March 13th, 2012

Economics & Finance

Central Bank projects economic growth above 5% in 2012

Central Bank President Nelson Merentes, says the government’s economic goals for 2012 are starting to show positively with inflation slowing down for three consecutive months, He also says that, based on early results, economic growth may be above the 5% estimated in the 2012 budget. More in Spanish: (AVN, 03-13-2012; http://www.avn.info.ve/node/103125)

Price caps hit manufacturers and wholesalers

Industry is the most concerned sector impacted by plans set forward by National Superintendent’s Office for Cost and Prices (SUNDECOP) for setting and limiting prices. An initial analysis shows that announced criteria narrow any manufacturers' range of motion. Standard prices, according to industrial experts, mean that given SUNDECOP’s failure to acknowledge different product presentations, production costs for certain products will be above prices set by the governing agency. A press release from the National Federation of Industry (CONINDUSTRIA) says "certain personal-care products will have standard retail prices and, though those products may be similar in nature, they actually have different components and cost structures." (El Universal, 03-10-2012; http://www.eluniversal.com/economia/120310/price-caps-pound-manufacturers-and-wholesalers)

Exchange rate adjustment postponed, overvaluation aggravated

The outstanding rise in oil prices has allowed the government to resort once more to a strategy of maintaining the dollar exchange rate stable despite high inflation, which is a formula that increases imbalances and portends further devaluation in the future. The combination of static exchange rate and an inflation rate far above the U.S. and the rest of Latin America lead to an overvalued currency, an imbalance which makes imported products cheaper than those produced domestically, and imports soar. Over time, the imbalance will become unsustainable, the high demand for foreign exchange becomes impossible to satisfy, and a decrease in production in the face of competition from cheap imports will leave the Government no choice but to devalue the currency. More in Spanish: (El Universal, 03-12-2012; http://www.eluniversal.com/economia/120312/posponen-el-ajuste-cambiario-y-se-agrava-la-sobrevaluacion)

President Chavez has announced a VEB10 billion agricultural bond issue to pay 9% interest. He also approved a three to five-year deadline to place VEB.2 billion, maturing in 2015; VEB 4 billion, maturing in 2016 and VEB 4 billion, maturing in 2017. (Veneconomy, 03-12-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29747&idc=2)

Chavez funds priority sectors

President Hugo Chavez has approved a significant amount aimed at reinforcing the development of important sectors, such as housing, food, transport, agriculture and sports. VEB 216.9 million was allocated to speed up 10 agribusiness projects launched by the Government in different states. He also approved VEB 725.1 million 8 sugar-growing centers nationwide. (AVN, 03-12-2012; http://www.avn.info.ve/node/103005)

Commodities

Junín 10 block within the Orinoco Belt to begin production in 2012

The Junín 10 block within the Orinoco Oil Belt, which holds proven reserves of 10.5 million barrels of extra-heavy crude oil according to state-run oil holding Petróleos de Venezuela, SA (PDVSA), will be the first among the new oil drilling projects at the belt to start producing oil as early as in 2012. Eulogio del Pino, PDVSA’s VP for Exploration and Production, reports that the first oil barrels from Junín 10 block -an area developed by PDVSA alone and likely to be renamed as the Southern Junín District-will be pumped by June this year. The partner selection process for the Junín 10 block closed on January 21, 2010, as "proposals made by French TOTAL and Norwegian STATOILHYDRO failed to meet eligibility criteria," according to PDVSA. (El Universal, 03-10-2012; http://www.eluniversal.com/economia/120310/junin-10-block-at-the-orinoco-belt-starts-production-in-2012)

Oil basket down to U$D 115.82

The price of the Venezuelan oil basket of crude oil and products decreased by U$D 1.28 during the week of March 5-9, according to the Ministry of Petroleum and Mining on its Twitter account. As a result, the average price of the Venezuelan oil basket of crude oil and products year to date fell to U$D 110.60. The ministry reports that "prices fluctuated amid concerns about the economy, mainly the Euro zone and its effects on global demand, geopolitical tensions and changes in the US dollar.” (El Universal, 03-09-2012; http://www.eluniversal.com/economia/120309/venezuelas-oil-basket-down-to-usd-11582)

