November 15th, 2011

Economics & Finance

Central Bank says economy grew over 3.5% in Q3

Venezuela's economy grew more than 3.5 percent during the third quarter of 2011 compared with the same period a year ago, says Nelson Merentes, head of the Central Bank. Its economy expanded 2.5% In the second quarter and 4.8%  in the first quarter versus the same periods in 2010, boosting the government's confidence in sustained growth following an 18-month recession that ended late last year. "Fortunately, the worst years for the economy have passed. 2009 and 2010 were very tough years," Merentes said. President Hugo Chavez is seeking to spur the economy ahead of an election next October at which he has vowed to win another six-year term despite  recovering from cancer. (Reuters, 11-15-2011; http://af.reuters.com/article/metalsNews/idAFN1E7AD1ZJ20111115)

PDVSA to issue U$D 2.4B in 2021 bonds

State oil giant Petróleos de Venezuela said Monday it will issue U$D 2.394 billion in 2021 bonds in a private placement to the Central Bank, further extending the country's debt issuance spree this year, which has now surpassed U$D 17 billion. In a statement, PDVSA, as the company is commonly known, said it will exchange U$D 1.25 billion in existing 2013 for the new notes in the private transaction. Another U$D 564 million in debt will be exchanged for cash up front. With plans for ramped up spending ahead of next year's presidential elections, more than U$D 17.5 billion in debt has already been raised between PDVSA and the government in 2011, more than any other country in the region. The oil monopoly alone has sold more than $10 billion this year. (The Wall Street Journal, 11-14-2011; http://online.wsj.com/article/BT-CO-20111114-714430.html)

Currency exchange operations to be made more flexible

The Central Bank (BCV) says it will modify rules on exchange controls starting January 1st, 2012. It will then allow duly authorized banks, savings and loan associations and currency exchange houses to operate under conditions dictated by the BCV. Hotels will also be able to also provide the service to customers. The rate of exchange for these operations has not been officially published. More in Spanish:  (Tal Cual; http://www.talcualdigital.com/index.html;

and El Universal;  http://www.eluniversal.com/economia/111115/permitiran-optar-al-sitme-sin-tener-que-agotar-cupo-cadivi)

Business climate worsens in Venezuela, says World Bank

According to the 2012 Doing Business report, conducted by the World Bank, the ease of doing business in Venezuela has been worsening. Venezuela ranks 177 out of 183 economies across the world. As per data compiled as of June 2011, the South American country is just five steps from becoming the country with the greatest difficulties for doing business worldwide. In the previous survey, Venezuela ranked 175th. (El Universal, 11-14-2011; http://www.eluniversal.com/economia/111114/business-climate-worsens-in-venezuela-says-world-bank)

“Socialist criteria” to prevail in setting prices, Government will decide

The Executive Office has already defined the criteria it will use in the analysis and review of costs and prices of goods and services produced and sold in Venezuela. The Regulation drafted by the Executive Office and expected to become official, provides that guidelines for setting prices "will be based on statistical, economic and accounting methods that are best suited to the Economic and Social Development Plan, particularly those that promote the setting of better prices for people, meet their needs and are in line with domestic interests." The Government will now decide what costs to admit, parameters for profit regulation, documents to be presented to the Superintendent, frequency with which revisions and adjustments can be requested, and the time officials will take to decide matters. (El Universal, 11-14-2011; http://www.eluniversal.com/economia/111114/socialist-criteria-to-prevail-when-setting-prices and El Universal, 11-15-2011; http://www.eluniversal.com/economia/111115/ejecutivo-se-reserva-detalles-de-esquema-de-revision-de-costos)

Stock market up 72%

The local stock market broke its last record once again this week. It rose 3.36% over the week. The biggest gainer was Electricidad de Caracas shares which rose 17.24% and ended the week at Bs. 0.34. The National Electric Corporation (CORPOELEC) has made public its intentions to withdraw the shares of Electricidad de Caracas from the Caracas Stock Exchange and buy-back shares from previous workers that still hold them. However, the price the government is offering is Bs. 0.53, and shareholders have rejected it as below the one PDVSA paid to AES in 2007 when Venezuela nationalized the company. AES was paid approximately Bs. 0.57 a share, since it paid US$739.25 million for 87.1% of all shares. (Latin American Herald Tribune, 11-14-2011; http://www.laht.com/article.asp?ArticleId=443803&CategoryId=10717)

Commodities

Oil basket rises to U$D 109.4

The price of the Venezuelan oil basket climbed to U$D 109.4 per barrel in the week from November 7 to 11, according to data released by the Ministry of Energy and Petroleum. It says;"The average price of main oil benchmarks ended the week higher, driven by improving macroeconomic data in the United States, as well as more positive expectations about a possible solution to the debt crisis in the euro zone". (El Universal, 11-11-2011; http://www.eluniversal.com/economia/111111/venezuelas-oil-basket-rises-to-usd-1094) 

