecimiento-económico-actividad-petrolera-se-ubicó-25; El Universal, http://www.eluniversal.com/economia/120518/economia-recupera-lo-perdido-en-la-recesion-y-crece-56; http://www.eluniversal.com/economia/120518/pib-petrolero-alcanzo-un-crecimiento-de-22-en-primer-trimestre)

Imports increased 48,5% during Q1 2012, according to a Central Bank report, up to U$D 13.190 billion from U$D 8.883 billion in Q1 2011. More in Spanish: (AVN, 05-18-2012; http://www.avn.info.ve/contenido/importaciones-se-incrementaron-485-al-cierre-del-primer-trimestre)

Private construction drops for nine quarters in a row

Construction in Venezuela grew by 29.6% in Q1 2012 but this was entirely due to public investment, as private activity continued to recede. Central Bank figures show private sector construction contracted by 10.6% and has been dropping for nine consecutive quarters. More in Spanish (El Universal, 05-18-2012; http://www.eluniversal.com/economia/120518/nueve-trimestres-de-caida-lleva-la-construccion-privada)

Nation's debts increased 22.5% in the first quarter of 2012

Venezuela's debts as a nation increased by 22.5% and closed Q1 2012 at U$D 93.3 billion. The increase is due to new loans from China, new bonds issued by the Government and PDVSA, renegotiations with expropriated companies and market variations. More in  Spanish: (El Nacional, 05-18-2012; http://www.el-nacional.com/)

International reserves at lowest point this year

International reserves reached their lowest point this year and closed at U$D 25.651 according to Central Bank official figures. The drop in reserves has increased by constant transfers to the National Development Fund (FONDEN). More in Spanish: (El Mundo, 05-18-2012, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/reservas-internacionales-cierran-en-su-nivel-mas-b.aspx)

VEB 5.30 per U$ dollar exchange rate gains ground

Financial authorities have set a new strategy: On the one hand, they will increase the amount of imports made with the VEB 5.30 per US dollar exchange rate used by the System for Foreign Currency Denominated Securities Transactions (SITME), a mechanism created by the Central Bank for companies that do not receive US dollars through the Foreign Exchange Board (CADIVI). On the other hand, they have cut more highly subsidized imports channeled through CADIVI at an exchange rate of VEB 4.30 per US dollar.  As transactions through SITME gain ground there is a gradual devaluation of the Venezuelan currency. Official data show that CADIVI authorized U$D 4.9 billion for imports, the lowest amount in the last six years and a 9% decline compared to the same period in 2011. (El Universal, 05-16-2012; http://www.eluniversal.com/economia/120516/veb-530-per-us-dollar-gains-ground-in-the-economy)

Over-budget loan appropriations soar 103.5% in a year

The government estimated FY2012 at VEB 297.8 billion (U$D 69.25 billion), but this amount has not been enough to meet the financial requirements of government agencies and state-run companies, thus leading the government to request additional loans. The National Assembly has approved extraordinary appropriations amounting to U$D 6.63 billion - at the official exchange rate of VEB 4.30 per US dollar - to date this year. This exceeds by 103.5% appropriations authorized for the same period in 2011, which were U$D 3.25 billion. (El Universal, 05-16-2012; http://www.eluniversal.com/economia/120516/extra-budget-loans-soar-1035-in-a-year)

Small and medium business endangered

The impact of new regulations imposed by the Government on Small and Medium Enterprises (SMEs) could result in closure or disinvestment of these enterprises, according to an alert issued by the National Council of Trade and Services (CONSECOMERCIO). The new Labor Law (LOT), along with recent minimum wage increase and prices regulated by the SUNDECOP seriously compromise the future of SMEs operating in trade and services throughout the country. More in Spanish: (Tal Cual, 05-16-2012; http://www.talcualdigital.com/index.html)

Overall business climate index for Latin America recovers, except for Venezuela

According to the quarterly study by Brazil's Getulio Vargas Foundation and the University of Munich, which consulted 149 experts from 18 countries, the Latin American Economic Climate Index was up to 5.2 points in April, its best level since July 2011. Venezuela went from 4.5 to 3.4 points. (Veneconomy, 05-16-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30528&idc=2; El Universal, 05-16-2012; http://www.eluniversal.com/economia/120516/brazilian-foundation-venezuelas-business-climate-deteriorates)

