November 08, 2013

Economics & Finance

Annualized inflation hits 54.3%

Venezuela's consumer prices rose 5.1% in October, accelerating from 4.4% the previous month to their second fastest pace in six years, according to the Central Bank. The 12-month inflation rate climbed to 54.3%, the latest blow to President Nicolas Maduro's efforts to stabilize the economy. Heavy public spending and a creaking currency control system left businesses struggling to import consumer staples, machinery and replacement parts. (Reuters, 11-07-2013; http://www.reuters.com/article/2013/11/07/venezuela-inflation-idUSL2N0IS28H20131107; El Universal, 11-07-2013; http://www.eluniversal.com/economia/131107/inflation-in-venezuela-stands-at-458-so-far-this-year; Bloomberg, http://www.bloomberg.com/news/2013-11-07/venezuela-inflation-hits-16-year-high-as-shortages-rise.html; Fox News, http://www.foxnews.com/world/2013/11/07/venezuela-inflation-surges-above-50-pct-as-currency-slump-hits-investment-goods/)

Maduro offers more controls, more bureaucracy and more subsidies; threatens more confiscations

President Nicolás Maduro has responded to the economic situation by announcing steps to tighten FOREX allocation and price controls on all goods and services. New government agencies are to be created to inspect companies and check the cost of products and the exchange rate used to buy the goods. He warned that the government will not accept price markups and said "if I have to confiscate entire stores to bring products to the people and sell them at fair prices, I will do so today and every day" The government is also considering subsidies to companies through special funds in order to stabilize prices and ensure production. Eduardo Garmendia, President of the National Industrial Council, says the announcements "do not provide any solution...what they do is increase controls, and any further control will be counterproductive". (El Universal, 11-07-2013; http://www.eluniversal.com/economia/131107/fund-to-subsidize-companies-in-order-to-sustain-prices; and more in Spanish: http://www.eluniversal.com/economia/131108/maduro-amenaza-a-los-acaparadores-con-quitarles-almacenes; http://www.eluniversal.com/economia/131108/subsidios-a-precios-develan-ineficiencia-de-la-regulacion)

Minister Ramírez vows to "crush the parallel dollar", charges 30% fraud in FOREX allocations

Rafael Ramírez, who is Vice President for Economic Affairs, Minister for Petroleum and Mining, and President of PDVSA says the Venezuelan "exchange controls will remain, because they shield international reserves," and adds: "We will crush the parallel dollar because we need to protect our economy from these (enemy) agents." Ramírez says the Foreign Exchange Board (CADIVI) delivered U$D 33 billion through September, and claimed 30% of that amount was based on padded prices or fraudulent. He says the U$D 33 billion provided for imports is more than that allocated in all of 2012. (El Universal, 11-07-2013; http://www.eluniversal.com/economia/131107/minister-ramirez-we-will-crash-the-parallel-dollar; AVN; http://www.avn.info.ve/contenido/venezuela039s-exchange-controls-continue-defend-international-reserves; and more in Spanish: Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/estado-calcula-fraude-de-divisas-en-30-de-las-peti.aspx#ixzz2k3GYR9xB)

FOREX deficit is estimated at U$D 12.8 billion

ECOANALÍTICA Director Asdrúbal Oliveros says that despite persistent government claims that there is no FOREX scarcity, in contrasting FOREX income this year and expenditures a U$D 12.8 billion deficit shows up. He says FOREX income this year will be U$D 73.724 billion and total expenditures, including imports, services, debt service and capital movement amounts to U$D 86.524 billion. Most of the imbalance will be met with PDVSA and official debt, such as the U$D 5 billion that has just gone into the Chinese Fund. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131108/proyectan-que-el-deficit-de-divisas-es-de-12800-millones)

Oil & Energy

Venezuela's government receives 94% of gross profit per oil barrel

Oil and Mining Minister Rafael Ramirez says the government receives 94 % of gross income per oil barrel and private companies get 6% of gross revenue per barrel. He added that the government has targeted 62.5% of revenues to finance social missions and programs that address the needs of the population. (AVN, 11-07-2013; http://www.avn.info.ve/contenido/venezuela039s-state-receives-94-percent-gross-profit-barrel-oil)

ROSNEFT to buy LUKOIL Venezuela stake amid U$D 13 billion spree

ROSNEFT, Russia’s largest oil producer, plans to invest U$D 13 billion in five projects in Venezuela over five years and buy at least part of LUKOIL’s stake in a producing field. ROSNEFT will buy half or the entire 8% stake that LUKOIL owns in Junin 6 block in the Orinoco Oil Belt, ROSNEFT’s Venezuela country head Jerome Auzenne says: “We might buy all of it or with might split it with” GAZPROM NEFT. ROSNEFT will make the U$D 13 billion investment as the company builds on the personal friendship between Russian President Vladimir Putin and Venezuelan authorities, he said. After the deal, the Moscow-based company will raise its stake in the Junin 6 project to as much as 32%. State oil company PDVSA, owns 60%, while GAZPROM NEFT has 8%. (Bloomberg: http://www.bloomberg.com/news/2013-11-08/rosneft-to-buy-lukoil-venezuela-stake-amid-13-billion-spree.html)