Politics

Attack reported on Venezuelan opposition candidate

An attack has been reported against Venezuelan opposition presidential candidate Maria Corina Machado and her supporters in a neighborhood on the east side of Caracas. El Nacional newspaper published a photo of what it said was the shooting, showing two people on a motorcycle. Wearing a red T-shirt, the man on the back is pointing a gun at a bus. A campaign spokesman says a pair on a motorcycle fired shots into a bus carrying Machado and her supporters. Machado says the “government has absolutely lost control and, in many cases, has been complicit with the criminal gangs". She accused the government of providing some groups with weapons. (CNN, 11-13-2011; http://edition.cnn.com/2011/11/13/world/americas/venezuela-candidate-shots-fired/)

“Thousands” are reported to rally in support of President Chavez and his re-election bid

“Thousands” are reported to have turned out to show support for President Hugo Chavez and his plan to run for re-election next year at a rally which has been one of the few public events that Chavez has attended in recent months as he recovers from cancer treatment. (The Washington Post, 11-13-2011;  http://www.washingtonpost.com/world/americas/thousands-of-venezuelans-rally-to-support-president-chavez-and-his-re-election-bid/2011/11/13/gIQA2db9IN_story.html; and Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=28422&idc=1)

UNASUR seeks closer tabs on arms spending in Latin America

Latin America's Union of South American Nations, which hopes to become a regional security umbrella organization, has served notice on members to get their facts together on who is spending what on defense in the region. UNASUR includes members of other regional groupings, notably the MERCOSUR trade bloc and the Andean Community of Nations. In recent months it has sought to exert influence on the defense spending of countries on its Defense Council, which is meeting in the Peruvian capital this week. (UPI, 11-10-2011; http://www.upi.com/Top_News/Special/2011/11/10/Unasur-seeks-closer-tabs-on-arms-spending-in-Latin-America/UPI-50241320957128/)

Washington Nationals’ catcher Ramos rescued after kidnapping

Wilson Ramos, the 24-year-old Venezuelan catcher for the Washington Nationals, was rescued yesterday in a mountainous area of central Venezuela two days after being kidnapped in front of his family’s home. Commando units rescued Ramos after exchanging gunfire with his captors in a rural area of Carabobo state, Interior and Justice Minister Tarek El-Aissami said. Six people were arrested. (Bloomberg, 11-12-2011; http://www.bloomberg.com/news/2011-11-12/washington-nationals-catcher-ramos-rescued-after-kidnapping-in-venezuela.html; Reuters, http://www.reuters.com/article/2011/11/12/us-baseball-ramos-kidnapping-idUSTRE7AA4M020111112)

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 11th, 2011

Economics & Finance

PDVSA has received U$D 13.58 billion from the Central Bank

Although the price of the Venezuelan basket of crude oil and byproducts averages U$D 99 to date this year, oil revenues have proven insufficient for the state-run oil company Petróleos de Venezuela, which has needed financial assistance from other government agencies. The Central Bank of Venezuela (BCV) has released details on the monetary base up to October 21, 2011. According to those figures, the BCV had provided financial assistance to the state-run oil company Petróleos de Venezuela (PDVSA) amounting to VEB 58.4 billion (U$D 13.5 billion).

In the opinion of Venezuelan economist José Guerra, former economic research manager at the Central Bank, the numbers show that the BCV is providing aid through purchase of PDVSA bonds. (El Universal, 11-09-2011; http://www.eluniversal.com/economia/111109/pdvsa-has-received-usd-1358-billion-from-the-central-bank)

PDVSA said to consider issuing dollar bonds to pay back Central Bank Debt

Petroleos de Venezuela SA, the state oil company, may repay part of a $3 billion debt with the Central Bank by giving it dollar-denominated bonds before year end, a government official said. PDVSA, as the oil producer is known, may issue the bonds to the central bank in a private placement to settle part of a debt stemming from loan agreements, said the official, who asked not to be identified because he isn’t authorized to speak publicly about the matter. The bank and PDVSA are still negotiating terms of the transaction, he said. (Bloomberg, 11-09-2011; http://www.bloomberg.com/news/2011-11-09/pdvsa-said-to-consider-issuing-dollar-bonds-to-pay-back-central-bank-debt.html)

78% of the 2026 bond was used to pay interest on internal debt

Treasury data shows that U$D 2.325 billion out of the latest bond issue for U$D 3 billion were used to cover interest payments and capital on public debt. More in Spanish: (El Mundo, 11-11-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/gobierno-utilizo-78--del-bono-2026-para-pagar-inte.aspx)

Chavez proposes new bond to cover backed up pension payments

President Chavez has proposed an additional bond issue to pay backed dup debts with retired Venezuelan workers. He said each retiree would receive a bond which he could later trade in. More in Spanish: (Agencia Venezolana de Noticias, 11-11-2011; http://www.avn.info.ve/contenido/lanzarán-petrobono-para-pagar-deuda-de-prestaciones)