Commodities

Iron, steel and aluminum production falling

Mining has dropped 3.2% in Q1 2012, within an apparently growing and expanding economy, as compared to last year. In his report on the economy, Planning and Finance Minister Jorge Giordani admitted a drop in production in iron, steel and aluminum industries concentrated in the Guayana region. More in Spanish: (El Universal, 05-18-2012; http://www.eluniversal.com/economia/120518/se-contrae-la-produccion-de-hierro-acero-y-aluminio)

Aluminum industry paralyzed

For the first time in over three decades, almost all of the domestic industry in Guyana aluminum processing is paralyzed, with some companies in "technical closure" having sent their workers home and others trying to "stretch" inventory - and all because of the almost total lack of aluminum due to the crisis VENALUM and ALCASA. More in Spanish: (Tal Cual; 05-16-2012; http://www.talcualdigital.com/index.html)

Stalled mining in Guyana

Canadian, Russian, Iranian and Chinese have landed in the southern state of Bolivar interested in gold mining, metal largest southern municipalities of the entity and of which live 90% of the population.

Two months after the expiry of the extension of the Order of Strength, and Value Range number 8413, which restricts the production and sale of gold to the State, the industry remains stagnant with no prospect of recovery. Rusoro Mining companies such as Promotora Minera de Guayana, are administered by the state after the expiration Minerven extension to form joint ventures. More in Spanish: (El Nacional, 05-16-2012; http://www.el-nacional.com/)

International Trade

Trade with Colombia rises by 18%

The exchange of goods and services between Colombia and Venezuela grew 18% in the first quarter, compared with the same period in 2011. Luis Alberto Russián, chief executive of the Chamber of Venezuelan-Colombian Integration, said that bilateral trade closed the first 3 months at U$D 564 million: U$D 449 million in Colombian imports and U$D 115 million in Venezuelan exports, mostly fuel from the El Vigía plant in Mérida state. The trade balance for the country shows a deficit of U$D 334 million. More in Spanish: (El Nacional, 05-17-2012; http://www.el-nacional.com/) and Ultimas Noticias, 05-17-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/colombia-recibio-14,6-millones-de-litros-de-combus.aspx)

Politics

In Venezuela, top diplomat steps into the void while cancer forces lower profile for Chavez

After nearly a year of cancer treatment that has forced President Hugo Chavez to step back from the spotlight, a burly former bus driver with a dark mustache and affable smile is emerging more than ever as the president’s stand-in. In recent weeks, Foreign Minister Nicolas Maduro has led news conferences, touted a new labor law and criticized the U.S. government with gusto. He even rallied a crowd of supporters while wearing a track suit emblazoned with the yellow, blue and red of Venezuela’s flag, just like one Chavez sometimes wears. (The Washington Post, 05-16-2012; http://www.washingtonpost.com/world/the_americas/in-venezuela-top-diplomat-steps-into-the-void-while-cancer-forces-lower-profile-for-chavez/2012/05/16/gIQAU7YBUU_story.html)

Brazil is following Chavez illness closely, according to a statement by Brazilian Foreign Minister Brasil Antonio Patriota, who wished the Venezuelan President a rapid recovery. More in Spanish: (Tal Cual, 05-18-2012; http://www.talcualdigital.com/index.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.

March 23, 2012

Economics & Finance

Industries required to register

The Ministry of Industries has now established an operation aimed at recording all individuals and companies involved with manufacturing. The information will then be a part of the Industry and Commerce Integrated Authority (SIGESIC), which in turn will establish requirements and procedures to be met in registering all persons or corporations, public or private, that carry out any activity that involves adding value, sale of goods, services, including not for profit institutions. It has been announced that this will provide reliable information for establishing procedures and policies aimed at promoting industrial development. More in Spanish: (Tal Cual, 03-22-2012; http://www.talcualdigital.com/index.html)

New Labor Law will eliminate outsourcing

The new Labor Law (LOT) aims at eliminating outsourcing and protecting the social rights of workers, according to Foreign Minister Nicolas Maduro, who also coordinates the presidential commission that is working on the project. The commission met with workers and members of the National Assembly and reviewed key issues such as the new system of social benefits, salaries and wages, working hours and new working relationships. More in Spanish: (AVN, 03-22-2012; http://www.avn.info.ve/node/104576)

61.07% of food sold by the Government was imported

A report by the Ministry for Nutrition shows purchases for the basic basket at 4,004,867, of which 3,484,367 tons were distributed directly to the MERCAL network and third parties, mainly the private sector and 520,500 tons went to the strategic reserve. The report noted that of the 3,484,367 tons of food distributed through official networks and private trading, 61.07% was purchased abroad by CASA. Another 461,323 tons were negotiated under oil compensation agreements with other countries, exchanging oil for food. More in Spanish: (El Nacional, 03-21-2012; http://www.el-nacional.com/)