Commodities

Central Bank Scarcity Index up to 22.4% in October

The Central Bank's index of shelf scarcity in stores broke its own record and rose to 22.4% in October; at the same time the index of product diversity at markets fell from 124.2 to 106.7 points. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/mercados/indice-de-escasez-llega-a-22-4--en-octubre--la-cif.aspx#ixzz2k3HwG5IM)

Spare part scarcities are paralyzing 10% of all ground transportation

Around 10% of all transportation units in Venezuela are paralyzed due to a lack of spare parts, and thus increase product scarcity levels. Tarek Bahsas, President of the CATACENTRO Road Foundation says "There are products that remain in stock because we have no way of moving them...we have a deficit in tonnage transportation capacity. There are some 1500-2000 units out of action". More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/paralizacion-de-10--del-transporte-por-falta-de-re.aspx#ixzz2k3IIDPdh)

International Trade

Imports to be centralized by a new government corporation

President Nicolás Maduro has announced he is setting up a National Foreign Trade Corporation to act as a clearing house for private requests for FOREX, centralize all imports and exports, and "validate" private enterprises. (El Universal, 11-07-2013; http://www.eluniversal.com/economia/131107/imports-to-be-centralized-by-a-new-corporation-in-venezuela)

47 containers seized and charged with overpricing imports

Major General Herbert García Plaza, Minister for Air and Water Transport, has announced that 47 containers have been confiscated at the Puerto Cabello Port under charges that their cargo was priced U$D 10.999 million above real amounts requested by private importers at the Foreign Exchange Board (CADIVI). He said a group of companies billed U$D 12.799 million and the estimated real price of the cargo was U$D 1.358 million. More in Spanish: (NOTITARDE; http://www.notitarde.com/La-Costa/Decomisaron-47-contenedores-con-mercancia-sobrefacturada-/2013/11/08/279373)

Logistics & Transport

Delays, scams and lax security at the Caracas airport

Venezuela's main international airport, the Simón Bolívar International Airport of Maiquetia, serves as the point-of-entry for those on their way to Caracas, and is also a prime jumping-off point for domestic flights. The facility reportedly processed more than 10 million passengers in 2012, and steadily increasing number of arrivals and departures are stressing a facility that has been, in many regards, outdated and inadequate for many years. Delays in processing at airline check-in counters are chronic. Some departing travelers may be approached by a man with an official-looking badge offering assistance, told that 200 Bolivars must be paid for a departure tax, asked for payment to expedite the procedure and never be seen again. Security procedures are slow and, compared to other international airports, lax. Most metal-detecting portals stand idle. Physical pat-downs and other procedures, such as the item-by-item examination of carry-on luggage that are routine in Colombia and Brazil, are token at best here. (Latin Business Chronicle: http://www.latinbusinesschronicle.com/app/article.aspx?id=5897)

Politics

Maduro says the National Assembly will grant him special powers next week

President Nicolas Maduro says that next week Venezuela's National Assembly will grant him the special powers he is seeking to legislate by decree. He is one vote short of the 99 required to pass such a resolution. However, the Supreme Court - in a move that has been called a "maneuver" - after quickly reviewing 5 year old charges of corruption recently brought by the Attorney General against opposition Assembly member Mercedes Aranguren has just declared sufficient grounds to remove her parliamentary immunity. The Assembly is now expected to vote next week to deprive her of voting rights by a simple majority - and bring in her pro-regime deputy, Carlos Flores, which would secure the votes needed by Maduro. More in Spanish: (INFOLATAM)

65% do not believe scarcity is caused by "economic warfare"

DATANALISIS Director Luis Vicente León, says polls show 65% of the people do not believe scarcity is caused by "economic warfare", as per official claims. He adds that "92% believe the problem must be solved through agreements between the public and private sector." More in Spanish: (El Universal, http://www.eluniversal.com/economia/131108/65-del-pais-no-cree-que-escasez-se-debe-a-guerra-economica)

        