Congress has authorized U$D 78 billion in public spending in 2011

As Finance Minister Jorge Giordani submitted the draft FY2012 Budget Law to the National Assembly, he also estimated government spending in FY2011 at U$D 76.05 billion. However, government spending has already exceeded his projections. Additional loans passed by the National Assembly in the first 11 months of 2011 amount to U$D 30.67 billion, although the original FY2011 budget was estimated at U$D 47.49 billion. Accordingly, government spending as authorized by the National Assembly amounts to U$D 78.16 so far this year. (El Universal, 11-09-2011; http://www.eluniversal.com/economia/111109/congress-authorizes-usd-78-billion-in-public-spending-in-2011)

Scarcity index at 23.89%

A study made by GS1, entitled Missing Product Shelf (AFP), encompassing any product that cannot be obtained by the end user at its usual place of purchase shows that between January and September this year the scarcity rate average was 23.89%. More in Spanish. (El Universal, 11-10-2011; http://www.eluniversal.com/economia/111110/indice-de-productos-faltantes-en-anaqueles-se-ubica-en-2389; El Nacional; http://www.el-nacional.com/)

Economist predicts increased government imports next year

The scenarios that are emerging for foreign exchange in 2012 are marked by rising consumption, increasing imports and foreign exchange controls, according to economist Asdrubal Oliveros. He noted that state imports will increase, and in light of declining oil production, the currency supply for the private sector dollars will be impacted. More in Spanish. (El Universal, 11-10-2011; http://www.eluniversal.com/economia/111110/preven-que-el-proximo-ano-aumentaran-las-importaciones-del-estado)

International reserves fall to U$D 28.457 million

International Reserves closed on Wednesday at U$D 28,457 million, according to Central Bank of Venezuela (BCV). More in Spanish. (El Mundo, 11-10-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/reservas-internacionales-bajaron-a-$28-457-millone.aspx)

Local stock market up 66%

The Venezuelan Stock Market rose again last week reaching a new 52 week high, closing at 108,353. Among the gainers this week were Electricidad de Caracas which closed at Bs. 0.29, up 16%. Mercantil Servicios Financieros also went up, both the A and the B shares, closing at Bs. 37, 4.23% above their closing levels last week. MANPA also had a considerable rise, closing at Bs. 3, a 7.14% rise. The Venezuela Stock Market Index is now up 65.83% for the year to date. (Latin American Herald Tribune, 11-08-2011; http://www.laht.com/article.asp?ArticleId=441032&CategoryId=10717)

Commodities

Candidate Pablo Perez would revise Cuba oil deal

A leading opposition candidate hoping to challenge Venezuela's Hugo Chavez at next year's presidential election would revise preferential oil deals with Cuba and other Central American nations if he wins. Pablo Perez, governor of the oil-rich western state of Zulia, is one of three front-runners who will take part in an opposition primary in February to pick a unity candidate to take on Chavez at the main vote in October. "Venezuela is losing $8 billion (a year) because of gifts that are given out by the government. With that money we can generate 1.1 million jobs," Perez told Reuters after a walking tour of Caracas's Chacao district. (Reuters, 11-10-2011; http://af.reuters.com/article/energyOilNews/idAFN1E7A91YF20111110)

Electricity Minister says power demand is down

Electricity demand in Venezuela has not exceeded 17,000 MW, although authorities had estimated peak demand at 18,400 MW, according to Electricity Minister Alí Rodríguez.  Rodríguez praised consumers' response to government power saving plans. (El Universal, 11-09-2011; http://www.eluniversal.com/economia/111109/electricity-minister-power-demand-down-in-venezuela)

International Trade

Gard P&I Club issues alert regarding robbery of vessels in Venezuelan ports

The risk of armed robbery is of concern for vessels anchoring in the areas surrounding Puerto La Cruz and Barcelona City off the north coast of Venezuela. Gard has warned members and clients and has repeated advice provided by their local correspondent and authorities as to precautionary measures to be taken by vessels calling at ports in the relevant areas. Reported incidents involve intruders, usually approaching the vessel in small fishing boats, climbing aboard the vessels during the night while the vessel is at anchor with the intent to rob the vessel and crew members of all valuables. Crew members have been threatened, beaten and even attacked with knives and guns. One  of  the  measures  suggested  by authorities is  to  always anchor in the Bahia de Pozuelos area where the authorities had implemented regular surveillance. (Safety4Sea, 11-11-2011; http://www.safety4sea.com/page/6971/63/the-gard-p-i--club-issues-alert-re-robbery-of-vessels-in-port-)

Venezuela among the main destinations for Panamanian goods

August exports from the Panamanian free zone totaled U$D 1.42 billion; 57% over U$D 910 million in the same term last year, according to an official source. Main destinations for commodities shipped from Colón, include Puerto Rico (U$D 356 million), Venezuela (U$D 231 million) and Colombia (U$D 172 million), according to a report from the Panamanian National Institute of Statistics and Census. (El Universal, 11-09-2011; http://www.eluniversal.com/economia/111109/venezuela-among-the-main-destinations-of-panamanian-goods)