BANDES debt to China is 8.6 times equity

2011 results for the Economic and Social Development Bank, published by the Ministry for Planning and Finance, show that total debt with banks abroad, basically with BDCarrojan, is now 8.6 times equity, which is above the limits set by the law that establishes the bank. More in Spanish: (El Nacional, 03-21-2012; http://www.el-nacional.com/)

Ricardo Hausmann: "Venezuela is prostrated and trying to provide artificial oxygen for the economy"

The economist and professor at Harvard University criticizes the disregard for private property, high inflation, lack of interest in children not attending school, lack of teachers, the collapse of PDVSA and the heavy indebtedness of an economy whose mismanagement "is unforgivable." More in Spanish: (El Nacional, 03-21-2012; http://www.el-nacional.com/)

Devaluation expected for 2013

Asdrúbal Oliveros,  the director of ECOANALÍTICA, says a "wait and see" mode is in place because the next 3 years will be very complex, particularly for the private sector which must be prepared to operate in a difficult and changing environment. He says the private sector must take advantage of the increase in spending and consumption, and should take special care of inventories, particularly those for which it is more difficult to obtain foreign currency, such as food and medicines. More in Spanish: (Tal Cual; http://www.talcualdigital.com/index.html; El Universal,  http://www.eluniversal.com/economia/120323/senalan-que-stock-del-sitme-llega-hasta-abril)

Commodities

Government claims oil output rose to 2.99 mln bpd in 2011

Venezuela's efforts to boost oil production have apparently gained traction as the country's energy ministry reported 2011 production at 2.99 million barrels per day, up 5% from the year before. The socialist administration of President Hugo Chavez wants to increase production to 3.50 million bpd by the end of this year, with much of the new output coming from the huge Orinoco extra heavy crude belt. While production from the country's traditional western oil heartland around the city of Maracaibo has continued to decline, output from fields in the east and in the central Orinoco region has been growing. The ministry's report said crude exports averaged 2.47 million bpd in 2011, up from 2.42 million the year before. (Reuters, 03-21-2012; http://www.reuters.com/article/2012/03/21/venezuela-oil-idUSL1E8ELSYO20120321)

PDVSA's receivable accounts up 44% in 2011

Crude oil sales via international agreements, as well as sales of fuel to governmental bodies, have had an impact on Venezuelan state-run oil company PDVSA's finances. Preliminary numbers on the management of the oil industry -published in PDVSA's 2011 Report - show that accounts receivable rose 44% in a year, from U$D 20 billion in 2010 to U$D 28.9 billion in 2011. In the report, PDVSA explains that "this increase in accounts receivable was influenced by the increase in the price of the Venezuelan oil basket, and the debts contracted by CORPOELEC, PEQUIVEN and CVG on sale of liquid and gaseous fuels." (El Universal, 03-22-2012; http://www.eluniversal.com/economia/120322/pdvsas-accounts-receivable-up-44-in-2011)

Government negotiating asset compensation with Canada-based miner

The government is negotiating a deal to compensate Canada-based RUSORO Mining for the takeover of its gold-mine assets, Oil and Mines Minister Rafael Ramirez said. “We’re in talks with the RUSORO company ... which, as in all the nationalization processes, happens because the government compensates companies for their assets ... but we have to reach agreement on the price,” said Ramirez. (Latin American Herald Tribune, 03-21-2012; http://www.laht.com/article.asp?ArticleId=481341&CategoryId=10717)

Politics

Presidential elections have been confirmed for October 7, according to an announcement by National Election Board Chair Tibisay Lucena. Regional elections will be held on December 16th. More in Spanish: Tal Cual, 03-23-2012; http://www.talcualdigital.com/index.html)

Chavez, Capriles tied ahead of election, poll shows

President Hugo Chavez is locked in a statistical tie with his rival Henrique Capriles Radonski seven months before presidential elections, according to a poll by Consultores 21. Chavez was favored by 46% of those surveyed compared with 45% for Capriles, said Saul Cabrera, vice president of the Caracas-based pollster. Another 9% of the 2,000 people polled between March 3 and 13 were undecided, Cabrera said today in an interview. Chavez, who is battling cancer, had 47.3% support in a December poll by Consultores 21. That was before Capriles won a primary to select a single opposition candidate to oppose Chavez in the October vote and before the president underwent a third cancer operation in less than a year. The poll had a margin of error of plus or minus 2.3 percentage points, Cabrera said. Should Chavez be unfit to run in the October elections, Capriles would beat all four of the government officials best positioned to succeed the president, the poll shows. (Bloomberg, 03-22-2012; http://www.bloomberg.com/news/2012-03-22/chavez-rival-tied-ahead-of-venezuela-election-poll-shows-1-.html)