Analysis: CHEVRON's Amazon-sized gamble on Latin America

Its footing in Venezuela -- where Chevron stayed after major U.S. oil companies EXXON MOBIL and CONOCO PHILLIPS departed in 2007 following oil nationalizations -- is also unstable. Ali Moshiri, Chevron's head of exploration and production in Latin America and Africa, is hailed as a "close friend" by anti-American President Hugo Chavez. Moshiri has strived to keep CHEVRON in Chavez's good graces, accepting laws limiting foreign oil companies to minority roles. The company shares projects led by state-owned oil company PDVSA, and invests in Venezuelan social welfare programs. However, a tax increase last year rattled oil companies that stayed in Venezuela, and PDVSA annoyed CHEVRON last month when it announced plans to sell part of the giant PETROPIAR oil upgrading plant to a Chinese state fund, industry sources said. CHEVRON owns 30% of PETROPIAR but was not consulted. Meanwhile Chevron's newest oil venture with PDVSA in the oil-rich Orinoco Belt faces delays. Production was expected to start this year, but sources say Chevron and PDVSA have yet to agree on investment terms, and basic engineering is unfinished. (Reuters, 03-12-2012; http://www.reuters.com/article/2012/03/12/us-chevron-latam-analysis-idUSBRE82B0FX20120312)

International Trade

Colombia and Venezuela will complete trade agreement within the next few days when Foreign Ministers Nicolás Maduro of Venezuela and María Ángela Holguín of Colombia sign six corollary agreements as agreed to by Presidents Chavez and Santos in their recent meeting in Havana. The agreement will then go to the legislatures of both countries for ratification. More in Spanish: (El Universal; http://www.eluniversal.com/economia/120313/esperan-refrendar-anexos-del-acuerdo-comercial-con-colombia)

Politics

President Chavez announces he will return to Venezuela next Sunday

During a special TV program broadcast from Havana, President Hugo Chavez announced he will return to Venezuela next Sunday, March 18. "God willing, next Sunday afternoon I will already be in Venezuela," said President Chavez. (AVN, 03-12-2012, http://www.avn.info.ve/node/102985; CNN, http://edition.cnn.com/2012/03/12/world/americas/venezuela-chavez/index.html?iref=allsearch; The Washington Post, http://www.washingtonpost.com/world/the_americas/chavez-recovering-after-cancer-surgery-in-cuba-says-he-will-return-to-venezuela-soon/2012/03/11/gIQAdHJA6R_story.html)

Down but not out, a sick Chavez seeks re-election

Facing potentially debilitating radiation treatment after a second malignant tumor was removed from his pelvis, the once-inexhaustible Chavez, 57, is being forced to slow down just as he goes into what could be his toughest election yet. "Unfortunately you are not going to see that much of me," a reflective Chavez said from Cuba, where he is recovering from surgery late last month after a recurrence of the cancer that struck him in 2011. "I'm forced to confront this new situation, to rethink my personal agenda and take better care of myself."Chavez has denied rumors that his cancer has spread but if his health worsens and less-popular ministers are pushed into the spotlight on his behalf, voters will wonder if a weakened Chavez can govern for another six-year term. The only person giving information on his condition, Chavez has not said what kind of cancer he has or laid out a detailed prognosis, though he has announced he will need radiation treatments which are bound to take a heavy physical toll. (Reuters, 03-11-2012; http://www.reuters.com/article/2012/03/11/us-venezuela-election-chavez-idUSBRE82A07720120311)

In Venezuela, elections won't bring stability

In Venezuela's increasingly unpredictable presidential election, voters face more than a choice between competing ideologies. They must also weigh which candidate represents the best hope of staving off political and social upheaval. Neither of the two contenders can guarantee the nation's stability past the Oct. 7 election. The challenges extend well beyond a polarized electorate, Latin America's highest inflation rate, rampant crime and shortages of basic goods, electricity and housing. (The Wall Street Journal, 03-08-2012; http://online.wsj.com/article/SB10001424052970204781804577269442727746860.html?KEYWORDS=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.