Politics

Noriega: Chavez cancer progressing faster than expected

A former official in the Bush administration said in a column that President Hugo Chávez is in worse health than he has let on, that his cancer is spreading faster than expected and that his doctors fear that he may have only a few months left to live, says Roger Noriega, former U.S. ambassador to the Organization of American States, citing sources inside the Venezuelan government. “The international team of doctors in charge of treating Hugo Chavez’s cancer does not expect him to live more than six months,” said. According to Noriega, U.S. officials knew that Chavez was suffering from cancer six months before the Venezuelan president acknowledged it publicly and now they know that it is unlikely that he would be the candidate in the next presidential elections. Read more: (Miami Herald, 11-09-2011; http://www.miamiherald.com/2011/11/09/2494843/noriega-chavez-cancer-progressing.html#ixzz1dOphyw4F)

Chavez urges “respect” for "Carlos the Jackal"

President Hugo Chavez urged respect for the legal rights of "Carlos the Jackal" during his trial in France and saluted him as a "worthy" fighter for revolutionary causes. The socialist Chavez has run into controversy in the past by praising a man regarded as a terrorist killer by Western governments, though imbued with revolutionary allure for a small coterie of admirers. Chavez, who has praised Ramirez as a "revolutionary fighter" and criticized his jailing as unfair, said French agents violated international law when they captured him in Sudan in 1994 after years on the run. (Reuters, 11-08-2011; http://www.reuters.com/article/2011/11/08/us-france-carlos-venezuela-idUSTRE7A75EZ20111108)

Washington Nationals catcher Wilson Ramos kidnapped here

Wilson Ramos, one of the Washington Nationals’ most promising young baseball players, was kidnapped at gunpoint Wednesday night from his family’s home here, leaving the team in a state of shock and raising questions about the safety of playing in a country ravaged in recent years by kidnappings and street crime. The 24-year-old Ramos, the starting catcher for the Nationals, had returned for the winter and planned to participate in roughly 10 games for his Venezuelan winter league team, the Aragua Tigers, starting Thursday. Wednesday evening, four armed men arrived at Ramos’s mother’s house in the Santa Ines sector of the central city of Valencia, and took Ramos away, according to multiple news reports. Ramos’s family had not established communication with the kidnappers as of late Wednesday. More: (Washington Post, 11-09-2011; http://www.washingtonpost.com/sports/washington-nationals-catcher-wilson-ramos-kidnapped-in-venezuela/2011/11/09/gIQAS8tz6M_story.html)

Crime is highest concern

A poll by International Consulting Services shows crime is the main concern of all Venezuelans. The poll shows 60% believe crime is the nation’s worst problem, while unemployment comes in second at 11.5%. More in Spanish: (El Nacional, 11-11-2011; http://www.el-nacional.com/)

Chavez plans to approve a new Labor Law before May 1st, 2012

President Hugo Chavez will enact a new Labor Law under his Enabling powers, to be launched before May 1st 2012. More in Spanish: (Agencia Venezolana de Noticias, 11-11-2011; http://www.avn.info.ve/contenido/chávez-propone-aprobar-nueva-ley-del-trabajo-antes-del-1º-de-mayo-de-2012; El Universal, http://www.eluniversal.com/economia/111111/chavez-plantea-modificar-regimen-de-prestaciones-sociales)

Supreme Tribunal: Leopoldo López cannot hold public office

Luisa Estella Morales, President of the Supreme Tribunal of Justice (TSJ), says that former Chacao mayor Leopoldo López has all of his political rights; and added that he can participate in political campaigns and create political parties, but that he cannot hold public office. (El Universal, 11-09-2011; http://www.eluniversal.com/nacional-y-politica/111109/venezuelan-justice-leopoldo-lopez-cannot-hold-public-office)

Assemblyman charges mismanagement of Chinese-Venezuelan Fund

Opposition Assemblyman Miguel Ángel Rodríguez says that the government here has mismanaged loans granted by the People's Republic of China under the Chinese Fund. He says: "We have in our hands a memorandum account from Minister (of Energy and Petroleum) Rafael Ramírez to President Chávez, and other documents that we can make available to all Venezuelans. Assessment of these documents shows that there is evidence that some acts contrary to the Constitution have been committed." (El Universal, 11-09-2011; http://www.eluniversal.com/nacional-y-politica/111109/deputy-reports-mismanagement-of-chinese-venezuelan-fund)

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 08th, 2011

Economics & Finance

Executive Office rules out debt default

Beatriz Bolívar, the head of the Public Credit National Office, said at the National Assembly that Venezuela is far from debt default. She added that Venezuela pays a high premium for bonds because of the global economic crisis, which makes funding more expensive. She noted that interest rates are pushed up by the private media's smear campaign against the government. (El Universal, 11-07-2011; http://www.eluniversal.com/economia/111107/venezuelan-executive-office-rules-out-debt-default)

BOA: Venezuela's fiscal deficit to increase to 8% in 2012

Bank of America assessed Venezuela's government management in a report entitled “Fiscal accounts in Venezuela: A black box”, and estimated that fiscal deficit in FY2011 will average 4% of GDP, but it will rise to 8% in FY2012, thus reflecting government's funding needs. BOA's paper added that the gap will be larger next year due to presidential elections and the government's decision to keep the official exchange rate unchanged. Venezuela's foreign exchange rate would be increased in 2013, according to the US financial institution. (El Universal, 11-07-2011; http://www.eluniversal.com/economia/111107/boa-venezuelas-fiscal-deficit-to-increase-to-8-in-2012)