Chavez denounces plot to kill rival in repeat of 2006 vote

President Hugo Chavez said he had evidence of a plot to kill the opposition presidential candidate Henrique Capriles Radonski, without giving details. Before the 2006 election, Chavez also said security forces had broken up a plot by “radical fascists” to assassinate opposition candidate Manuel Rosales.  In a television interview Capriles replied: “Yesterday someone on television was saying that they had information that someone was preparing an assassination attempt against me,” “Quite honestly, I’ll tell you one doesn’t know if that’s a warning or a threat.” On his Twitter account, Capriles added; “When you’re in an important position such as leading a country, you need to speak the language of peace,” Capriles said. “It’s not about offering security to me, you need to offer security to all the people you serve.” (Bloomberg, 03-20-2012; http://www.bloomberg.com/news/2012-03-20/chavez-warns-of-plot-to-assassinate-electoral-rival-capriles.html)

The White House wishes President Chávez "good health"

"We have no details about his health, except that he is back in Venezuela, but we wish him well," said US State Department Acting Assistant Secretary for Public Affairs Mike Hammer, when asked about unofficial reports published in various countries regarding the health condition of Venezuelan President Hugo Rafael Chávez. (El Universal, 03-22-2012; http://www.eluniversal.com/nacional-y-politica/120322/the-white-house-wishes-president-chavez-good-health)

Petitions from 4 countries affect Venezuelan atlantic coast

The Commission on the Limits of Continental Shelf of the United Nations (CLCS for its acronym in English) will evaluate applications for marine extension affecting the Atlantic coast from Venezuelan Guyana, Barbados and Trinidad and Tobago. Furthermore, having delivered its recommendation in the case of Suriname.

Of these four applications, Venezuela has established its position only if the presentations of Barbados and Guyana recently. More in Spanish: (El Universal, 03-21-2012; http://www.eluniversal.com/nacional-y-politica/120321/petitorios-de-4-paises-afectan-fachada-atlantica-venezolana)

February 28th, 2012

Economics & Finance

New price controls order cuts of up to 25%

The government will cut prices on a slate of basic goods up to an average of 25% as part of a long-awaited first wave of broadly expanded price controls that officials say will combat the country's soaring inflation, Vice President Elias Jaua announced Monday. "We have not messed with profit margins," Jaua said during a televised rally. "We have only taken out the costs that should not be included in a cost structure." Among the adjustments, the price of bleach and dishwashing liquid will fall 6%, toilet paper and tooth paste, 11%, and shampoo and detergent, 25%. The new prices will go into effect April 1, allowing a chance for appeals, though Chavez has threatened to seize the assets of any company that resists the changes. Companies that faced audits in connection with the first installment of revised prices include local units of multinationals like Colgate-Palmolive Co., PepsiCo Inc., H.J. Heinz Co., Johnson & Johnson Unilever PLC and Nestle, as well as local food distributor and packager Alimentos Polar. (Fox Business, 02-27-2012; http://www.foxbusiness.com/news/2012/02/27/venezuelas-new-price-controls-order-cuts-up-to-25/#ixzz1niHkOVEY)

Venezuelan bonds continue their momentum

Since 2006, the government has been issuing government bonds, with three objectives: control the parallel dollar exchange rate, drain excess cash flows and secure financial resources to invest. Although experts say these goals have not been achieved (the parallel dollar drops momentarily, but quickly starts rising again, liquidity is drained only temporarily), they provide an important opportunity for many Venezuelans to secure dollars below parallel market prices. More in Spanish: (Tal Cual, 02-27-2012; http://www.talcualdigital.com/index.html)

Internal debt increased 13% in six weeks to Bs.148 billion despite the fact that oil prices, the country’s main source of revenue, have rallied 24% in the first six weeks of this year, compared to the same period in 2011. (Veneconomy, 02-24-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29548&idc=2)

