May 14, 2013

Economics & Finance

POLAR tells government to boost output

Venezuela's top food producer, Empresas POLAR, challenged the country's socialist government to boost output of basic staples and ease nagging product shortages, rejecting accusations it is hoarding products to destabilize the economy. President Nicolás Maduro said over the weekend that POLAR, which makes products from beer to detergent, was intentionally cutting output to leave supermarket shelves bare and weaken his government through "economic war." POLAR President Lorenzo Mendoza, in an energetic press conference, said the product shortages have been partly spurred by inefficiency of state-run companies nationalized during the 14-year-rule of late socialist leader Hugo Chavez. "There's an immediate solution to this: Get the public sector (food production) plants running at 100%," Mendoza said, insisting POLAR's output of products such as rice and corn flour were at maximum capacity. He added the government should increase the regulated prices of food products that have in some cases forced companies to produce at a loss. Mendoza said. “The accusations that we are producing less than last year are false,” Mendoza told reporters. “I presume that President Nicolas Maduro is not well informed about the situation and about what’s happening.” Mendoza said his company has increased production of cornmeal by 10% in the past four months, and he offered to buy or rent government-owned corn processing plants to boost output event further. Maduro said he wanted to work with POLAR to resolve the situation, while warning it to leave governing the country to him. He told Vice President Jorge Arreaza to arrange a meeting, which Polar said that it would attend as it is willing “to cooperate with the search for solutions that favor the Venezuelan people”. After a two hour meeting Arreaza said they had agreed that "economic agents should stay out of all partisan politics and dedicate themselves to production". He said they also discussed cyclical excess demand and the need to increase production. Maduro is scheduled to meet with Mendoza today. (Reuters, 05-13-2013; http://www.reuters.com/article/2013/05/13/venezuela-economy-idUSL2N0DU1ZZ20130513; http://www.reuters.com/article/2013/05/13/venezuela-economy-idUSL2N0DU1ZZ20130513; El Universal, 05-13-2013; http://www.eluniversal.com/economia/130513/polar-group-rebuts-charges-on-deliberate-shrinkage; Bloomberg, http://www.bloomberg.com/news/2013-05-13/maduro-accuses-empresas-polar-of-sabotaging-venezuela-s-economy.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=775177&CategoryId=10717; http://www.bloomberg.com/news/2013-05-13/maduro-accuses-empresas-polar-of-sabotaging-venezuela-s-economy.html; and more in Spanish: AVN; http://www.avn.info.ve/contenido/gobierno-y-grupo-empresarial-polar-sostuvieron-primera-reuni%C3%B3n-trabajo)

Maduro claims economic warfare has begun

President Nicolás Maduro says economic warfare is now under way, seeking to disrupt supplies, launch unbridled inflation and undermine Venezuela's international credit. More in Spanish: (El Nacional, 05-14-2013; http://www.el-nacional.com/; El Universal, http://www.eluniversal.com/economia/130514/maduro-afirma-que-trabaja-en-varias-acciones-economicas)

Opposition says the Government is solely responsible for shortages, and criticized the fact that Venezuelans depend on imports for their food. Ramón Guillermo Aveledo, Secretary General of the United Democratic Conference (MUD) says that for more than 14 years the Government has "attacked productiveness through land invasions, the confiscation of productive enterprises, and by expropriated farms and industries, creating a lack of both personal and lefal security of those who work in the countryside and cities". More in Spanish: (El Nacional, 05-14-2013; http://www.el-nacional.com/)

Experts doubt Central Bank's capacity to settle private-sector debt

The business sector applauds the Venezuelan government's decision to speed up currency allocation. However, skepticism surrounds the government's actual payment capacity. "The bad news for us is that operating reserves are quite low," says Jorge Roig, first vice president of the Venezuelan Federation of Industry and Trade Chambers, FEDECÁMARAS, following statements by Nelson Merentes, minister of Finance, and Edmée Betancourt, president of the Central Bank of Venezuela. Based on information provided by the national government, 85% of currency pending allocation to companies amounts to USD 2.6 billion, a figure much lower than estimates by FEDECÁMARAS. (El Universal, 05-11-2013; http://www.eluniversal.com/economia/130511/experts-doubt-central-banks-capacity-to-settle-private-sector-debt)

Agribusiness, pharmaceuticals, airlines and chemical industries owe U$D 4.1 billion to suppliers abroad

Companies operating in agribusiness, pharmaceuticals, chemicals and airlines owe their suppliers over U$D 4.1 billion since the Foreign Exchange Administration (CADIVI) is operating with average delays of 200 days, and this is lowering inventories. Pablo Baraybar, President of the Food Industries Association says suppliers abroad are refusing to dispatch to Venezuela because they have not been paid. More in Spanish: (El Nacional, 05-14-2013; http://www.el-nacional.com/)

Wholesale imported product prices have risen quickly during the first four months of 2013, for a total increase of 16.8%, double what they were in 2012 and the highest recorded rise since 2005. More in Spanish: (El Universal, 05-14-2013; http://www.eluniversal.com/economia/130514/se-dispara-precio-al-mayor-de-los-productos-importados)

Commodities

PDVSA has received U$D 40 million from gov't agencies in two years

Financial data supplied by state-run oil holding Petróleos de Venezuela (PDVSA) points to a funding network with public banks and government agencies. Through promissory notes, investment certificates and borrowing, the state oil company managed to get U$D 40 billion in 2011-2012 from the National Treasury, Banco de Venezuela and Banco del Tesoro. Company information indicates part of the debt has been repaid. In order to cover remaining liabilities, the state oil company has taken steps, such as the renewal of the certificates delivered to state-owned banks in January 2013. (El Universal, 05-11-2013; http://www.eluniversal.com/economia/130511/pdvsa-has-received-usd-40-million-from-govt-agencies-in-two-years)