Venezuela's revenue from devaluation at USD 5.35 billion

The Venezuelan government has resorted to different funding sources such as revenue from devaluation, dividends of state-run agencies and investments made by the Treasury in order to implement its policy of expanding public spending this year. These three sources will yield the National Treasury U$D 6.05 billion this year, according to estimates of the Ministry of Finance. (El Universal, 11-07-2011; http://www.eluniversal.com/economia/111107/venezuelas-revenue-from-devaluation-at-usd-535-billion)

FEDECAMARAS foresees parity adjustment in 2012

In a recent study, FEDECAMARAS, the main business federation, is projecting a higher parity rate in 2010, continued exchange controls, and higher foreign debt. It places 2011 year end inflation at 27.3%, slightly higher than 2010, and estimates it could be slightly lower in 2012. More in Spanish: (El Nacional, 11-08-2011; http://www.el-nacional.com/)

Nearly U$D 30 billion is reported missing from the Venezuelan national development fund controlled by President Hugo Chavez, who appears to have diverted some of the missing money to his political allies in other countries, while much of the rest remains unaccounted for. The money came from a U$D 69.4 billion fund for development aid, known as FONDEN, which operates outside the Venezuelan National Assembly’s budget process and largely beyond public scrutiny, answerable only to a board of directors and to Chavez himself. A comparison of a comprehensive list of FONDEN projects and, separately, a breakdown of contributions to the fund and allocations over the years uncovered a gaping U$D 29 billion shortfall between the money allocated for projects, and the actual projects on record. It now appears that much of the missing funds instead went to Chavez’s political allies in the region in Bolivia, Cuba and Nicaragua, who belong to a group known as the Alianza Bolivariana, para los Pueblos de Nuestra America, or ALBA.  (100 Reporters, 10-31-2011; https://100r.org/2011/10/venezuelas-vanishing-billions/)

Central Bank analyzes anti-inflation policies

The bank’s First Vice President, Eudomar Tovar, says the institution is working with the government to seek price regulations and seeking options to bring down inflation. He said “inflation is curbed by producing more, and we are seeking alternatives”. More in Spanish: (El Universal, 11-08-2011; http://www.eluniversal.com/economia/111108/bcv-senala-que-se-analizan-opciones-para-combatir-la-inflacion)

Venezuela-owned Russian bank beats CITIGROUP in Venezuela bond sales

A Russian bank whose biggest shareholder is the Venezuelan government is overtaking CITIGROUP Inc. (C), Credit Suisse Group AG (CSGN) and Deutsche Bank AG (DBK) in bond underwriting in the South American country.

Evrofinance Mosnarbank SA managed U$D 3.6 billion in bond deals from the Venezuelan government this year, while Credit Suisse, Deutsche Bank and Citigroup followed with U$D3 billion, U$D 2.1 billion and U$D 1.5 billion respectively including securities sold by state-owned oil company Petroleos de Venezuela SA, according to data compiled by Bloomberg. Evrofinance didn’t do any deals in Venezuela last year, when CITIGROUP ranked first with U$D 3 billion. (Bloomberg, 11-07-2011; http://www.bloomberg.com/news/2011-11-07/chavez-s-russian-bank-beats-citigroup-in-venezuela-bond-sales.html)

PDVSA announced it was reopening bond offer for U$D 1,783 million via a private and direct placement addressed to the Venezuelan Central Bank (BCV). The bonds maturing in November 2013 and with an 8% coupon will be ruled by the law of New York State in the United States and will have the same terms and conditions of those issued in November 2010. (Veneconomy, 11-07-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28337&idc=2)

Commodities

Lack of investment hits mature oil fields

Crude oil production at mature oil fields has stagnated and even plunged in some cases as oil companies are facing problems to get funds, sources told Reuters. Once again, Hugo Chavez's administration threatened to revoke the permits for joint ventures between state-run oil company Petróleos de Venezuela (PDVSA) and private companies operating mature oil fields if they fail to meet the new output targets that were set when they were established in 2006. (El Universal, 11-07-2011; http://www.eluniversal.com/economia/111107/lack-of-investment-hits-mature-oil-fields-in-venezuela)

SIDOR production halted by worker protests demanding 33 months retroactive pay. More in Spanish: (El Universal, 11-08-2011; http://www.eluniversal.com/economia/111108/sidor-lleva-tres-dias-sin-producir-y-en-servicios-minimos; Correo del Caroní, 11-08-2011; http://www.correodelcaroni.com/index.php?option=com_content&view=article&id=190849:sidor-ingobernable&catid=75:laboral&Itemid=114)