Capriles seeks Papal mediation in Venezuelan politics

Opposition leader Henrique Capriles held a private meeting in Rome with Pope Francis on Wednesday and sought his mediation in the nation's tumultuous internal politics. "The word of the Holy Father for our beloved Venezuela is dialogue, we have asked for his mediation via the church if possible," Capriles said, adding that the Pontiff "is aware" of the situation in Venezuela, which Capriles called, "the most complex in Latin America", and that the new Vatican Secretary of State Pietro Parolin (previously Nuncio in Venezuela), could "help a lot in promoting dialogue". Capriles said: "Whenever the Church calls for talks we will be there...I am willing to talk to anyone to seek a democratic way out in Venezuela". (Reuters, 11-06-2013; http://www.reuters.com/article/2013/11/06/venezuela-opposition-idUSL2N0IR13O20131106; Fox News, http://www.foxnews.com/world/2013/11/06/venezuelan-opposition-leader-talks-with-pope-at-vatican-says-francis-promotes/); and more in Spanish: INFOLATAM)

Maduro: air defense systems to be set up in the slums

President Nicolás Maduro says a comprehensive air defense system will be installed in key points of the country's mountains, "including the slums in Greater Caracas and the whole country" to "prevent any enemy, foreign, and imperialist military aircraft from entering the city." (El Universal, 11-07-2013; http://www.eluniversal.com/nacional-y-politica/131107/maduro-air-defense-systems-to-be-set-up-in-the-slums; Fox News, http://www.foxnews.com/world/2013/11/07/venezuela-president-looks-to-install-anti-aircraft-weapons-in-slums-to-ward-off/)

Military chief says the Armed Forces are working to defend the economy

The chief of the Operational Strategic Command of the Bolivarian National Armed Forces (FANB), General Wladimir Padrino, twitted on Thursday that actions have been launched to deal with the economic distortions Venezuela is going through. He said that both "the FANB and the Economy Higher Authority are joining efforts to face economic distortions." (El Universal, 11-07-2013; http://www.eluniversal.com/economia/131107/venezuelan-govt-armed-forces-are-working-to-defend-the-economy)


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.

November 05, 2013

Economics & Finance

Government says it is preparing an "Economic Offensive Plan", again

President Nicolás Maduro now says an "Economic Offensive Plan" is being prepared and will be announced in some two weeks. Previously, Executive Vice-president Jorge Arreaza announced that the President would announce a set of economic steps, and called on the people to help Maduro enforce them. About a month ago, Rafael Ramírez, Vice President for Economic Affairs said serious economic decisions were on their way. (El Universal, 11-04-2013; http://www.eluniversal.com/economia/131104/venezuelan-executive-office-prepares-economic-offensive-plan)

Domestic and foreign debt payments will eat up a fifth of the 2014 budget, a larger share than that allocated to social expenditure, according to an analysis by "La Verdad" regional daily. Allocated capital and interest payments are 22% of the total amount of expenditure planned, which is VEB 552 billion. (Veneconomy, 11-04-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=36997&idc=2)

2014 Budget proposal only covers government expenses through May

According to Mercedes de Freites, Director of Transparency Venezuela, the Draft 2013 Budget Law estimates VEB 552.6 billion for expenditures, which is 63 less than real expenses in 2013, including extraordinary expenditures. "When we count additional credits, total expenditures for 2013 through October are VEB 635.7 billion", which means amounts budgeted in the Draft Law will only cover government expenses through May next year. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Presupuesto-cubrira-gastos-gobierno-mayo_0_294570821.html

Lower income tax revenue is projected in 2014

The 2014 Draft Budget Law shows tax income from individuals will drop 62%. Down to VEB 4.4 billion from this year's VEB 11.8 billion. This shows individual buying power is being hit by inflation. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131105/preven-menos-ingresos-por-islr-de-personas-naturales

Industry is paralyzed by labor strife

Food production remains threatened by labor strife and absenteeism that lower productivity and increase losses, while the Labor Ministry does not respond to their complaints. Unplanned stoppages generally due to conflict with unions have become the key obstacles to industries that are faced with the loss of raw material and miss production goals. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131105/industrias-de-manos-atadas-por-la-conflictividad-laboral )

Cabello says: "We will take over any company that stops "

Diosdado Cabello, President of the National Assembly, called on unions and the pro-government militia to be alert to any attempt by the opposition to alter the nation's economy. "We will take over any company that stops", he said. (Últimas Noticias, Video, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/video---cabello-empresa-que-se-pare-vamos-a-tomarl.aspx )

Squeeze yield from PDVSA: buy 2014, short 2022 debt-Credit Suisse

Investors looking to squeeze more yield out of debt issued by Petroleos de Venezuela (PDVSA), should look to buy bonds maturing in 2014 and short bonds maturing in 2022, Credit Suisse said on Monday. Venezuelan government debt yield spreads have widened precipitously over the last 3-1/2 years, although they have stabilized from their worst levels in the first quarter of 2013, according to JPMorgan data. (Reuters, 11-04-2013; http://www.reuters.com/article/2013/11/04/venezuela-debt-trade-idUSL2N0IP14E20131104)