Private consumption gets a breath of fresh air, but still at bottom

Central Bank statistics show that last year government spending moved up 5.9% to create a boom as part of the election agenda. Nonetheless, private consumption is still 1% below the 2008 level. Barclays Capital explored the effect of public spending and transfers such as scholarships and subsidies in household consumption. According to the investment bank, while there was a positive reaction, "it is worth noting that it is relatively modest compared with that recorded between 2006 and 2008." At that time, a similar expansion of spending attained a "two-digit growth in private consumption." (El Universal, 02-27-2012; http://www.eluniversal.com/economia/120227/private-consumption-takes-a-breath-of-fresh-air-but-still-at-bottom)

Commodities

China raises financing to Venezuela

The government has signed as many as 14 additional bilateral cooperation agreements with the People's Republic of China. The legal instruments will allow for additional funding around U$D 10 billion. As a result, Chinese total lending amounts to U$D 38 billion. "(U$D) 10 billion to reinforce and expand oil drilling at the Orinoco Oil Belt, for agricultural development, for home building, for economic and industrial development, and infrastructure development," said Vice-President Elías Jaua during the signing ceremony held at the headquarters of state-run oil holding Petróleos de Venezuela. (El Universal, 02-28-2012; http://www.eluniversal.com/economia/120228/china-raises-financing-facility-for-venezuela)

Capacity to raise production at the Orinoco Oil Belt in doubt

State-run oil holding Petróleos de Venezuela has voiced its intention to raise by 445,000 barrels per day (bpd) the output at the Orinoco Oil Belt in 2012, that is: from 1.18 million bpd to 1.63 million bpd. PDVSA needs to invest heavily to meet this schedule. The oil company has particularly neglected production due to the large amount of social and industrial commitments set by the Chavez government, which leads many to question the far-reaching nature of the goals in view of difficulties faced by Pdvsa. (El Universal, 02-25-2012; http://www.eluniversal.com/economia/120225/doubts-about-the-capacity-to-lift-production-at-the-orinoco-oil-belt)

Agricultural balance still in the red

World food prices will continue to play a key role in supplying goods to the Venezuelan market in 2012. While the value of some commodities, including sugar, cereal and oil, dropped at the end of 2011, international organizations fear that prices this year will continue above the average. This situation will undoubtedly benefit traditional Latin American exporters, such as Colombia, Brazil, Argentina and Paraguay. However, for Venezuela as an importer of both final products and raw materials, the outlook will not that bright. (El Universal, 02-27-2012; http://www.eluniversal.com/economia/120227/agricultural-balance-still-in-the-red)

Venezuela heads in the opposite direction of Carbs

The new map of the global economy encompasses China and India as a bloc of high-growth emerging nations; superpowers hit by the crisis and showing little progress, such as the United States and the Euro area, and the CARBS (Canada, Australia, Russia, Brazil and South Africa) a the group of countries, which have made effective use of the boom of commodities. CARGS is the acronym coined by Citigroup, to describe the five countries that make-up the world's key commodity markets. As a whole, these countries own commodity-related assets worth U$D 60 trillion. The sun does not set in territories that cover 29% of the planet and control 25-50% of the output of important metals and minerals. (El Universal, 02-25-2012; http://www.eluniversal.com/economia/120225/venezuela-heads-in-the-opposite-direction-of-carbs)

Cristinas gold mine to be developed with China

Venezuela will develop its huge Las Cristinas gold project in partnership with Chinese state investment company CITIC, President Hugo Chavez announced on Friday. The government last year cancelled Canadian company CRYSTALLEX International's permit to develop the long-troubled mine project south of the Orinoco river. Russian-Canadian miner RUSORO had hoped to partner with Venezuela in what could be Latin America's largest gold deposit. Las Cristinas has estimated reserves of 17 million ounces. (Reuters, 02-24-2012; http://www.reuters.com/article/2012/02/24/venezuela-gold-idUSL2E8DOBTT20120224)

International Trade

U$D34 million allocation to raise tractor production

The production capacity at the Pauny tractor factory Pauny, in Guarico State, should rise after the National Government approved U$D 34.990 million to purchase spare parts. Vice President Jaua says "These resources will allow us to purchase over 300 parts to manufacture the same number of tractors, as well as 120 sowers, 5 sowing drill-machines, 150 rotary seeders, 50 stick compactors from Argentina and 100 spray machines". (AVN, 02-26-2012; http://www.avn.info.ve/node/100839)

Chavez says Venezuela is risk-free for foreign investment, after signing new accords with China and reviewing figures of production and oil revenues, as the country has sufficient resources to offer security and guarantee to foreign investment. (AVN, 02-25-2012; http://www.avn.info.ve/node/100749)