POLAR´s Lorenzo Mendoza says “Venezuela has a significant exporting potential in rice, cocoa and chocolate among other products, but its current economic model does not allow for business with other countries,” Empresas Polar CEO Lorenzo Mendoza spoke at the 8th Business Meeting held at the Caracas Chamber. He indicated there can be no alliances when paying with currencies that are not acknowledged abroad. (Veneconomy, 11-07-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28316&idc=3)

Politics

President Chavez celebrates Daniel Ortega’s victory, congratulates Guatemala´s Molina

President Hugo Chavez celebrated what he called Ortega’s “overwhelming” victory and congratulated the Nicaraguan people for the peaceful climate that marked the presidential elections of last Sunday, which shows Daniel Ortega heading for reelection. He also congratulated the elect president of Guatemala, Otto Perez Molina, who won the presidential elections in this country last Sunday. (AVN, 11-07-2011; http://www.avn.info.ve/contenido/chavez-great-homeland-celebrate-daniel-ortega-overwhelming-victory and http://www.avn.info.ve/contenido/president-chavez-welcomes-guatemalas-molina-our-american-struggle)

Venezuela, Brazil foreign ministers meet in Caracas

Brazil's Foreign Affairs Minister Antonio Patriota has arrived in Caracas to meet with his Venezuelan counterpart, Nicolas Maduro, in order to review bilateral issues. The agenda includes setting a date for a visit of President Dilma Rousseff to Caracas. This is the third visit by Foreign Minister Patriota to Caracas, and the meeting will be used to review bilateral, regional and international issues. (AVN, 11-07-2011; http://www.avn.info.ve/contenido/venezuela-brazil-foreign-ministers-meet-caracas)

Venezuela among world leaders — in red tape, says Andrés Oppenheimer

Following last week’s announcement that Venezuelan President Hugo Chávez has created two new Cabinet ministries — the Ministry of Ground Transportation and the Ministry of Air and Water Transportation — it may be time to propose a new economic theory: that countries’ economic development is inversely proportional to their number of ministers .The two new Cabinet ministries that — like many others in Venezuela — will be headed by military officers. The two new positions bring to 31 the number of Venezuelan Cabinet ministries.

Since taking office in 1999, Chavez has created dozens of new Cabinet ministries, and has changed Cabinet ministers 176 times since he took office in 1999. With so many Cabinet ministries and their respective bureaucracies, it’s not surprising the World Bank “Doing Business in 2012” report released last week placed Venezuela among the world champions of red tape.m In Venezuela, it takes 17 legal procedures to register a business. The huge government bureaucracies in Venezuela are doing little more than creating more corruption opportunities for government inspectors and their supervisors, and more burdens for average citizens. (Miami Herald, 11-05-2011; http://www.miamiherald.com/2011/11/05/2490746/venezuela-among-world-leaders.html#ixzz1d7GQYjUl)

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 04th, 2011

Economics & Finance

An estimated U$D 9 billion corporate dividends frozen in local market

Asdrúbal Oliveros, a director at the ECOANALÍTICA economic analysis firm estimates that total pending Central Bank obligations to multinational companies for dividend repatriation, plus amounts still in the works comes to approximately U$D 9 billion. He explained the CADIVI currency board shows U$D 2.5 billion pending, but says there are another U$D 6.5 still undeclared, adding that this situation is halting investments until after the 2012 Presidential elections allows a clear picture on debt repayment. He says dividend repatriation will remain on “standby” for the next months; and adds that if there is a Chavez reelection there may be a plan for “payments through debt”, in order to finance investment projects in the oil industry. (El Universal, 11-02-2011; http://www.eluniversal.com/economia/111102/access-to-foreign-currency-is-the-main-problem-for-companies)

Year to date inflation at 22.7%; 27.7% for foods and beverages

The Central Bank (BCV) and the National Statistics Institute (INE) officially confirmed that the consumer Price index for October was 1.8%, which brings year to date inflation to 22.7%. However, inflation for foods and beverages was 2.5% in October, which brings year to date inflation in this to 27.7%. However, Augusto Montiel, head of the official Consumer Protection Agency says price increases are not due to inflation, but rather to “speculation” and the “perception of rising prices”. More in Spanish: (Tal Cual, 11-04-2011; http://www.talcualdigital.com/index.html; El Nacional; http://www.el-nacional.com/; El Universal; http://www.eluniversal.com/economia/111104/en-10-meses-los-precios-de-los-alimentos-se-aceleraron-277 and El Mundo; http://www.elmundo.com.ve/noticias/economia/empresas/-percepcion-de-alzas-de-precios--se-debe-a-especul.aspx)

No other country in the world pays as much interest as Venezuela

Alejandro Grisanti, research director for Latin America at Barclays Capital, says Venezuela is paying interest rates around 12% due to a policy of high indebtedness in order to meet currency demands. He points out no country is in such a situation, not even Greece; and considers it necessary to stop this policy immediately given foreseeable short term consequences. More in Spanish: (Tal Cual, 11-04-2011; http://www.talcualdigital.com/index.html)