Venezuela stock market up 24% for week -- up 454% for the year

Caracas shares are gapping up sharply and this week the Caracas Stock Index rose 503,005 to 2,611,562 for the week ending November 1. Everything that wasn’t nailed down went up as the market rallied 23.85% in one week. The Venezuela Stock Market is now up 453.96% for the year to date in bolivar terms, though only 278.11% in official rate dollar terms because of a February devaluation, but still making it the best performing stock market in the world. (Latin American Herald Tribune, 11-03-2013; http://www.laht.com/article.asp?ArticleId=1145054&CategoryId=10717)

Oil & Energy

Venezuela seizes US-owned oil rigs in dispute

Venezuela is quietly seizing control of two oil rigs owned by a unit of Houston-based Superior Energy Services after the company shut them down because the state oil monopoly was months behind on payments. The seizure started Thursday after a judge in the state of Anzoategui entered a Superior depot and ordered the company to hand over the rigs to an affiliate of state-owned PDVSA. PDVSA in a court document obtained by The Associated Press calls the expropriation essential to Venezuela’s development. Greg Rosenstein, head of corporate development, says “We were surprised by the takeover as we have had a cordial relationship with PDVSA ... We continue to work with PDVSA and the Venezuelan authorities and look to resolve this issue soon.” The so-called snubbing units have a combined value of about U$D 1 million and Superior’s total assets in Venezuela have a combined book value of about U$D 2 million, Rosenstein said. (Bloomberg, 11-04-2013; http://www.bloomberg.com/news/2013-11-04/superior-energy-equipment-seized-by-pdvsa-in-venezuela.html; Reuters, http://www.reuters.com/article/2013/11/04/oil-venezuela-superior-rigs-idUSL2N0IP1MB20131104; and The Washington Post: http://www.washingtonpost.com/world/the_americas/venezuela-seizes-us-owned-oil-rigs-in-dispute-over-unpaid-bills/2013/11/01/c98c8d86-434f-11e3-b028-de922d7a3f47_story.html)

PDVSA ships seized over U$D 70 million in unpaid bills

State oil company Petroleos de Venezuela (PDVSA) was forced to pay U$D 70 million into a London court after its ships were arrested over unpaid ship charters. CH Offshore, Ltd., a Singapore-based ship owner, chartered two ships to PDVSA beginning in 2008. The Amethyst and Turquoise were anchor handling and supply vessels and CH agreed to charter them to PDVSA in 2008 for U$D 50,000 a day each. In 2009, as the financial crisis began to bite and oil and charter rates collapsed, CH agreed to lower the daily rate to just over U$D 40,000 a day for each ship. CH renewed the yearly contract earlier this year but PDVSA had not paid a total of U$D 68,257,203.96, according to court filings in London and Miami. Court records reveal that PDVSA has yet to file a response in London, but CH released a statement saying that after it arrested the Venezuelan state oil company's ships, PDVSA agreed to pay U$D 70 million. "The Company had arrested vessels belonging to PDV Marina as security for its claim," said CH Offshore's Board Secretary Valerie Tan May Wei. "PDV Marina has made payment of US$70 million into court as security for the Company's claim including interest and costs. Accordingly, the Company has released PDV Marina's vessels." CH did not say how many PDVSA ships were arrested nor where the arrests took place. Simultaneously, CH filed suit in Florida to find any PDVSA assets in the United States, and garnished $93,108.52 at Wells Fargo Bank belonging to oil service company Astivenca Astilleros De Venezuela, with whom PDVSA has a close relationship and had subleased the ships. (LATIN AMERICAN HERALD TRIBUNE: http://www.laht.com/article.asp?CategoryId=10717&ArticleId=1089801)

Venezuelan oil drops to U$D 95.10

Venezuela's weekly oil basket continued falling below the country's desired U$D 100 a barrel floor as well-supplied stocks reduced demand for oil. This was Venezuela's 9th straight week of falling prices. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending November 1 was U$D 95.10, down U$D 0.66 from the previous week's U$D 95.76. (Latin American Herald Tribune, 11-02-2013; http://www.laht.com/article.asp?ArticleId=1141791&CategoryId=10717)

Guatemala rules out adhesion to PETROCARIBE

Guatemala´s Vice President Roxana Baldetti says that nation ruled out adhesion to PETROCARIBE, a Venezuelan initiative that allows countries in the region to buy Venezuelan oil under favorable terms and conditions. She said the decision was made after failing to reach the agreements Guatemalan President Otto Pérez was trying to negotiate. The Central American nation tried to negotiate interest rates below 2% on oil bills. (El Universal, 11-04-2013; http://www.eluniversal.com/economia/131104/guatemala-rules-out-adhesion-to-petrocaribe)