International Trade

4 bilateral agreements have been signed with China

President Nicolás Maduro and China's Vice President Ly Yuanchao have signed 4 bilateral agreements that include building a port for PEQUIVEN in Carabobo State, along with new food processing techniques. More in Spanish: (AVN, 05-14-2013; http://www.avn.info.ve/contenido/maduro-acuerdos-bilaterales-china-van-l%C3%ADnea-directa-plan-patria and http://www.avn.info.ve/contenido/vicepresidente-china-nuevos-acuerdos-fortalecen-alianza-estrat%C3%A9gica-venezuela)

760,000 tons of food imported to strengthen reserves

A total of 760,000 tons of food will arrive in Venezuela this week to increase the national reserve, thanks to agreements made with Uruguay, Argentina and Brazil, says Food Minister Felix Osorio. Osorio says the goal is to strengthen the three-month food reserve of about 2 million 300 thousand tons of food. Among staples scheduled to arrive within the coming days are edible oil, whole milk powder, beef, canned tuna and sardines, raw sugar, soy and sorghum flour, with an investment of 600 million dollars. (AVN, 05-13-2013; http://www.avn.info.ve/contenido/760000-tons-food-arrive-strengthen-reserves)

Agreements with MERCOSUR nations total U$D 11 billion

President Nicolas Maduro say trade agreements between Venezuela and Brazil, Argentina and Uruguay in MERCOSUR are up to a total U$D 11 billion. Brazil takes the greater share, U$D 6 billion, followed by U$D 3 billion with Argentina and the remainder with Uruguay. Brazil is studying emergency food sales to Venezuela, according to Marco Aurelio Garcia, foreign policy adviser to President Dilma Rousseff. Maduro this week visited Uruguay, Argentina and Brazil. (El Universal, 05-13-2013; http://www.eluniversal.com/economia/130513/procurement-from-brazil-argentina-uruguay-up-55 and more in Spanish: AVN; http://www.avn.info.ve/contenido/convenios-entre-venezuela-y-pa%C3%ADses-del-mercosur-suman-11000-millones)

Colombia seeks to renew agribusiness trade with Venezuela

Colombia's Agriculture Minister Juan Camilo Restrepo has asked Venezuelan authorities to meet commitments made in 2011 to renew agribusiness trade between both nations. He said agreements made two years ago have been poorly executed. More in Spanish: (El Universal, 05-14-2013; http://www.eluniversal.com/economia/130514/colombia-busca-reactivar-comercio-agropecuario-con-venezuela)

Politics

Maduro again charges the US plans his overthrow

President Nicolás Maduro warned Venezuela's Armed Forces that "the empire", as he calls the United States, "does not rest" in its efforts to "take over" Latin America and specially Venezuela, and that it "knocks on doors to see who opens". Maduro made his charge during military ceremonies at Fort Tiuna in Caracas, the main military garrison in the country. He added the US has not gone any further "because they have not been able to". "Let no one be deceived by a smile or a greeting, or praise or a visa to visit the United States", he said as he announced an increase in military pay. He had previously said US President Barack Obama is making "a serious mistake" in not recognizing his election last April 14th. He said Obama had been tricked by Venezuela's opposition who "promised him I would be overthrown in 24 or 48 hours, and that there would be a violent crisis here". More in Spanish: (Infolatam)

Government launches massive street security operation

President Nicolas Maduro has launched a massive security plan aimed at curbing street crime. Under operation "Safe Homeland", 3,000 soldiers will patrol the streets of the capital Caracas and other cities. He says the plan would bring peace to Venezuela, which has one of the highest homicide rates in South America. The opposition has long criticized the government's record on crime, and used it as a campaign issue in recent polls. The government claims more than 16,000 people were killed in crimes in 2012, a rate of 54 per 100,000. However the Venezuela Violence Observatory, put last year's murder rate much higher - at 73 per 100,000 people. Last year, the government introduced a new gun law banning the sale of firearms and ammunition.(BBC; http://www.bbc.co.uk/news/world-latin-america-22519497)

Venezuela has received 76% of Russia's weapons sales to Latin America

Russia exported U$D 14.5 billion in weapons to Latin America over the past 12 years, and Venezuela took 76% of the total, according to Anatoli Isaikin, director of the ROSOBORONEXPORT weapons trading firm. He said trade with Venezuela is part of a strategic alliance between both governments in which Russia is the main weapons purveyor to Venezuela, and is also building two plants here to assemble Kalashnikov automatic rifles and munitions. The list of Venezuelan purchases includes 100,000 Kalashnikov rifles, 47 helicopters, 25 SUMK2 fighter aircraft, T-72B1 combat vehicles, SMERCH and GRAD missile launchers, S-300 antiaircraft defense equipment, and transport trucks. More in Spanish: (El Nacional, 05-14-2013; http://www.el-nacional.com/)

Santos says he works with Maduro despite differences

Colombian President Juan Manuel Santos says "We have deep differences with Chávez and Maduro, but this is not an obstacle in finding matters of common interest where we can work together to benefit our people". Santos made the statement after meeting in Rome with Pope Francis I. He made the reference as an example in discussing his peace talks with Colombian guerrillas. More in Spanish: (El Universal, 05-14-2013; http://www.eluniversal.com/nacional-y-politica/130514/santos-dice-que-trabaja-con-maduro-pese-a-diferencias)

MERCOSUR will discuss democracy in Venezuela

The MERCORSUR Human Rights Committee has agreed to review the state of democracy in Venezuela, based on violent episodes following the April 14th presidential election and the arrest of General Antonio Rivero. Leopoldo López, of the opposition Voluntad Popular organization presented the committee with proof, videos and photos of political persecution and torture. More in Spanish: (El Universal, 05-14-2013; http://www.eluniversal.com/nacional-y-politica/130514/mercosur-debatira-sobre-la-democracia-en-venezuela

Cubans in Venezuela

Retired Major General Antonio Rivero, recently detained on charges of fueling riots after the presidential election of April 14, collected data on the extent of Cuba-Venezuela agreements and disclosed alleged meddling of Cuban advisors in security and defense matters. According to his calculations about 210,000 Cubans have arrived in Venezuela through 2012, as part of an alliance established by Hugo Chávez. A number of agreements have enabled Cubans to take part in a wide range of government plans and social welfare, from health to national intelligence to security. (El Universal, 05-11-2013; http://www.eluniversal.com/nacional-y-politica/130511/cubans-in-venezuela)

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group. 