March 09, 2012

Economics & Finance

Central Bank says there will be no devaluation this year, increases foreign currency flow to public

Nelson Merentes, President of the Central Bank has said there will be no devaluation this year, but added that this is something that depends on “economic dynamics”, adding that the Government is trying to “closet he gap between the official exchange rate and the unofficial ones”. Merentes made his statements during a CNN interview. At the same time and in order to stem inflation, it has increased the supply of foreign currency supply through the System for Transactions in Foreign-Currency Denominated Securities (SITME) to expedite imports and to steady the supply of goods. SITME provides State or Pdvsa-issued US dollar-denominated bonds in bolivars in order to resell them abroad and obtain US dollars at an exchange rate of VEB 5.30. From January 1 to March 6h, companies purchased bonds on the order of U$D 1.72 billion from SITME, an amount 31% higher than in the same period of 2011. When the bonds are sold abroad, companies must absorb a discount on price of these securities. (El Universal, 03-08-2012; http://www.eluniversal.com/economia/120308/central-bank-of-venezuela-boosts-foreign-currency-supply; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/merentes-descarta-devaluacion-este-ano.aspx)

Frozen corporate dividend repatriation mounts to around U$D 9.436 billion

The ECOANALITICA economic analysis firm reports that international companies operating in Venezuela have a dividend repatriation backlog of some U$D 9.436 billion due to processing delays at Venezuela’s Currency Board (CADIVI). The figure includes both official requests pending with CADIVI and those that have not yet been registered because the exchange authority will not accept additional requests until previous ones have been adjudicated. More in Spanish: (El Universal, 03-09-2012; http://www.eluniversal.com/economia/120309/crece-deuda-de-cadivi-por-repatriacion-de-dividendos)

Investment climate is seriously deteriorated

Carlos Tejera, general manager of the Venezuelan-American Chamber of Commerce and Industry (VENAMCHAM), says that investment climate has seriously deteriorated in Venezuela."It is obvious that foreign investor perception about Venezuela's country risk is high. It is evident that according to academic and objective criteria there is a bad assessment about our country's risk and the rule of law in Venezuela," Tejera noted. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venamcham-venezuelas-investment-climate-has-seriously-deteriorated)

Special funds managed by the Executive estimated around U$D 52 billion

Special – not budgeted - funds managed by the Government have continued to increase. According to the ECOANALITICA firm, by the close of January they were up to U$D 52 billion, an increase of 52.8% over last January year. More in Spanish: (El Nacional, 03-09-2012; http://www.el-nacional.com/)

Inflation decreased 1.1% in February

The National Consumer Price Index (CPI) registered an inter-monthly variation of 1.1%, according to the monthly report published jointly by the Venezuelan Central Bank (BCV) and the National Statistics Institute (INE). The monthly report highlights that it is a positive indicator, as it has been falling for three consecutive months and "it is the lowest value registered since January 2008." (AVN, 03-06-2012; http://www.avn.info.ve/node/102128; El Universal, http://www.eluniversal.com/economia/120306/inflation-hits-the-lowest-month-to-month-increase-since-january-2008)

Commodities

ECOANALITICA estimates PDVSA loses around U$D 6.8 billion a year in China operations

According to the ECOANALITICA firm around U$D 3.5-5 billion are discounted from the price of oil shipments in order to amortize loans from China, and also makes interest payments around U$D 1.8 on bonds issued, which hinders its ability to fund the special investment plan. More in Spanish: (El Nacional, 03-09-2012; http://www.el-nacional.com/)

PDVSA, Chevron ready U$D 2 bln oil project credit

State oil company PDVSA and U.S. oil major Chevron are readying a U$D 2 billion credit to expand oil production at the PETROBOSCAN joint project, sources close to the operation said on Tuesday. "The conditions for the credit have already been negotiated. The U$D2 billion will be loaned by Chevron's headquarters," said one of the sources who were not authorized to speak on the record about the deal. PETROBOSCAN, in western Venezuela, now produces 115,000 barrels per day of crude and is 60% controlled by PSVSA and 40% owned by Chevron. (Reuters, 03-06-2012; http://www.reuters.com/article/2012/03/06/venezuela-oil-idUSL2E8E6D5R20120306)

PDVSA to trade bonds in the Hong Kong Stock Exchange which would expand its markets says Oil and Mining Minister Rafael Ramírez. He also said State oil company is not planning to sell part of its shares. Ramírez did not detail amounts or the time in which PDVSA would concrete the registration in the market and he also discarded a short-term securities issuance. (Veneconomy, 03-08-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29714&idc=4)