Politics

Chavez in good shape after surgery, VP Says

President Hugo Chavez is in good condition and recovering from surgery in Cuba to remove a lesion in his pelvic area where doctors previously detected cancer, Vice President Elias Jaua said. Jaua, reading from a statement while speaking to the National Assembly on state television, said tests on the “lesion,” which was removed in its entirety, will become available in the coming hours. “President Chavez finds himself in good physical condition, in the company of his family and in constant contact with his Vice President and ministers,” Jaua said as allied lawmakers chanted “Oh no, Chavez won’t go!” (Bloomberg, 02-28-2012; http://www.bloomberg.com/news/2012-02-28/chavez-in-good-health-after-operation-vp-says.html; Reuters, http://www.reuters.com/article/2012/02/28/venezuela-chavez-jaua-idUSL2E8DS70T20120228; El Universal, http://www.eluniversal.com/nacional-y-politica/120228/chavez-in-good-condition-following-operation-authorities-confirm)

Chavez surgery gives rival an opening before vote

Throughout his presidency, Hugo Chavez has relied on his vigor and endurance: playing baseball, speaking for hours at a stretch and making decisions on the fly while bounding around Venezuela exuding energy. Now, just as he may need it most, Chavez finds himself ailing heading into a re-election campaign. The 39-year-old state governor has cast himself as a polite, non-confrontational politician, a sharp contrast to the venom-tongued president, who recently referred to Capriles as "a pig" and has accused rivals of wanting him dead. But Capriles didn't rise to the bait. "I wish the head of state a long life," Capriles said. "I want him to see the changes that are going to come about in our country, for him to see a Venezuela of progress, a united country, a country where Venezuelans have many opportunities." (AJC, 02-26-2012; http://www.ajc.com/news/nation-world/chavez-surgery-gives-rival-1363590.html)

December 20th, 2011

Economics & Finance

International reserves drop 4.4% in 2011

Although oil prices have risen 40% to an average U$D 100.87, there is no growth in currency availability at the Central Bank for exchange needs and foreign debt payments. International reserves have dropped by 4.4% during 2011, and on December 15 were pegged at U$D 28.198 billion. More in Spanish: (El Universal, 12-20-2011; http://www.eluniversal.com/economia/111220/reservas-internacionales-acumulan-caida-de-44)

55% of debt held abroad

Official figures from the Ministry of Finance and Planning show that July-September 2011 total central government public debt was up to U$D 78.598 billion dollars, which is an increase of 8,68%, over June this year. More in Spanish: (El Mundo, 12-20-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/55--de-la-deuda-se-encuentra-en-manos-de-acreedore.aspx)

Private sector wage purchasing power remains stagnant

The private sector has begun to recover after two years of recession, but worker purchasing power, after subtracting the effect of inflation, on average recorded only a small improvement of 1.4%, during 3Q 2011 as compared to 3Q 2010, according to Central Bank figures. Jose Guerra, director of the School of Economics, Central University of Venezuela, believes that "the private sector comes from a long recession; this means that companies sell less and in a context of high inflation is very difficult to improve the wages in real terms." (El Universal, 12-19-2011; http://www.eluniversal.com/economia/111219/se-estanca-capacidad-de-compra-del-salario-en-el-sector-privado)

Bank Superintendency approves Caroni, Guayana merger

The Banking Superintendency approved the merger of Banco Caroni C.A. and Banco Guayana, according to a resolution published in today’s Official Gazette. Banco Caroni’s assets now represent 1.7% of the total in Venezuela’s banking system, making it the country’s 10th largest bank, according to data on the Superintendency’s website. (Bloomberg, 12-16-2011; http://www.bloomberg.com/news/2011-12-16/venezuela-s-bank-superintendency-approves-caroni-guayana-merger.html)

Commodities

Coal processing plant expropriated 

The Government has ordered the expropriation of the Grafitos Del Orinoco carbón products industrial processing plant in the Industrial Area of Matanza, at Puerto Ordaz in Bolivar state. The plant processes such products as anthracite and liquid graphite. More in Spanish: (El Nacional, 12-20-2011; http://www.el-nacional.com/; El Universal, http://www.eluniversal.com/economia/111220/gobierno-decreta-expropiacion-de-grafitos-del-orinoco)