May 10, 2013

Economics & Finance

April inflation hits 3-year high of 4.3%%

Consumer prices rose in April at their fastest rate in three years, the central bank said on Thursday, presenting a growing economic challenge for recently elected President Nicolas Maduro. Inflation last month reached 4.3%, with the annualized rate hitting 29.4%, driven by a 6.4% rise in food and non-alcoholic drinks. The figures will make tough reading for Maduro, who won election last month by a narrow margin of 1.5 percentage points but is constantly accused of economic mismanagement by opposition leader Henrique Capriles. (Reuters, 05-09-2013; http://www.reuters.com/article/2013/05/09/venezuela-inflation-idUSL2N0DQ33W20130509; Bloomberg, http://www.bloomberg.com/news/2013-05-09/venezuela-inflation-soars-toward-30-as-maduro-cuts-dollar-sales.html)

Maduro cuts dollar sales

The government introduced a complementary currency system this year, after a February devaluation, that auctioned $200 million on March 27. The system, known as SICAD, has not auctioned any foreign currency since. Finance Minister Nelson Merentes said May 2 that 85% of the country’s economic problems would be solved “soon.” Fewer dollars for importers make it harder to buy goods abroad, exacerbating shortages. The scarcity index, which measures the amount of goods that are out of stock on the market, rose to 21.3% last month, the highest since the central bank started tracking the measure in April 2009, according to the central bank report. (Bloomberg, 05-09-2013; http://www.bloomberg.com/news/2013-05-09/venezuela-inflation-soars-toward-30-as-maduro-cuts-dollar-sales.html)

Scarce food staples leads to lines, rationing

Scarcities are strongest in flour, milk, margarine, oil, sugar and other staples in the Greater Caracas area, and consumers must wait in long lines to obtain them. In addition, many stores are selling only one to four units to buyers in order to make sure there is enough to go around. More in Spanish: (El Mundo; http://www.elmundo.com.ve/Noticias/Economia/Industrias/Escasez-de-alimentos--basicos-pone-a-la-gente-a-ha.aspx)

New labor law may increase business costs by 39.2%

Asdrúbal Oliveros, director of the ECOANALÍTICA economic think tank is estimating that the newly enacted Labor Law will take a heavy toll on the economy and is particularly harmful to small and medium enterprises. He says that according to their projections the cost of labor will rise around 39.2% due to a return to retroactive compensation, increased vacation bonuses, a reduction in working hours, among others; and adds that the impact in the area of trade is 53%. More in Spanish: (El Universal, 05-10-2013 http://www.eluniversal.com/economia/130510/estiman-que-lottt-incremento-los-costos-laborales-en-392)

BANDES murky operations estimated at U$D 33 million

US authorities have unveiled a fraud by a New York based brokerage firm, Direct Access Partners (DAP), bribed the way for the Economic and Social Development Bank of Venezuela (BANDES) to sell FOREX cheaply and buy it dearly, leaving behind a handsome return. DAP would pay bonds and sell them afterwards to BANDES at higher prices. Also, whenever BANDES needed to sell a share of its bonds, it would offer them to DAP much lower than market prices. (El Universal, 05-09-2013; http://www.eluniversal.com/economia/130509/murky-operations-for-usd-33-million-at-bandes; Bloomberg, http://www.bloomberg.com/news/2013-05-07/venezuelan-offical-u-s-broker-dealers-charged-in-bribe-scheme.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=772712&CategoryId=10717; http://www.laht.com/article.asp?ArticleId=772127&CategoryId=10717; The Washington Post, http://www.washingtonpost.com/business/venezuelan-banking-official-and-2-miami-broker-dealers-charged-in-5-million-ny-bribery-case/2013/05/07/f9b256d6-b771-11e2-b568-6917f6ac6d9d_story.html)

Commodities

PDVSA is the fifth largest oil company in the world, according to Petroleum Intelligence Weekly (PIW). The largest global company is Saudi Arabia's ARAMCO, followed by Iran's NIOC, US firm EXXON MOBIL and China's CNPC. More in Spanish: (AVN, 05-10-2013; http://www.avn.info.ve/contenido/pdvsa-se-ubica-como-quinta-petrolera-m%C3%A1s-grande-del-mundo)

BRASQUEM and ODEBRECHT will build an urea plant in Venezuela, according to a statement by President Nicolás Maduro following his meeting with Brazilian President Dilma Rousseff. The plant is expected to produce 1.5 million tons of fertilizer per year, to supply the local market and Northern Brazil. He said Venezuela is a supplier of green coke to Brazil. More in Spanish: (El Universal, 05-10-2013; http://www.eluniversal.com/economia/130510/brasil-participara-en-construccion-de-planta-de-urea)

REPSOL says no gas production at Cardón IV until 2014

REPSOL has announced there will be no gas production at the Cardón IV bloc until 2014. CARDON IV is a joint venture by REPSOL and Italy's ENI, along with PDVSA, to develop a field which has 9.51 cubic foot reserve and 182 million condensed barrels. More in Spanish: (El Universal, 05-10-2013; http://www.eluniversal.com/economia/130510/repsol-reitera-que-gas-de-cardon-iv-no-llegara-antes-de-2014)