Government expects to produce 8.3 million tons of cement in 2012

Raúl Pacheco, Vice Minister of Productivity Management, predicts the Executive will to produce 8.3 million tons of cement in 2012 to further strengthen the country's infrastructure, as well as the housing construction program. He says that cement production was 7.77 million tons in 2011. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venezuelan-govt-to-produce-83-million-tons-of-cement-in-2012)

Steelmaker stopped production of 14,000 tons of rebars

The production steel bars in state-run steelmaker Siderúrgica del Orinoco (SIDOR) was stopped for two weeks, which hit the manufacture of rebars essential to meet goals within the government’s housing program. Operations started up again Monday. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venezuelan-steelmaker-stopped-producing-14000-tons-of-rebars)

Government regulates fuel sales in Venezuela's border states

The Ministry of Petroleum and Mining published rules for "setting up, operating and regulating" a system for fuel sales in Venezuela's border states. Users must register with the Control System for Fuel Supply (SISCCOMBF) in order to receive a tag or electronic identification, which is essential to buy fuel under government regulations.  Rules define five types of users, namely "end-users, residents, tourists, travelers, and emergency users." End-users who are not registered with SISCCOMBF will only be allowed to buy fuel up to three times. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/government-regulates-fuel-sales-in-venezuelas-border-states)

Harvest shares surge on Venezuela divestment plan

Harvest Natural Resources Inc. (HNR) climbed the most in four years after announcing it’s in exclusive talks to sell assets in Venezuela. Harvest rose 23% to U$D 7.70 at the close in New York, the biggest gain since June 18, 2007. The Houston-based oil producer is in exclusive talks to sell its 32% stake in the PETRODELTA joint venture in Venezuela, it said. “While no dollar amounts were provided, news of an imminent sale has nonetheless put a charge into shares today,” Chad Mabry, senior oil and gas analyst at Rodman & Renshaw LLC in Houston, said today in an e-mailed note to clients. (Bloomberg, 03-06-2012; http://www.bloomberg.com/news/2012-03-06/harvest-shares-surge-on-venezuela-divestment-plan-caracas-mover.html; El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/harvest-natural-seeks-to-sell-stake-in-petrodelta)

Power failure hits Andean region and Barinas

The Andean states of Trujillo and Mérida, and Barinas (plains) have been hit by power rationing due to an outage occurred last weekend at the José Antonio Páez hydroelectric power plant. As a result, generating units 3 and 4 and one of the transformers were left out of service. According to an unofficial report, a load of 70 megawatts has not been supplied during peak hours in several Andean and plains towns: Trujillo (30 MW), Mérida (10 MW) and Barinas (30 MW). (El Universal, 03-08-2012; http://www.eluniversal.com/economia/120308/power-failure-hits-andean-region-and-barinas)

Logistics & Transport

Venezuela’s tax authority (SENIAT) unifies criteria with customs agents in Vargas state to begin data transmission via the SIDUNEA World technological platform, scheduled for next month and which is expected to expedite operations. SENIAT is considering an expansion of this system customs operation at Guanta and Puerto La Cruz, in Anzoátegui, and Valencia, in Carabobo. (Veneconomy, 03-08-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29721&idc=2)

Politics

Chávez tells Santos he will return home next week, approves trade agreement

Colombian President Juan Manuel Santos met Wednesday afternoon with his President Chávez in Havana, Cuba, and reports that the Venezuelan Head of State told him that he plans to return to Venezuela early next week, after he underwent a surgery to remove a cancerous tumor. "We found him in good health condition, happy and in good spirits. He told me his recovery is going well." Santos spoke at the end of a short visit to Cuba. Both presidents discussed issues related to the Colombia-Venezuela bilateral trade agreement. "We had not given a green light to the annexes that our ministers and experts discussed for the trade agreement with Venezuela to take effect. We have given the green light and all we have left is the signing of the annexes by the foreign ministers. In order to save time, we are going to draft the corresponding decrees and take the steps for the agreements to take full effect as soon as possible," the Colombian leader added. (El Universal, 03-08-2012; http://www.eluniversal.com/nacional-y-politica/120308/chavez-tells-santos-he-will-return-home-next-week)