Venezuela mortgages its oil to China for U$D 30 billion

China increased its claim on Venezuela's oil production this week with an additional U$D 4 billion in loans, bringing to U$D 30 billion the total owed by the nation, which is secured by future Venezuelan oil production. To repay the debt, Venezuela now sends about 410,000 barrels of crude a day to China, or half the average 806,000 barrels per day that Venezuela sent to U.S. refineries in September, the last month for which Department of Energy figures are available. The country's average production is 2.3 million to 2.4 million barrels per day. Planning and Finance Minister Jorge Giordani said this week that China does not get a discount on the oil it receives. If true, that means Venezuela is receiving the loans without paying any financing costs or interest rates. Apart from the loans, China has signed deals totaling U$D 40 billion to invest in energy projects through 2016, including an oil production and refining project called Junin in the oil-rich Orinoco Belt in eastern Venezuela. (Los Angeles Times, 12-16-2011; http://latimesblogs.latimes.com/world_now/2011/12/china-venezuela-loan-oil.html)

Venezuelan oil slips to U$D 104.39

Venezuela's weekly oil basket slipped to U$D 104.39 as oil prices fell in international markets as hopes dimmed for a rapid resolution of the debt crisis rocking Europe and world markets. According to figures released by the Venezuela Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending December 16 fell to U$D 104.39 from the previous week's U$D 107.47. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=452806&CategoryId=10717)

Rusoro may turn to arbitration to resolve Venezuela gold mining dispute

Rusoro Mining Ltd. (RML) said it may file a claim against Venezuela in an international arbitration court if negotiations to resolve the nationalization of its assets aren’t resolved within six months. Rusoro, a Vancouver-based gold mining company, said a 90- day period to form a joint venture with the government following the nationalization of the gold industry in September has expired. The company hasn’t been told about the status of the venture or any possible compensation. (Bloomberg, 12-17-2011; http://www.bloomberg.com/news/2011-12-17/rusoro-may-turn-to-arbitration-to-resolve-venezuela-gold-mining-dispute.html)

Ferrominera Orinoco closes year producing 17 million tons of iron ore, still beneath break even

According to union sources, Ferrominera Orinoco will close this year producing 17 million tons of iron ore. This is an increase of almost 2 million tons above last year but still below break even, which requires producing over 20 million tons. More in Spanish: (El Mundo, 12-20-2011; http://www.elmundo.com.ve/noticias/economia/industrias/ferrominera-orinoco-cierra-produccion-en-17-millon.aspx)

International Trade

Chávez visits Uruguay to push for Venezuela´s entry toe MERCOSUR

President Chavez says he feels well enough to attend the MERCOSUR summit meeting in Uruguay, where the Foreign Ministers of Argentina, Brasil, Paraguay and Uruguay seek ways to circumvent a veto by Paraguay’s Congress on Venezuela’s admission into MERCOSUR due to compliance issues with the group´s democracy requirements. Before departing for Montevideo, Chavez said increased trade within South America is key to meeting the challenges of the global financial crisis. More in Spanish: (Últimas Noticias, 12-20-2011; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/chavez-viaja-para-puyar-ingreso-en-el-mercosur.aspx); El Nacional; http://www.el-nacional.com/; El Universal, http://www.eluniversal.com/nacional-y-politica/111220/mercosur-busca-formulas-para-acoger-a-venezuela) and Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/chávez-propone-aumentar-mercado-suramericano-para-enfrentar-crisis-económica-mundial)

Trade rules with Colombia remain undefined

An inside source that withheld its identity says that despite an agreement signed by the Presidents of both nations at the close of November, specific customs rules remain undefined. Meetings last week “were not very fluid” and no agreement was reached on several instances. Colombia wants no tariff on products involved in bilateral trade from 2006 to 2010, while Venezuela expects preferential tariffs to be applied to 90% of products exchanged during the same period. More in  Spanish:  (El Universal, 12-20-2011; http://www.eluniversal.com/economia/111220/sin-definir-las-normas-comerciales-con-colombia)

Subsidized food ends up in Colombia as contraband

Products subsidized by the Venezuelan Government and sold at controlled prices through MERCAL and PDVAL goes to Colombia border towns "in large trucks at late hours and it is not known which authorities allow this”. Venezuelan made powdered milk, corn oil, and precooked flour are sold in their original packaging and at prices up to six times greater than in Venezuela. Currency exchange rates favor Colombia, making the deal even more lucrative. More in Spanish:  (El Nacional, 12-20-2011; http://www.el-nacional.com/)