International Trade

Maduro gets firm Brazilian backing, trade; signs agreements with Argentina and Uruguay

President Nicolas Maduro got strong backing from Brazil on a tour of South American allies to cement his legitimacy as political heir to the late Hugo Chavez. The endorsement will strengthen Maduro's grip on power following his contested election. "We wish you great success with your presidential mandate and your government," Brazilian President Dilma Rousseff said after a meeting in which she promised Venezuela food supplies, expanded trade and cooperation in the oil and gas sector. Maduro announced that Brazilian construction and engineering conglomerate ODEBRECHT will build a 1.5-million-ton-a-year urea plant in Venezuela. He said Brazil and Venezuela agreed to strengthen military ties. In private, though, Rousseff was expected to advise Maduro to tone down his aggressive rhetoric against his opponents for the sake of political stability, said a diplomat who was briefed ahead of the meeting. Venezuela is the second largest market after Argentina for Brazilian manufactured goods, and its trade with Venezuela that has expanded seven-fold in the last decade to U$D 6 billion last year. Maduro previously visited Argentina, where he signed 12 agreements with President Cristina Kirchner; and Uruguay, where he signed in the agreements in areas of energy, defense, science and technology with President José Mujica. Maduro told Rousseff he is "building a government for all, for those who voted with us and for those who did not". (REUTERS, 05-10-2013; http://uk.reuters.com/article/2013/05/10/uk-brazil-venezuela-maduro-idUKBRE94900920130510); AVN, 05-09-2013; http://www.avn.info.ve/contenido/venezuela-argentina-ink-12-agreements; El Universal, http://www.eluniversal.com/nacional-y-politica/130509/venezuela-argentina-presidents-ratify-bilateral-alliance; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelan-president-rivals-tour-south-america-seeking-allies-after-contested-election/2013/05/08/ffb8f0d0-b83e-11e2-b568-6917f6ac6d9d_story.html; Fox News, http://www.foxnews.com/world/2013/05/08/venezuelan-president-rivals-tour-south-america-seeking-allies-after-contested/ and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/130510/maduro-aseguro-a-rousseff-que-gobierna-para-todos)

Politics

The Economist: As political and economic crises deepen, the army waits in the wings

With a narrow and disputed election victory last month and an accelerating economic crisis, the man who succeeded Hugo Chávez as Venezuela’s president got off to an inauspicious start. Now Nicolás Maduro’s efforts to establish authority are making matters worse at home, and setting alarm bells ringing abroad. Food shortages are worsening and inflation is nearing 30%. Falling oil prices have eroded foreign reserves, roughly 70% of which consist of gold, another tumbling commodity.. But without a change of course, Venezuela is heading for social unrest. Diosdado Cabello, the speaker of the Assembly and a former army lieutenant, is seen as Maduro’s main rival within the chavista movement. Many on the radical, civilian left view him as a dictator-in-waiting. His contemporaries in the army are now generals. Some fear that Cabello is trying to engineer violence that would leave him holding the whip hand. Maduro appears to have little room for maneuver. In contrast to Chávez’s one-man show, government decisions are taken by a shadowy junta known as the “political-military command”. For the first time, analysts are speaking of a split in the armed forces. Rocío San Miguel of Citizens’ Control, a think-tank, says street violence requiring army intervention “could oblige the armed forces to take a [political] position”. The government says this is alarmist talk put about by the opposition and Venezuela’s foreign enemies. But the crisis seems ever more real. (The Economist, http://www.economist.com/news/americas/21577392-political-and-economic-crises-deepen-army-waits-wings-cry-havoc)

Peru seeks UNASUR meeting on Venezuela

Peruvian Foreign Minister Rafael Roncagliolo has announced that as pro tem chair of UNASUR, the Peruvian government has begun "consultations" for a regional position on Venezuela. More in Spanish: (El Universal, 05-10-2013; http://www.eluniversal.com/nacional-y-politica/130510/peru-gestiona-reunion-de-unasur-por-caso-venezolano)

Colombia's Congress analyzes motion on Venezuela

Colombia's Congress is considering a formal statement over Venezuela after hearing a report from Venezuelan legislator María Corina Machado on attacks on opposition legislators and denial of their right to speak at the National Assembly. More in Spanish: (El Universal, 05-10-2013; http://www.eluniversal.com/nacional-y-politica/130510/congreso-colombiano-evaluara-mocion-sobre-venezuela)

MERCOSUR legislators seek to suspend Venezuela

Legislators from Argentina, Paraguay and Uruguay have asked the chairman of MERCOSUR' s parliament to call a special meeting to analyze the presence of Venezuela in the regional grouping. They seek to analyze events in Venezuela during 2013 following April 14th presidential elections in light of the Ushuaia Protocol democratic clause. The request says "many instances lead to this request. Among them, the troubling situation coming out of elections, the beating of opposition legislators, persecution of critical media and charges of severe violations of human rights.". More in Spanish: (El Nacional, 05-10-2013; http://www.el-nacional.com/)

US vice-president urges Venezuelan president to dialogue

The US administration called on President Nicolás Maduro to open "genuine dialogue" to overcome the crisis Venezuela has been going through due to the "profound division" of society following the narrow results of the April 14th presidential election. US Vice-President Joe Biden saidany Venezuelan Government has a key responsibility regardless of the election's winner: to allow freedom of expression and assembly, protect citizens from violence, and engage in a genuine dialogue in a country that is profoundly divided. (El Universal, 05-08-2013; http://www.eluniversal.com/nacional-y-politica/130508/us-vice-president-urges-venezuelan-president-to-open-dialogue; http://www.eluniversal.com/nacional-y-politica/130508/the-us-laments-no-dialog-to-resolve-polarization-in-venezuela)

US imposes sanctions on a Iran-Venezuela bank

The US Treasury Department has placed sanctions on the Iran-Venezuela Binational Bank (IVBB) for being ac financial "representative" of the Iran's Development Bank. More in Spanish: (El Mundo, 05-10-2013; http://www.elmundo.com.ve/Noticias/Actualidad/Internacional/EEUU-condena-a-banco-binacional-Iran-Venezuela.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.