Journalist in eye of Chavez cancer storm

Derided as a "liar" and "clown" by President Hugo Chavez's allies, a bespectacled 66-year-old journalist has defied the verbal barrage to become a must-read for anyone tracking the Venezuelan leader's cancer. Veteran reporter and columnist Nelson Bocaranda broke the stunning news in mid-2011 that Chavez, the country's all-dominant socialist leader, and has garnered more than 670,000 followers via his two Twitter accounts - @NelsonBocaranda and @RunRunesWeb. Bocaranda says he has sources around the region, from Cuba and Colombia to Brazil and the United States, and protects them with personal meetings, constant changes of phone chips and the use of Blackberry messenger chat among other techniques. That prominence has made him a hate figure for Chavez supporters, and he does have serious concerns for his safety. He warned in a column this week that the state would be responsible for anything that happens to him or his family. (Chicago Tribune, 03-08-2012; http://www.chicagotribune.com/news/sns-rt-us-venezuela-chavez-journalistbre8270td-20120308,0,777161.story)

Venezuela readies third diesel fuel shipment to Syria

Venezuela is readying a new shipment of diesel to Damascus as part of a supply agreement signed by both governments in 2010. The Chávez's administration plans to continue meet the agreement despite the troubled political situation in the Middle East country, according to a pro-government legislator.  State-run oil company Petroleos de Venezuela (PDVSA) delivered a cargo of low-sulfur diesel in February aboard the Negra Hipólita tanker, a Venezuelan vessel operated by a PDVSA subsidiary. According to sources, it was the second fuel cargo shipped from the Venezuelan refinery of Puerto La Cruz. (El Universal, 03-06-2012; http://www.eluniversal.com/economia/120306/venezuela-prepares-third-shipment-of-diesel-fuel-to-syria)

US Southern Command to remain vigilant

During a hearing before the Armed Forces Committee in the House of Representatives, Southern Command chief General Douglas Fraser said they were attentive to the “geopolitical turmoil” that may originate in Cuba, Venezuela, Bolivia and Haiti. As to Venezuela, General Fraser pointed out the country faces “uncertainty over President Chávez’ health,” a “persistent economic instability and growing violence levels that generate more demands from the government.” (Veneconomy, 03-07-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29683&idc=1)

Caracas to host Sao Paulo Forum

PSUV party International Affairs coordinator Rodrigo Cabezas has announced that the 18th Sao Paulo Forum will be held in Caracas, with 40 countries in attendance from July 4 to July 6 and the formal opening would be on July 5 to celebrate Venezuelan Independence Day. (Veneconomy, 03-06-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29681&idc=1)

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

March 06, 2012

Economics & Finance

Foreign debt grew 90% over the past three years, reaches U$D 79.2 billion in 2011

In 2009, drop in oil prices led the Venezuelan government to borrow in order to cover the oil revenue gap and, although the barrel price recovered over the following years, the government has continued to issue further debt.

Laws have been reformed over the last three years with a view to endorsing increased borrowing, which corresponds not only to the central government, but also to official entities. Bond issues and loans are reflected in the balance of the foreign debt of the public sector, which grew 90% in 2008-2011. Based on figures from the Ministry of Finance central government domestic and foreign debt came to U$D 79.2 billion, up from U$D 71.1 billion in 2010. This figure does not include the liabilities of oil holding Petróleos de Venezuela (PDVSA), state-owned companies and borrowing from foreign countries, such as China and Russia. (El Universal, 03-03-2012; http://www.eluniversal.com/economia/120303/in-three-years-venezuelas-foreign-debt-grew-90 and http://www.eluniversal.com/economia/120303/debt-of-the-central-government-in-2011-finishes-at-usd-792-billion)

Operating reserves sink to lowest level in 15 years

Venezuela's operating reserves, that is, currency deposited with banks for imports and foreign-debt payments have plummeted to their lowest level in 15 years. By the end of 2011, operating reserves held by the Central Bank amounted to U$D 5.58 billion, which is less than two months' worth of the balance needed to cover imports. This is a severe decline of 82.6% since 2008 and the lowest level since 1997. The drop is basically due to the way the country's wealth is managed. Last year, Venezuela's petroleum revenues generated income of U$D 88.13 billion, but most went directly into the funds managed by the government, while only a small portion found its way to the central bank. (El Universal, 03-03-2012; http://www.eluniversal.com/economia/120303/venezuelas-operating-reserves-sink-to-lowest-level-in-15-years)