Industrial capability shrank by 40% in 12 years

Carlos Larrazabal, President of the National Industrial Council (CONINDUSTRIA) reports that investment in manufacturing is either stagnant or receding as attacks on prívate property increase. He says the situation has become worse since 2006 when there was one takeover; 126 in 2007, 24 in 2008, 137 in 2009, 284 in 2010 and 497 takeovers to date in 2011. More in Spanish:(Tal Cual, 11-04-2011; http://www.talcualdigital.com/index.html)

Land rescue policy shows no success in the market

Official spokesmen say decisions to seize lands implemented by the Government over the past 10 have been aimed at increasing meat and milk production, on the premise they are ensuring food security. However, results of this policy are not borne out by the market. Meat is not easily found on the shelves of butcher shops and supermarkets due to low prices and to the inability of the local production base. The supply of milk has been also hit by the same problems. Production of milk in Venezuela's two most productive areas in the state of Zulia has declined between 50% and 60% due to the takeover of farms and weather factors, according to cattle raiser associations. (El Universal, 11-02-2011; http://www.eluniversal.com/economia/111102/success-of-land-rescue-policy-is-not-reflected-in-the-market)

Budgetary allocation for agriculture dives 16.2% in 2012

Transparency Venezuela says a 45% nominal growth in Venezuela's 2012 budget compared to funds initially appropriated in the 2011 budget does not reflect in funds available to productive sectors. The NGO found that the funds appropriated in the 2012 proposed budget for several production areas fell in real terms compared to 2011. (El Universal, 11-02-2011; http://www.eluniversal.com/economia/111102/budgetary-allocation-for-agriculture-dives-162-in-2012)

An increase of money supply (M2) expected by the last quarter of 2011 in the domestic market as a result of the traditional Christmas bonuses and other payments made by both the public and private sectors before the end of the year. Data from the Central Bank (BCV) indicate money supply has increased 25% since the beginning of the year when it was Bs.F.294,492 million. The indicator posted Bs.F.366,694 million on October 21. (Veneconomy, 11-02-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28288&idc=2)

Commodities

Venezuela 2012 oil output to stay at 3.01 million barrels a day, calls for OPEC production cut

Venezuela will maintain its current crude oil production of 3.01 million barrels a day in 2012, Oil Minister Rafael Ramirez said today during a presentation to the National Assembly’s Finance Committee to discuss the budget.

“We’re going to continue to comply with our OPEC quota until there’s an agreement to change output levels,” Ramirez said. “We’re going to keep working on stabilizing our oil price.” He also said members of the Organization of Petroleum Exporting Countries who are producing above their mandated output quotas must cut oil production before discussing future decisions; and added that uncertainty over the future of the global economy has increased since the last OPEC meeting when member countries failed to reach a consensus. (Bloomberg, 11-02-2011; http://www.bloomberg.com/news/2011-11-02/venezuela-2012-oil-output-to-stay-at-3-01-million-barrels-a-day.html and http://www.bloomberg.com/news/2011-11-02/opec-members-must-cut-extra-production-venezuela-s-ramirez-says.html)

PetroSa finds 1 billion barrels in Orinoco Belt

South Africa's national oil company PetroSA reported on Wednesday that its joint venture with state-run oil company Petróleos de Venezuela (PDVSA) has found about 1 billion barrels of recoverable oil at the Orinoco Oil Belt.

In 2008, PetroSA signed oil exploration and heavy crude oil production agreements with Pdvsa, Reuters quoted. (El Universal, 11-02-2011; http://www.eluniversal.com/economia/111102/petrosa-finds-1-billion-barrels-in-orinoco-belt)

PDVSA to transfer 14% of oilfield in Orinoco belt to PETROECUADOR

State-run oil company PDVSA will transfer to Ecuadorian PETROECUADOR a 14% stake in the Dobokubi oilfield in Orinoco oil belt, according to Alexi Arellano, manager of PETROECUADOR, who said the operation will be completed "in the next three months". The Dobokubi oilfield currently produces 6,200 barrels per day, but it has potential to reach 25,000 to 30,000 bpd. (El Universal, 11-01-2011; http://www.eluniversal.com/economia/111101/pdvsa-to-transfer-to-petroecuador-14-of-oilfield-in-orinoco-belt)

Indigenous miners complain about illegal acts by military

Indigenous communities in the Amanaima area (Upper Paragua) of Guayana have released a group of 19 military officers and soldiers the Indians had held and disarmed in the La Paragua township, after finding soldiers engaged in illegal mining activities. The area was demilitarized, mining by the military halted, and Indians recovered their areas. Indigenous leaders complained that people reacted to abuses by troops, whose job is to prevent illegal mining for environmental purposes. (El Universal, 11-01-2011; http://www.eluniversal.com/economia/111101/venezuelan-indigenous-miners-complain-about-illegal-acts)

CAF approves U$D 380 million to streamline GURI plant

The Andean Development Corporation (CAF) has approved a U$D 380 million loan to Venezuela, to be executed by the National Electricity Corporation (CORPOELEC) for a comprehensive streamlining plan for the first six generating units at Simón Bolívar (GURI) Hydroelectric Power Plant which has been operating for 50 years,. (El Universal, 11-02-2011; http://www.eluniversal.com/economia/111102/caf-approves-usd-380-million-to-streamline-guri-plant)