May 07, 2013

Economics & Finance

Government fine tunes exchange and price policies

Pressured by the short supply in basic staples within the domestic market, business half-operating businesses for lack of inputs, and a cooling economy, the government is striving to improve FOREX allocations and pondering changes in price controls. President Nicolás Maduro recently said that Finance Minister Nelson Merentes will announce a plan for apportioning US dollars in order to end with "caseload" of unmet applications at the Foreign Exchange Administration Board (CADIVI). (El Universal, 05-04-2013; http://www.eluniversal.com/economia/130504/venezuelan-government-refines-exchange-and-price-policy)

Scarcities will not soon end

According to estimations by the ECONOMÉTRICA research firm, imports have dropped during Q1 2013, and it believes the trend must be closely monitored as "a severe contraction would mark the beginning of an economic recession", adding that "it will be difficult to abate shortages in the near term". More in Spanish: (El Universal, 05-07-2013; http://www.eluniversal.com/economia/130507/estiman-que-la-escasez-no-se-reducira-en-el-corto-plazo)

Central Bank is unlikely to pay debts to private sector

FEDECÁMARAS First Vice President Jorge Roig applauded moves to accelerate FOREX allocations,but said "the bad news we have is that operational reserves are very low".  More in Spanish: (El Universal, 05-07-2013; http://www.eluniversal.com/economia/130507/dudan-que-bcv-pueda-liquidar-deuda-con-sector-privado)

Merentes unable to overcome high risk perception

Finance Minister Nelson Merentes is on a crusade to improve negative perceptions on Venezuela's economy, but his meetings with the business community have not led to better bond ratings for either the government or PDVSA. Neither have they clarified what economic course the government will set. Three weeks after the recent Presidential elections sovereign and PDVSA bonds remain 4 points below their pre-election prices. According to a report prepared for Bank of America by analyst Francisco Rodríguez, "many multinationals have registered great losses due to devaluation, and this makes headquarters reluctant to increase financing to their subsidiaries."  Rodríguez adds that "as recession deepens, Maduro's approval ratings will continue downward and this will lead some in the opposition to become more confrontational". More in Spanish: (El Nacional, 05-07-2013; http://www.el-nacional.com/)

Commodities

PDVSA's accounts receivable soared 32% in 2012

State oil company PDVSA's annual report for 2012 reveals that its receivables soared 32% in 2012, from U$D 31.57 billion in 2011 to U$D 41.70 billion in 2012. The results were strongly influenced by government debts to PDVSA, which are mainly due to oil and byproducts supplied to foreign governments. Official debts are 74.5% of PDVSA's total receivables. (El Universal, 05-06-2013; http://www.eluniversal.com/economia/130506/pdvsas-accounts-receivable-soar-32-in-2012)

Oil and fuel exports rose, crude output slips

Venezuela's oil and fuel exports rose slightly in 2012 over the previous year even as crude production and refinery output slipped, the oil minister said on Friday, as the nation relied on imports to meet part of local fuel demand. Exports rose 4% to reach 2.57 million barrels per day (bpd) while oil production slipped 3% to 3.03 million bpd from 3.13 million bpd, state oil company PDVSA said. The total amount of oil processed by Venezuelan refineries dropped 13%. Oil Minister Rafael Ramirez said PDVSA last year imported refined products to supply the domestic market. He said it also imported naphtha to blend with extra-heavy crude from the vast Orinoco belt and exported the resulting mix. (Reuters, 05-03-2013; http://www.reuters.com/article/2013/05/03/venezuela-oil-idUSL2N0DK18820130503; Veneconomy, 05-06-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34558&idc=4)

PDVSA's partners could be out if they fail to boost production

Private-owned oil companies operating in partnership with PDVSA in traditional areas must meet the oil output increase ordered by the Ministry of Petroleum and Mining. If they fail to do so, their partnerships may be dissolved. Oil minister and PDVSA president, Rafael Ramírez says some small join ventures that were operating agreements must now become part of a single company to make them financially viable. (El Universal, 05-06-2013; http://www.eluniversal.com/economia/130506/pdvsas-partners-could-be-out-if-failing-to-boost-production)

International Trade

PETROCARIBE economic zone created

An agreement to create an economic region for investment, trade and common development among PETROCARIBE member states was approved during a presidential summit of the group, in order to solidify the energy, economic and finance stability in the region. President Nicolas Maduro and 19 delegations, agreed to begin working to create the zone, which extends scope of an alliance that was limited to oil affairs and now aims at "investing, trading to carry out joint productive, tourism projects." (AVN, 05-05-2013; http://www.avn.info.ve/contenido/petrocaribe-economic-zone-passed; El Universal, http://www.eluniversal.com/economia/130506/firm-results-expected-from-petrocaribe-zone-in-june)

Honduras and Guatemala added to the PETROCARIBE program

Honduras and Guatemala have been included in the Petrocaribe program, under which his country provides oil and natural gas on preferential terms. President Nicolas Maduro made the announcement Sunday as he hosted a PETROCARIBE summit bringing together Latin American and Caribbean leaders in Venezuela’s capital. (The Washington Post, 05-05-2013; http://www.washingtonpost.com/business/venezuelas-maduro-says-honduras-and-guatemala-have-been-added-to-petrocaribe-program/2013/05/05/505c63e2-b5c8-11e2-b568-6917f6ac6d9d_story.html)