International Trade

Venezuela, Colombia develop infrastructure plans

The governments of Colombia and Venezuela are analyzing several cooperation projects in infrastructure and expansion of the electricity interconnection, following meetings between Venezuelan Foreign Minister Elías Jaua and his Colombian counterpart María Ángela Holguín. The diplomats went over agreements on transport and communication signed by the late Venezuelan president Hugo Chávez, and Colombia's Juan Manuel Santos. (El Universal, 11-04-2013; http://www.eluniversal.com/nacional-y-politica/131104/venezuela-colombia-develop-infrastructure-plans)

Mexico, Venezuela agree to begin trade talks in 2014

Mexican Foreign Secretary Jose Antonio Meade and Venezuelan counterpart Elias Jaua agreed here Monday to begin conversations leading to the signing of a trade accord, Mexico's government said. In a meeting in the Mexican capital, the two ministers agreed "to hold in 2014 the second meeting of the Permanent Binational Commission, as well as to update the legal framework guiding the relationship between the two countries," Mexico's foreign ministry said in a statement. Bilateral relations have been in a good period since Enrique Peña Nieto became Mexico's president last December. (FOX NEWS: http://latino.foxnews.com/latino/news/2013/11/04/mexico-venezuela-agree-to-begin-trade-talks-in-2014/

Wholesale prices on imported goods multiply fivefold

The continued devaluation of the Bolivar on the parallel market is pushing up prices on imported products and decreasing the buying power of families as the cost of appliances, textiles, auto parts, and alcoholic beverages rises. Central Bank data shows wholesale price increases for imported products are up 42.5%, which is five times more than 2012, when it was 7.2%. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131105/se-quintuplica-precio-al-mayor-de-los-productos-importados)

Logistics & Transport

Government freight expenditures up 1532% in nine years

According to the Central Bank total imports during the first half of this year were U$D 27.519 billion and U$D 3.065 were spent on freight and insurance. A closer look shows that government spends more on freight than the private sector, even as its imports were lower. The government bought U$D 12.515 billion abroad, and paid U$D 1.720 billion in freight and insurance, that is 13.7% of the value of imports. The private sector's imports were U$D 15.004 billion, but it spent U$D 1.345 billion on freight and insurance. In 2003 official expenditures for freight and insurance were U$D 375 million, which means this expense, has grown 1532%. Shippers say the Venezuelan government has become their main client due to its import activity. Government expenditure for transportation is usually higher due to lack of planning, delays offloading, and delays in returning containers. (El Universal, 11-04-2013; http://www.eluniversal.com/economia/131104/venezuelas-freight-expenses-soar-1532-in-nine-years)

Activity at Venezuelan seaports down 17.6% in the first semester this year

Activity in Venezuelan seaports dropped 17.6% during the first half of the year, according to information disclosed by the Economic Commission for Latin America and the Caribbean (ECLAC). Venezuela's performance was among the poorest in the region, followed by Costa Rica, whose activity descended 22.6%.

(El Universal, 11-04-2013; http://www.eluniversal.com/economia/131104/activity-in-venezuelan-seaports-down-176-in-the-first-half)

Politics

Maduro seeks to free South America from Twitter

President Nicolas Maduro has urged the liberation of Latin America from Twitter, arguing that the US microblogging company compromised 6,600 accounts, including his own. "We must achieve independence, and we have to think about deep and radical ways we can free ourselves from these multinational corporations that have monopolized social networks," Maduro said Saturday. "Let's prepare ourselves to liberate ourselves from you," said the President addressing Twitter. Maduro called on MERCOSUR (the Common Market of the South), UNASUR (Union of South American Nations) and ALBA (Bolivarian Alliance for the Americas) to join the fight against the popular microblog. Maduro's Twitter account was allegedly attacked earlier this week. The country's Communications Minister, Delsy Rodriguez, said that almost 6,600 of Maduro's Twitter followers disappeared from the president's account within 10 minutes. Maduro has accused Twitter of attacking his account and those of some of his ministers as part of a right wing plot. "We've uncovered a massive attack by the Twitter company and the international right against the accounts of Bolivarian patriots and Venezuelan Chavistas, coming from various parts of the world," he said, accusing the company of removing several thousand of his followers. For months, Maduro has denounced alleged plots from abroad to sow trouble, overturn the government, assassinate members of the executive and aid opposition. (The Voice Of Russia; http://voiceofrussia.com/news/2013_11_03/Venezuela-s-Maduro-seeks-to-free-South-America-from-Twitter-4650/)