PDVSA debts crimps ambitious oil output plans

The increasingly heavy debts of Venezuela's state oil company PDVSA are hindering the OPEC nation's efforts to meet ambitious goals to boost its crude production this year. President Hugo Chavez's government aims to increase output to 3.5 million barrels per day (bpd) in 2012, from 3 million bpd last year. It would be the biggest annual rise during the socialist leader's 13 years in power. Much of the new production is slated to come from the vast Orinoco belt. But several executives at companies working with PDVSA said delays by PDVSA in paying its partners were creating severe bottle-necks. (Reuters, 03-02-2012; http://www.reuters.com/article/2012/03/02/venezuela-oil-pdvsa-idUSL2E8E19OZ20120302)

A new government may face bankruptcy

Economic experts analyzing possible scenarios for a new government emerging from upcoming elections on October 7 find it important to offer a credible social and economic proposal of the country. But according to Robert Bottome of VENECONOMY, it is important to consider that a new government "would inherit a bankrupt country with repressed inflation, with its institutions, its infrastructure, its farms, its factories in state of ruin." More in Spanish: (Tal Cual, 03-05-2012; http://www.talcualdigital.com/index.html)

Sale prices higher in Venezuela

A study by the office of the Price and Cost Superintendent has established a price comparison on 19 items and shows sale prices in Venezuela carry a surcharge. The comparison was made with countries such as Colombia, Ecuador, Brazil, México and Argentina, and is based on reference prices used by the National Tax Authority (SENIAT) and the fluctuation of import prices. Karlin Granadillos, Cost and Price Superintendent claims high prices on products such as juices, preserves, soap, diapers and sanitary towels, among others, is due to “transactional accounting” as opposed to normal cost accounting. She says “transactional accounting” establishes the price of products according to the place they are destined to and use the term “hidden costs” to add items such as losses due to government regulations and added taxes. More in Spanish: (Últimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/en-venezuela-se-vende-mas-caro-que-en-otros-paises.aspx)

Commodities

Export oil barrel averaged U$D 117.10/bbl. this week, up U$D 2.51 from last week when it traded at U$D 114.59/bbl. The average-to-date this year is UI$D 110.00. (Veneconomy, 03-03-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29635&idc=4)

International Trade

Imports from Colombia up 77.6% in January

Venezuela’s imports from neighboring Colombia rose 77,6% in January compared to the same month last year, according to data from Colombia´s National Statistics Department (DANE)  The total for imports rose to U$D 136.24 million compared to U$D 76.73 million the same month in 2010. Fuel and mineral oil imports took the larger part, U$D 44.9 million, up 215%. More in Spanish: (El Mundo, 03-06-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/importaciones-desde-colombia-subieron-77,6--en-ene.aspx)

U$D 13.1 million paid to Nicaragua for coffee

According to Nicaragua’s Export Center (CETREX), Venezuela paid U$D 13.1 million to purchase Nicaragun beans, which along with the beef is the first export commodity for the Central American country. More in Spanish: (El Universal, 03-05-2012; http://www.eluniversal.com/economia/120305/venezuela-pago-131-millones-por-cafe-de-nicaragua)

Politics

Chavez says tumor extracted in Cuba was cancerous

President Hugo Chávez said a tumor recently removed from his pelvic region was of the same type of cancer as a previous tumor extracted from that part of his body about seven months ago. Speaking at his first television appearance in nine days, Chávez said the surgery and follow-up tests showed the tumor was "a recurrence of the initially diagnosed cancer." He said "the tumor was totally extracted" and noted "the absence of lesions suggestive of cancer neither locally, neither in nearby organs, neither far away ... neither metastasis, none of this thanks to God, to the diagnosis and rapid intervention." He verified the date of the recording by displaying a Saturday copy of the Cuban government newspaper Granma and a similar copy of the Venezuelan government paper Correo del Orinoco. (Fox News, 03-04-2012; Reuters; http://www.reuters.com/article/2012/03/04/us-venezuela-chavez-idUSTRE8230FB20120304; AVN, 02-05-2012; http://www.avn.info.ve/node/101897; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-hugo-chavez-appears-on-tv-for-1st-time-in-9-days-after-tumor-surgery/2012/03/04/gIQAR3KhqR_story.html)