Guyana to resume rice exports to Venezuela under new PETROCARIBE deal

Guyana says it will resume rice shipments to Venezuela following the renewal of a U$D 130 million rice-for-oil deal between the two countries. Agriculture Minister Leslie Ramsammy said Saturday that Guyana could export as much as 210,000 metric tons (231,500 tons) of rice in the next two weeks. He said he expects to travel to the Caracas in about a week to hasten the renewed PETROCARIBE deal, which offers fuel at preferential terms. (The Washington Post, 05-04-2013; http://www.washingtonpost.com/business/guyana-to-resume-rice-exports-to-venezuela-under-new-petrocaribe-deal/2013/05/04/9d94f706-b4d7-11e2-9fb1-62de9581c946_story.html)

Maduro to visit Mercosur nations this week

Venezuelan president Nicolas Maduro informed that he will start a formal call through Argentina, Uruguay and Brazil, member states of the Common Market of the South (Mercosur) next Tuesday, May 7. (AVN, 05-06-2013; http://www.avn.info.ve/contenido/maduro-visit-mercosur-nations-week)

Logistics & Transport

Port activities down 20-30% due to delays in accessing foreign exchange and bureaucratic processes to import goods. This situation has led to shortages of some products. The decline is hitting over 700 companies working in the port. More in Spanish: (El Carabobeño, 05-06-2013; http://www.el-carabobeno.com/impreso/articulo/58997/actividades-portuarias-cayeron--entre-20-y-30-por-ciento)

Politics

Dialogue begins at the National Assembly

Pro government and opposition legislators have begun talks in order to try to reach an agreement which will allow the National Assembly to function. Roberto Enriquez, President of the COPEI party had earlier said they would seek to renew debates "with no limitation whatsoever on what the Constitution mandates, and put an end to insults and most particularly, aggressions" that took place in recent sessions. More in Spanish: (El Universal, 05-07-2013; http://www.eluniversal.com/nacional-y-politica/130507/oficialismo-y-oposicion-abren-dialogo-en-la-asamblea)

Capriles brings additional challenge on election

Miranda Governor Henrique Capriles is bringing a new challenge against the recent Presidential elections to the Venezuelan Supreme Court. The former presidential candidate says he will bring additional proof on each of the charges made against the election, and added he has brought action "in view of the refusal of the Elections Board to carry out a full audit". More in Spanish: (El Universal, 05-07-2013, http://www.eluniversal.com/nacional-y-politica/130507/nueva-impugnacion-de-las-elecciones-presentaran-hoy)

Colombia protests Maduro references to former President Alvaro Uribe

Colombian Foreign Minister María Ángela Holguín called in Venezuela's Ambassador to Bogotá, Iván Rincón, to protest references by Nicolás Maduro toward former Colombian President Álvaro Uribe, whom Maduro he termed a "murderer" and accused of plotting to kill him. Earlier, Colombian President Juan Manuel Santos had instructed the Foreign Minister to establish diplomatic contact to uphold the "dignity" of the former President. More in Spanish: (El Universal, 05-07-2013; http://www.eluniversal.com/nacional-y-politica/130507/colombia-expreso-a-venezuela-inconformidad-por-tema-uribe)

Maduro begins tour of MERCOSUR

President Nicolas Maduro says a tour he is taking to Uruguay, Argentina and Brazil aims at strengthening food supplies for Venezuela. He says he will seek to ensure a three month supply of staples, including food, personal care, home and consumer products. More in Spanish: (AVN, 05-07-2013; http://www.avn.info.ve/contenido/ampliar-reserva-alimentaria-ser%C3%A1-tema-esencial-gira-del-presidente-maduro; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maduro-saldra-de-gira-internacional-para-buscar-al.aspx; El Mundo, http://www.elmundo.com.ve/Noticias/Economia/Internacional/Maduro-buscara-alimentos-en-su-primera-gira-intern.aspx)

Nicaragua owes Venezuela U$D 2.188 billion according to a report by Nicaragua's Central Bank, which shows the amount reflected under ALBANISA, a consortium created to manage Venezuela's funding. This makes Venezue1la Nicaragua's main creditor, for almost half of the Central American nation's public foreign debt. More in Spanish: (El Mundo, 05-07-2013; http://www.elmundo.com.ve/Noticias/Economia/Internacional/Nicaragua-le-debe--2-188-millones-a-Venezuela.aspx)

No democracy in Venezuela, according to 130 countries

Representatives of 130 Foreign Offices of nations considered democratic met last week at the Summit of the Community of Democracies in Mongolia. Venezuela was one of a small group of 16 nations not invited for failing to meet the minimum requirements. Nations attending are required to have free elections, uphold human rights, ensure freedom of the press and freedom of association are ensured, and enforce the rule of law. (El Universal, 05-06-2013; http://www.eluniversal.com/nacional-y-politica/130506/no-democracy-in-venezuela-according-to-130-countries)

Venezuela rebuffs Obama, repeats case against U.S. 'spy'

Venezuela brushed off criticism from U.S. President Barack Obama and maintained its accusation that an American detainee in Caracas is a spy pretending to be a filmmaker. During his visit to Latin America, Obama said the allegations against Tim Tracy, 35, were "ridiculous." But Interior Minister Miguel Rodriguez Torres insisted that intelligence agents tracking Tracy since late 2012 had uncovered ample evidence he was plotting with militant anti-government factions to destabilize Venezuela with violence. "When you want to do intelligence work in another country, all those big powers who do this type of spying, they often use the facade of a filmmaker, documentary-maker, photographer or journalist," he told state TV. (Reuters, 05-06-2013; http://www.reuters.com/article/2013/05/06/venezuela-usa-idUSL2N0DM0D520130506; El Universal, 05-06-2013; http://www.eluniversal.com/nacional-y-politica/130506/venezuelan-public-authorities-repudiate-obamas-statements; The Washington Post, http://www.washingtonpost.com/world/the_americas/obama-idea-that-american-detained-by-venezuela-is-a-spy-is-ridiculous/2013/05/04/1b2ae9f0-b4fb-11e2-9fb1-62de9581c946_story.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.