Venezuela receives another 60 tons of textiles from Bolivia

A second shipment of 60 tons of textiles from Bolivia, arrived in Venezuela last week. Huáscar Ajata, Bolivia's Vice Minister of Trade and Exports, reported that the shipment includes more than 100,000 units of clothing and 30% of it was prepaid by Venezuela. The rest of the shipment (70%) remains to be paid, Bolivian media reported. (El Universal, 12-19-2011; http://www.eluniversal.com/economia/111219/venezuela-receives-another-60-tons-of-textiles-from-bolivia)

Trade with Ecuador grew 20%

Trade between Venezuela and Ecuador grew by U$D 300 million this year, compared to 2010, says Ecuador's ambassador to Caracas, Ramon Torres. The increase is due to the development of new forms of trade in place after Venezuela withdrew from the Andean Community (CAN), says Minister of Commerce, Edmee Betancourt. Bilateral trade in 2010 was U$D 1.5 billion. (Últimas Noticias, 12-19-2011; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/intercambio-economico-con-ecuador-crecio-20-.aspx)

Venezuela and Cuba sign 47 cooperative agreements for 2012

Oil and Mining Minister Rafael Ramirez reports that both nations signed 47 agreements for cooperation during 2012, fo a total of U$D 1.6 billion. Agreements were reached for joint programs on education, agriculture, transport, trade, culture, environment sport, health and electricity. More in Spanish: (AVN, 12-20-2011; http://www.avn.info.ve/contenido/venezuela-y-cuba-suscribieron-47-acuerdos-cooperación-para-año-2012)

Politics

Obama: "Venezuela ties to Iran and Cuba have not served its interests", Chavez calls him a “total fraud”

The US Head of State answered in written form to a questionnaire forwarded by El Universal daily in Caracas. President Obama highlighted that his government is worried to see undermined public powers in Venezuela and the ties of the Venezuelan government to Iran. He also advocated more cooperation between the United States and Venezuela. "In Venezuela, we have been deeply concerned to see action taken to erode the separation of powers." "I look forward to the day when our governments can work more closely". Obama’s replies drew immediate sharp rebukes from both Chavez – who called the US President a “total fraud” - and his supporters, demanding he “mind his own business” and leave Venezuela alone. (El Universal, 12-29-2011; http://www.eluniversal.com/nacional-y-politica/111219/venezuelan-govts-ties-to-iran-and-cuba-have-not-served-its-interests; Reuters, 12-19-2011; http://www.reuters.com/article/2011/12/19/us-venezuela-usa-obama-idUSTRE7BI14H20111219; The Washington Post, http://www.washingtonpost.com/world/americas/obama-criticizes-venezuelas-rights-record-ties-to-iran-and-cuba-in-remarks-to-newspaper/2011/12/19/gIQAyF5Y4O_story.html; More in Spanish: AVN; http://www.avn.info.ve/contenido/chávez-“obama-es-fraude-total; El Universal, http://www.eluniversal.com/nacional-y-politica/111220/chavez-insta-al-presidente-estadounidense-a-dejarnos-tranquilos)

Chavez rolls back seizures as shortages hurt re-election bid

President Chavez is enlisting Mexico’s Gruma SAB, French retailer Casino and other international companies to boost supplies of milk, corn flour and cement as shortages threaten to dent his bid for re-election in 2012. He is rolling back policies that have allowed him to expand control over the economy. He is forging alliances with corporations he previously accused of price-gouging.  He now says: “In the past, socialist models that nationalized everything were forced to later ease their policies.” “We’re moving towards a flexible model, our historic creation.” Colombia-based Forsa SA, which produces aluminum molding for construction, has agreed to a joint venture to produce materials for housing projects. Healso invited Cemex SAB to re-invest in the country after paying the Monterrey-based company $600 million this month to resolve a three-year dispute over compensation for assets seized in 2008. (Bloomberg, 12-16-2011; http://www.bloomberg.com/news/2011-12-16/chavez-rolls-back-seizures-as-shortages-hurt-bid-for-third-term.html)

Venezuela honors Simon Bolivar with new coffin

President Chavez has unveiled a new coffin containing the remains of 19th Century South American independence hero Simon Bolivar. The mahogany coffin, encrusted with diamonds, pearls and golden stars, was revealed at a ceremony to mark the anniversary of Bolivar's death in 1830. The president claims him as the inspiration for his "Bolivarian" revolution, though some historians say Bolivar would not agree with Mr. Chavez's socialist policies. (BBC, 12-18-2011; http://www.bbc.co.uk/news/world-latin-america-16236105)

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.