Government supporters criticize Catholic Church as Pope meets with Capriles

A group of pro government journalists headed by former Communications Minister Tania Díaz, a member of the National Assembly, have accused the Catholic Church of "playing politics" as Pope Francis will meet with opposition leader Henrique Capriles. Díaz said their charges would be sent to the Vatican. Capriles has said he will talk to the Pope about the role of the Church and the Pontiff himself in the dialogue - which he considers necessary - that must follow what he terms the fraud in the April 18th presidential elections. "Hopefully the Church, and the Pope as head of the Church, can help us to have a dialogue in Venezuela", says Capriles. Pope Francis met with President Nicolás Maduro for 20 minutes on June 17th, and Vatican Foreign Secretary Archbishop Dominique Mamberti met with three opposition legislators in June. More in Spanish: (INFOLATAM)

The US spied on Venezuela during Chávez's rule

According to an official memo compiled by former analyst of the US Central Intelligence Agency (CIA) Edward Snowden, provided to the NY Times by British newspaper The Guardian in 2007, Venezuela was on a watch list of six priority targets of espionage of the US National Security Agency (NSA), amidst concerns about the threatening influence of the government headed by late President Hugo Chávez on the interests of the United States in Latin America, according to documents disclosed by the New York Times. The NSA hacked the official and private e-mail accounts of 10 high-ranking officials of the Venezuelan Ministry of Planning and Finance, according to the Times. (El Universal, 11-04-2013; http://www.eluniversal.com/nacional-y-politica/131104/the-us-spied-on-venezuela-during-chavezs-govt)

Perception of progress declines among Venezuelans

Venezuelans and other Latin American citizens see "slim" progress in their countries, according to a survey conducted by non-profit NGO LATINOBARÓMETRO. In 2011, Venezuelans had a 37% positive perception of progress as a nation and society. This year, it declined three percentage points, to 34%. (El Universal, 11-04-2013; http://www.eluniversal.com/nacional-y-politica/131104/progress-perception-declines-among-venezuelans)

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.

November 01, 2013

Economics & Finance

Vice President says Maduro will soon announce economic decisions

Venezuela´s Executive Vice-president Jorge Arreaza claims economic players deliberately inject liquidity into the economy to create pressure and use it as a tool in the so-called economic war by entrepreneurs against the nation. He said the players have already been singled out and that soon President Nicolás Maduro would disclose their names, adding that Maduro will soon announce a set of economic decisions. He called on the population to support the national government in enforcing them. (El Universal, 10-31-2013; http://www.eluniversal.com/economia/131031/venezuelan-vp-maduro-will-announce-economic-measures-soon)

Central Bank moves to absorb liquidity

In an effort to absorb liquidity, the Central Bank ordered an increase in bank reserve levels held at the Central Bank, and has now set longer terms  - 270 and 360 days - for transactions between itself and the banking system so that financial institutions hold on to papers and Bolivars are held in for a longer time. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/bcv-profundiza-politica-monetaria-y-cambiaria-para.aspx#ixzz2jOCcJLGv; El Universal, http://www.eluniversal.com/economia/131101/71-ha-subido-la-liquidez-por-el-gasto-y-la-ayuda-del-bcv-a-pdvsa)

Venezuela to create new "tourist" exchange rate

Venezuela will create a new exchange rate for tourists to buy up to U$D 10,000 of the local bolivar currency per year in a measure intended to help reduce black market trading, the government said in its official gazette. The announcement by the Finance Ministry and Central Bank said new foreign exchange counters would be established at airports and ports where foreigners enter the nation. There was no indication, however, of what price the dollars would be sold at. (Reuters, 10-31-2013; http://www.reuters.com/article/2013/10/31/us-venezuela-currency-idUSBRE99U13V20131031; El Universal, 10-31-2013; http://www.eluniversal.com/economia/131031/foreign-tourists-may-sell-up-to-usd-10000-annually-in-venezuela; Bloomberg, http://www.bloomberg.com/news/2013-10-31/venezuela-central-bank-to-introduce-non-resident-exchange-rate.html)

Treasury obtained U$D 22 billion from the last devaluation

Last February's devaluation brought Nicolás Maduro's administration additional funds to pay wages and salaries, pensions, social programs commonly known as "missions," and additional expenditures by public institutions. Official Treasury statistics it received some VEB 140 billion (U$D 22 billion) from the adjustment. The devaluation came after

Public expenditure smashed record highs ahead of the vote to elect both president and governors in December and the nation closed 2012 with a gap of 15.6% in GDP. (El Universal, 10-31-2013; http://www.eluniversal.com/economia/131031/venezuelan-treasury-gets-usd-22-billion-from-the-latest-devaluation)

Oil & Energy

Gasoline prices increased to VEB 20 per liter at border gas stations

PDVSA authorities responded to a request by Táchira state governor José Vielma Mora and increased the price of fuel at five border gas stations from VEB 12 to VEB 20 in order to fight gasoline contraband to Colombia. (El Universal; http://www.eluniversal.com/economia/131101/elevaron-a-bs-20-el-litro-de-gasolina-en-bombas-fronterizas