May 03, 2013

Economics & Finance

Finance Minister seeks to speed up FOREX supply

Finance Minister Nelson Merentes has said his office is working with the private sector to speed up FOREX allocations within the Currency Board (CADIVI). "They will not be delayed again", he said after a meeting with businessmen, Central Bank President  Edmee Betancourt, and Eudomar Tovar, President of CADIVI.  More in Spanish: (AVN, 05-03-2013; http://www.avn.info.ve/contenido/ministro-merentes-garantiza-que-cadivi-acelerar%C3%A1-entrega-divisas-empresas)

Effective new minimum wage of 2,457 bolivars

The new 20% increase in the monthly minimum wage for workers in Venezuela is now in force. On September 1 there will be a further increase of 10%, taking the minimum wage to 2,702.73 monthly bolivars, and on November 1 there will be another adjustment between 5 % and 10%, "based on the behavior of the National Consumer Price Index (INPC) during 2013." In the first quarter, inflation varied 7.9%. (AVN, 05-02-2013; http://www.avn.info.ve/contenido/effective-new-minimum-wage-2457-bolivars; El Universal, http://www.eluniversal.com/economia/130502/new-minimum-wage-rules-of-the-labor-organic-law-in-official-gazette; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=34535&idc=2)

Alimentos POLAR says hoarding is “impossible” as the company is not allowed to transport a single kilogram of pre-cooked corn flour without authorization from the government. Alimentos POLAR administers 4,200 SICA reports every month and only 1% of them is rejected. POLAR Operations Director José Anzola stresses they are willing to dialogue with the government. (Veneconomy, 05-02-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34531&idc=3)

Commodities

PDVSA has no immediate plans for bond issue

State oil company PDVSA has no immediate plans to issue bonds, the company's finance director said on Thursday.

"Right now there are no instructions (to issue) and we are not working on any bond issues," Victor Aular told reporters on the sidelines of a PDVSA event in the eastern city of Cumana. Borrowing by PDVSA has been a key source of financing for Venezuela's government in recent years. The firm issued U$D 3 billion last year and more than U$D 10 billion in 2011. (Reuters, 05-02-2013; http://www.reuters.com/article/2013/05/02/venezuela-pdvsa-idUSL2N0DJ1NM20130502)

Politics

Opposition challenges Maduro's win in court, seeks new elections

Opposition leader Henrique Capriles has challenged President Nicolas Maduro's narrow election victory before the Supreme Court, prolonging what appears to be a futile effort to overturn last month's vote. Capriles refused to accept the results of the April 14 vote for a successor to late socialist leader Hugo Chavez, and called on supporters to take the streets. Few expect Capriles to win a favorable ruling from the court, which the opposition says is controlled by the ruling Socialist Party. He may also go to international tribunals. "This appeal seeks to annul the elections and request new presidential elections in Venezuela," said Gerardo Fernandez, one of the lawyers representing the opposition. He said that the complaint is contained in a paper of more than 180 pages.
The constitutionalist attorney explained that the opposition coalition impeached the whole election. "It is not only the event of April 14, but also all the stages of such event (...) the campaign, vices in the register of voters, the system through which it took place. Unbalance, misuse of public monies, all the irregularities that occurred on and after the Election Day," he specified. (El Universal, 05-02-2013; http://www.eluniversal.com/nacional-y-politica/130502/venezuelan-opposition-contests-election-of-april-14-at-the-high-court; Reuters, http://www.reuters.com/article/2013/05/03/us-venezuela-election-idUSBRE94118W20130503)

Political chaos grips Venezuela after legislative brawl and rival marches

Venezuela stumbled deeper into political chaos this week as legislators brawled in the National Assembly and government supporters and opponents took to the streets for rival marches amid continuing tensions over the narrow election victory of President Nicolás Maduro. A punch-up in Congress on Tuesday that put several opposition deputies in hospital. The deputies had raised a banner saying "Coup in Parliament" after the pro-government leadership of the legislature prevented them from speaking during the session unless they explicitly recognized Maduro as president. Maduro allies have in most cases said they regretted the violence, but blame the incident on provocation by opposition deputies who interrupted the sessions with whistles and air horns. Prisons Minister Iris Varela was less cautious. "They really deserved the beating that they got," she said. Government supporters and opponents held separate May Day marches in Caracas, the capital, on Wednesday that many had initially feared could turn violent. But the routes were changed to keep the rival bands apart — and attention focused instead on the violence that erupted in the National Assembly a day earlier. (The New York Times, 05-01-2013; http://www.nytimes.com/2013/05/02/world/americas/rival-marches-after-legislative-brawl-in-venezuela.html?_r=0 and Reuters, http://www.reuters.com/article/2013/05/03/us-venezuela-election-idUSBRE94118W20130503)

Opposition asks investigation of clash in congress

Opposition legislators have asked prosecutors to investigate a brawl on the floor of congress that injured several of its lawmakers and forced at least one of them to undergo surgery. Congressman Julio Borges, who suffered head injuries when ruling party member Michele Reyes repeatedly struck him in the face, met with federal prosecutors to demand the probe into who was responsible for Tuesday’s clash in the National Assembly. (The Washington Post; http://www.washingtonpost.com/world/the_americas/venezuela-opposition-asks-investigation-of-clash-in-congress/2013/05/02/0b42f350-b363-11e2-9fb1-62de9581c946_story.html)