Sugar production only covers 30% of local demand, due to a decreasing production and population growth, according to the head of the Venezuelan National Sugar Cane Growers Federation (FESOCA) José Ricardo Álvarez. The current sugar cane harvest is only 6,500,000 tons which represents some 500,000 tons of the final products, according to data from FUNDACAÑA. (Veneconomy, 11-02-2011;  http://www.veneconomy.com/site/index.asp?ids=44&idt=28291&idc=3)

Logistics & Transport

New Land Transport, and Air and Aquatic Transport Ministries created, under military direction

President Chavez has decided to split the Ministry of Transport and Communications to provide better attention to land and aeronautical areas. The new Ministry for Air and Aquatic Transportation will be headed by Capitan Elsa Gutierrez, who has been in charge of port management; and the newly created Ministry for Land Transportation will be headed by General Juan Garcia. (AVN, 11-03-2011; http://www.avn.info.ve/contenido/created-offices-land-transport-air-and-aquatic-transport)

International trade

Venezuela and Portugal signed 13 new agreements extending their bilateral cooperation in areas of industrial development, which include the construction of a factory to assemble Canaima computers (these are the computers the government gives to primary school children) and a commitment between PDVSA Gas and a Portuguese engineering company to develop a gas project in Cumaná, Sucre state. (Veneconomy, 11-02-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28289&idc=3)

Politics

Three-horse race for Venezuela's anti-Chavez ticket

The race to be the presidential candidate of Venezuela's opposition coalition has come down to three challengers who all hope their youth and experience in office make them the best bet to unseat President Hugo Chavez.

Less than a year ahead of the South American OPEC member's October 7 vote politics are dominated by two issues: the health of socialist leader Chavez after cancer treatment, and who will win the Democratic Unity coalition's February primary. The three frontrunners in the opposition tussle ahead of the February primary are state governors Henrique Capriles Radonski and Pablo Perez, and former district mayor Leopoldo Lopez. (Reuters, 11-02-2011; http://www.reuters.com/article/2011/11/02/us-venezuela-opposition-idUSTRE7A14QR20111102)

Chavez says he needs more time, prepares new administration

After 12 years in office, Hugo Chavez says he needs more time ruling the country in order to fulfill his task; and says he has started plans for his 2013-2019 term, which he calls the second stage of the “revolution” and says it will be to strengthen XXI century socialism. More in Spanish: (Tal Cual, 11-04-2011; http://www.talcualdigital.com/index.html)

Chavez foes criticize big boost in 2012 budget

Opposition leaders criticized lawmakers loyal to Venezuelan leader Hugo Chavez on Wednesday for sharply boosting the government's budget, saying they suspect it is meant to help the president's bid for re-election. Pro-Chavez lawmakers who hold a majority in the National Assembly have proposed a 2012 budget totaling U$D 69 billion, which is a 45.6% rise from this year's budget. Legislators are expected to approve the budget within several weeks. Chavez's opponents called the increase excessive, saying it will allow Chavez to spend lavishly to help augment his popularity before the election next Oct. 7. (AP, 11-02-2011; http://www.google.com/hostednews/ap/article/ALeqM5jPZElENR8dLqgHbRcDur5GbK3EAg?docId=cabefd3737da414c8c3c885dca8d37ef)

Pollster: 50% thinks Venezuela needs a change of course

Oscar Schemel, CEO of the HINTERLACES polling firm, found that while 49% of respondents disagree with President Hugo Chávez s governance, they replied emotionally because he is a "charismatic leader". (El Universal, 11-02-2011; http://www.eluniversal.com/nacional-y-politica/111102/pollster-50-thinks-venezuela-needs-a-change-of-course)

TIME Magazine: Chavez goes after the islands of Venezuela's rich — and their yachts

President Hugo Chavez announced earlier this month he'd like to expropriate much of private property the resort archipelago of Los Roques for state tourism — including yachts, which he says would be better used for ferrying visitors. Chavez spoke on state television denouncing the "high bourgeoisie" and "international set" that frequent the islands. But while spoiling the high life might sound appealing to his supporters, environmentalists fear the President's plan could instead spoil Los Roques, one of the Caribbean's most gorgeous natural treasures — and one of the most fragile. "It was due to that "fragility," says former Tourism Minister Diego Arria, “that Los Roques was made a national park in 1972, to protect it from developers.” (Time, http://www.time.com/time/world/article/0,8599,2097735,00.html#ixzz1cYYgXMXE)

19 new Ministries have been created in 12 years

Despite a December 8, 1998pledge by then President elect Chavez to bring the number of Ministries down to 11 or 12, the number of ministerial positions has been raised from 21 to 32 over the past 12 years. More in Spanish:. (El Universal, 11-04-2011; http://www.eluniversal.com/nacional-y-politica/111104/19-despachos-ejecutivos-ha-creado-chavez-en-12-anos)

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.