Paraguay seeks to renegotiate oil debt with Venezuela

Paraguay is seeking to reschedule oil company PETROPAR's debt with PDVSA. Pedro Halley, an advisor to PETROPAR President Fleming Frutos says the request was made by the Paraguayan Foreign Office and that if Venezuelan authorities accept the proposal, the parties will enter negotiations for a year to set new payment terms. Halley explained the idea is to reschedule the debt, extending it to 15 years. (El Universal, 10-30-2013; http://www.eluniversal.com/economia/131030/paraguay-seeks-to-renegotiate-oil-debt-with-venezuela)

PDVSA set up the negotiation team for the 2013-205 collective bargaining agreement draft presented to the Labor and Social Security Ministry last September 18 by the Unitary Federation of Oil, Gas, and Byproducts Workers (FUTPV, after its initials in Spanish). The new agreement has 82 clauses. (Veneconomy, 10-30-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=36958&idc=4)

Commodities

FOREX allocation delay endangers wheat imports, bread and pasta production

The wheat processing industry remains in critical condition. Despite meetings with government officials there has been no speeding up of FOREX allocation for wheat imports and companies currently report 120-150 day delays, and in one case a full year without receiving a single dollar. The situation has become an obstacle to importing raw material, 50% of which goes to making bread, 20% for pasta, and 30% for biscuits and other products. Processors fear a new devaluation will increase their indebtedness to foreign suppliers, a situation which had led to suspending wheat dispatches to Venezuela. Price regulations on bread and pasta have not yet been adjusted to the two previous devaluations. Pasta processors and wheat mills have been warning of low inventories since August, and production had been sustained by companies borrowing wheat from each other, but there is no longer any stock to sustain this practice. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131030/retrasos-en-entrega-de-divisas-afecta-la-importacion-de-trigo)

Stop the presses: Newsprint shortage halts circulation of pro-government paper

A pro-government newspaper from Hugo Chavez's home state is the latest Venezuelan broadsheet to halt its presses as a shortage of newsprint has the government scrambling to guarantee supplies. Barinas-based newspaper De Frente informed readers it had run out of newsprint and stopped printing for a few days. The paper later returned to newsstands, but its publisher says it only has enough inventories to print for another week. It's the fifth regional newspaper to stop printing since July as 50% inflation and restrictions on dollar purchases to stave off devaluation make it difficult to import paper and other basic supplies. Even better-financed national publications have had to reduce page count and number of copies sold. (Fox News, 10-31-2013; http://www.foxnews.com/world/2013/10/31/stop-presses-venezuela-newsprint-shortage-halts-circulation-pro-government/)

Monaca plants at Puerto Cabello been seized by National Guardsmen and workers have not been allowed access to their working place. No reasons have been given for the intervention. Workers claim they have not been paid in the last 12 weeks. The plants have 258 workers in the fixed roll and 60 under contract (tercerizados). (Veneconomy, 10-30-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=36945&idc=3)

Two spoonfuls of baby formula are being sold for Bs.10 in Puerto La Cruz and other locations in Anzoátegui state. This is one of the options offered by small grocery stores due to permanent shortages. Street vendors are offering a can of the same baby formula at Bs.150 (vs. regulated price of Bs.90). (Veneconomy, 10-30-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=36954&idc=3)

NESTLE negotiating repatriation of dividends

NESTLÉ Venezuela President Fausto Costa says the company is talking to authorities over ways of repatriating dividends obtained here, and "some way to show these results to stockholders". Costa made his remarks during a plant expansion ceremony at El Tocuyo, in Lara state. He says they have talked to authorities about increasing exports from Venezuela. More in Spanish: (El Universal, http://www.eluniversal.com/economia/131101/nestle-negocia-con-el-gobierno-repatriar-ganancias-en-el-pais)

International Trade

Margarita Free Port imports have dropped

Increasing difficulties in obtaining FOREX have led to a considerable drop in imports at Margarita's Free Port system as 2013 draws to a close. Teodoro Bellorín, President of the Nueva Esparta State Chamber of Commerce says that according to official data imports there through May were U$D 266 million, as opposed to U$D 398 million for the same period in 2012, and says the situation has been made worse by exclusing the Free Port from the most recent SICAD auction. Bellorin estimated tax free items sold at within the system will shrink by up t 60%. (El Universal; http://www.eluniversal.com/economia/131101/caen-importaciones-del-puerto-libre-de-margarita)