OAS' Insulza calls for restoration of deputies' rights in Venezuela

Secretary General of the Organization of American States (OAS) José Miguel Insulza has expressed regrets about the violent events taking place inside the National Assembly. "Violence inside the Venezuelan Parliament "reflects, in a dramatic way, the absence of a political dialogue that could reassure the people and the public powers, so that all Venezuelans can solve the outstanding issues facing the country in a climate of peace," Insulza said, according to an OAS's press release. (El Universal, 05-02-2013; http://www.eluniversal.com/nacional-y-politica/130502/oas-insulza-calls-for-restoration-of-deputies-rights-in-venezuela)

....Foreign Ministry takes issue with OAS Secretary General

The Foreign Ministry immediately issued a communiqué to rebut the "interfering" remarks from José Miguel Insulza, the Secretary General of the Organization of American States (OAS). According to the notice, the OAS senior officer works "closely" with spokespersons of the US Department of State and the White House in an attempt "at forming the perception of a political crisis in Venezuela which requires mediation." (El Universal, 05-02-2013; http://www.eluniversal.com/nacional-y-politica/130502/venezuelan-fm-takes-issue-with-oas-secretary-general)

Following is based on an interesting summary of the Venezuelan political situation by analyst Enrique Ter Horst

Today’s two large marches did not meet and May 1 ended peacefully, but the afternoon before a group of PSUV deputies to the National Assembly brutally attacked their colleagues of the opposition, wounding Deputies Julio Borges, Maria Corina Machado, Ismael Garcia, Nora Bracho, Dinorah Figuera, Homero Ruiz, Eduardo Gomez Sigala and Americo de Grazia, while one of the PSUV deputies continued to speak as if nothing was happening and President Cabello looked on. The ANTV cameras had been turned to the roof of the Assembly, but one of the opposition deputies was able to register the melee on video (see http://www.panorama.com.ve/portal/app/push/noticia64605.php and http://www.noticias24.com/venezuela/noticia/165748/en-fotos-asi-fue-la-trifulca-hoy-en-la-asamblea-nacional/).

Deputies Borges and Machado suffered serious wounds on their faces, requiring surgery in the case of Machado, who had her nose fractured at four different points by PSUV Deputy Nancy Ascencio, and de Grazia has been hospitalized. Machado stated that during the attack she suffered at the hands and feet of Ascencio, who kicked her as she was lying on the floor in front of the podium of the Presidency while Cabello looked on with a smile. Machado also informed that the doors to the Assembly had been locked for the occasion, leading her to conclude that it was a premeditated attack. Machado is not a woman who would invent a story. For a closer look at this intelligent and courageous woman click on http://univision23.univision.com/noticias/americalatina/article/2013-04-17/venezuela-maria-machado-pide-permiso-raul-castro-recuento.  

Cabello, it will be recalled, had ruled he would not give the floor to any opposition deputy who refused to recognize Maduro as the President of Venezuela [1][1], and has also ordered the suspension of their paychecks as long as they persisted in their position. At one stage, after the PSUV majority approved a motion by Cabello confirming his ruling, the opposition unfurled a banner which read “Golpe al Parlamento” and started to honk and make other noises, which then led to the attack. Pedro Carreño, the head of the PSUV parliamentary fraction, surrounded by some of the attackers, held a press conference in which he stated that it was they who had been attacked, and that the PSUV deputies had only reacted to the provocation by the opposition. It is the third time that Julio Borges is physically attacked and it will be recalled that Deputy William Davila was recently hospitalized after a PSUV deputy hurled a microphone at his head.

Henrique Capriles will contest tomorrow the election at the Electoral Chamber of the Supreme Tribunal of Justice, while the CNE continues with the “audit” it has designed avoiding the review of the “cuadernos electorales” (voter registers), the extracts from the voters registry at each voting center, and voting table. In this regard it is interesting to see how Jorge Rodriguez, Maduro’s campaign manager and former President of the CNE, says why the “cuadernos de votacion” are essential for a true audit, when on the occasion of the opposition’s primaries in February 2012 he took exactly the same line of argumentation Capriles is taking now, and even goes as far as explaining how the fraud is done. Fascinating, (see http://www.youtube.com/watch?v=qEqhciete98). Rodriguez is the person credited with having stopped Maduro in his tracks when he initially agreed to a full recount.

Capriles has already said he is aiming at a fresh election, and that it will take the help of the international community to ensure that it is held, mentioning UNASUR, the OAS and the UN. “As we have said, we shall exhaust all national institutional possibilities, even if we are aware what the reality is”. He added that "when justice is denied to a people, the international community helps to get to the truth”). The intention is to seize the Inter-American Commission on Human Rights as soon as possible in order to then seek a ruling at the Inter American Court of Human Rights, but that will not happen the day after tomorrow. A new election would require the active participation of high credibility international observers, such as the United Nations and/or the European Union. UNASUR and the OAS have shown that they are not impartial.

The regime continues its repression, criminalizing dissent, even peaceful protest. General (Ret.) Antonio Rivero, formerly the head of the Natural Disaster Agency under Chavez and now a prominent member of Voluntad Popular, the political party led Leopoldo Lopez, and which is being singled out by the regime for particular attention, was detained and indicted on charges of “incitement to hatred” and “association to commit a crime”, all based on the recent Organic Law against Organized Crime and the Financing of Terrorism. It was his membership in Voluntad Popular which was used as a ground for his charge of “association to commit a crime”. Is Voluntad Popular now to be declared a criminal organization? Is that the next step?

Both the UN and OAS Secretaries-General have called on the two sides to solve their differences peacefully and engage in dialogue. Everything would be solved if a true audit were to be carried out, but the regime and the electoral authority it controls refuses to do so. Is it tacitly admitting that it stole the election?  What is urgently needed is a respected mediator, a creative and discreet Latin-American elder statesman.   

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[1][1] Before turning over the floor to an opposition deputy he asks him or her “Do you recognize Nicolas Maduro as President of Venezuela?” and when the answer is “no”, as it always is, he gives the floor to the next PSUV deputy on the list of speakers.

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.