Politics

Maduro challenges the opposition to call a midterm referendum

President Nicolás Maduro says that if the opposition wants to get rid of him it should collect signatures and call for a referendum at the middle of his six year term. He also said: "If a bourgeois government should come into the government some day it would not last 47 hours". (El Universal, http://www.eluniversal.com/nacional-y-politica/131101/maduro-reta-a-la-oposicion-para-que-convoque-a-referendo)

Opposition warns government may create incident to call off December 8th vote

Ramón Guillermo Aveledo, Executive Secretary for the opposition Democratic Unity Conference, says he has information that "the government is seriously considering provoking an extraordinary incident in order to suspend municipal elections on December 8th", and pointed to President Nicolas Maduro's insistence on the possibility. Aveledo says "the government fears December 8th because it feels it will lose polls point to that trend. It will have a lower popular vote. Opposition mayors will rule the majority of the nation's population; they will lose many mayoralties they now control". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/131101/mesa-alerta-ante-una-excusa-para-cancelar-elecciones-del-8d)

Pro-Maduro campaign incites violence against opposition leaders

Venezuela's president has been blaming the opposition, private enterprise, and alleged foreign intervention for scarcity, inflation and the high cost of living. Nicolás Maduro has called Henrique Capriles, María Corina Machado and Leopoldo López "the trilogy of evil" and they have become the center of all of Maduro's accusations at all recent events. Their faces are now depicted in sinister looking posters all over Caracas which read: "Recognize them: The trilogy of evil. They take away your light. They take away your food. They take away your peace. Enough violence." The words come from a Maduro speech at a recent rally, in which he shoped their photographs and also called them "enemies of the nation". Both Machado and López have called the campaign "pure fascism", and López compares it to Nazi campaigns in the 1930's. Opposition spokesmen warn this campaign endangers the lives of the three leaders. More in Spanish: (INFOLATAM)

Maduro claims Chavez's countenance appeared on a wall during subway excavation

President Nicolás Maduro has claimed the face of the late President Hugo Chavez appeared on one of the rocky walls of a tunnel being excavated in order to extend the Caracas Metro. He showed a photograph that purports to show Chavez, saying "who is in this face? a look, it is the look of the Fatherland that is everywhere"." He said a worker had shown him the photograph during a site inspection, and added: "my hair stands on end just retelling it". Caracas daily Tal Cual has recently editorialized: "We have never had a more rhetorical regime than this. True to the tradition, the successor has taken up the task and allocated funds to continue it. This seems to be his worst misfortune. His ADN lacks the verbal aptitude, the delirious imagination, the histrionic talent, or his predecessor´s arrogance". More in Spanish: (INFOLATAM)

Government seeks to tame 'Wild West' motorcycle chaos

Choking traffic, causing pileups and even ambushing drivers, Venezuela's hordes of motorcyclists are an increasingly high-profile problem for the government. Denounced in the media as a "plague," they provide essential, cheap transport but are often held responsible for anarchy on the roads and the terrifying number of homicides, kidnappings and armed robberies that beset the country. Many behave atrociously riding on sidewalks, knocking off mirrors as they weave in and out of traffic, and hurling abuse whenever challenged. Some are involved in much more serious offenses, including abductions and drive-by shootings. According to one study, as many as nine out of ten violent crimes in Caracas involve motorcycles. In recent months, funeral corteges of dozens of motorcycles have become regular flashpoints, with bikers creating gridlock in order to smash windows and rob drivers at gunpoint. Some see them as shock troops of the late Hugo Chavez, and for many of the "motorizados" Chavez is almost God-like. Bikers in socialist red T-shirts whip up support at Chavez rallies. "Motorizado" gangs have become notorious for attacks on an opposition TV station, and on opposition activists protesting at a square in Chacao. President Nicolás Maduro faces a huge test to crack down on the lawlessness often associated with the "motorizados" while still retaining their many working-class votes. "They're a problem," Interior Minister General Miguel Torres said, launching a strategy last month to control Venezuela's hundreds of thousands of bikers. "Not all of them, but there are lots who think they're in the old Wild West." A stuttering government effort to register motorcycles has recorded about 300,000 so far. Local business groups estimate there are about a million. (Reuters, http://www.reuters.com/article/2013/10/31/us-venezuela-bikers-idUSBRE99U0EV20131031)

A total of 48 bench warrants for exchange-related malfeasance

Interior Minister General Miguel Rodríguez Torres says authorities have issued arrest warrants against 48 individuals allegedly involved irregular consignments of US dollars bought at the official exchange rate. He said the deals under investigations were made by members of the Lebanese community in Venezuela, particularly in Nueva Esparta state, and added that in the next few days the investigation would review consignments from Colombia and China. (El Universal, 10-31-2013; http://www.eluniversal.com/economia/131031/a-total-of-48-bench-warrants-for-exchange-related-malfeasance)


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.