…and defends Syrian President Bashar Al-Assad, who has tried to violently crush a popular revolt in much of the Middle Eastern country. Venezuela has at least twice sent shipments of diesel oil to Syria over the past months. "We continue lamenting the aggressions against Syria," Chávez said, "and the pressure of the United States government and many European countries, failing to recognize the sovereignty of a people such as the Syrian people." (Fox News, 03-04-2012; http://latino.foxnews.com/latino/news/2012/03/04/hugo-chavez-says-tumor-extracted-in-cuba-was-cancerous/#ixzz1oFwnmYNJ)

President Santos to meet Chavez and Castro in Cuba

Colombian President Juan Manuel Santos will meet this week in Havana with his Cuban and Venezuelan counterparts, Raúl Castro and Hugo Chavez, to discuss Cuba’s attendance in the Summit of The Americas, and to sign a trade agreement with Mr. Chavez. Santos says: “it is a chance to talk as all good friends, with the Cuban Government, with Castro, the matter of Cuba in the upcoming Summit”. More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/120306/presidente-santos-se-reunira-con-chavez-y-castro-en-cuba)

Expert says Executive decisions made from Cuba are void and could be challenged

Alberto Arteaga, a prominent attorney and criminal law authority says the Government’s refusal to allow Vice President Jaua to govern is political. “One may think that it is to avoid the 90 consecutive day absence period, after which the National Assembly must declare a permanent absence”. He says temporary absences have a limitation and that the current predicament is abnormal, as there is a designated person that can cover for Chavez. More in Spanish: (El Nacional, 03-05-3012; http://www.el-nacional.com)  

Venezuela suspends gun imports for a year

Venezuelan authorities have established a moratorium on importing guns for sale to the general public, while banning the marketing of munitions and all other armaments in an attempt to “put order” in that sector and exercise some control over the nation’s widespread violence. The technical secretary of the Presidential Commission for the Control of Arms, Munitions and Disarmament, Pablo Fernandez, said Friday in an interview on state channel VTV that since Feb. 29 “the importing of weapons to Venezuela has been suspended.” (Latin American Herald Tribune, 03-03-2012; http://www.laht.com/article.asp?ArticleId=474839&CategoryId=10717)



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

March 02nd, 2012

Economics & Finance

Combined Gov't and PDVSA debt skyrockets to U$D 114 billion

Despite oil prices averaging U$D 101 in 2011, Venezuelan authorities embarked increased indebtedness. Numbers emerging from the Finance Ministry state-run oil holding Petróleos de Venezuela (PDVSA), during 2011 Central Government and PDVSA debt rose to U$D 141 billion, a 18% hike over U$D 96.6 billion in 2010. This figure does not include borrowing from China, Russia and Brazil. If these loans are added, total liabilities rise considerably higher. This week, government made a additional deal with China for U$D 10 billion funding. At the end of the day, loans contracted with the Asian giant amount to an aggregate U$D 38 billion. (El Universal, 03-01-2012; http://www.eluniversal.com/economia/120301/govt-and-pdvsa-debt-sums-up-usd-114-billion)

Price controls hit small business

Business leaders have cautioned that standard pricing set by the National Superintendent of Costs and Prices (SUNDECOP) is risky. Carlos Larrazábal, President of the Venezuelan Industrial Confederation (CONINDUSTRIA) is afraid smaller manufacturers will find it difficult to survive the price regulation. "They could damage small enterprises, the costs of which are not as competitive as those of big enterprises," Larrazábal noted. (El Universal, 02-29-2012; http://www.eluniversal.com/economia/120229/price-control-hits-smaller-enterprises)

Chavez cancer surgery makes Venezuela bonds best emerging-market performer

Venezuelan debt returned the most in emerging markets this month as investors boosted holdings of the oil producer’s bonds on speculation President Hugo Chavez’s deteriorating health will prevent him from seeking re-election. Venezuelan bonds returned 14% this month through yesterday, compared to 7.4% for the Ivory Coast, 5.2% for Vietnam and 3.1% for Belarus, according to JPMorgan Chase & Co.’s EMBI Global index. Year-to-date, Venezuela’s dollar bonds have returned 22%. (Bloomberg, 02-29-2012; http://www.bloomberg.com/news/2012-02-29/chavez-cancer-surgery-makes-venezuela-bonds-best-emerging-market-performer.html)

Unemployment remains around 10.3% in January 2012

The unemployment rate in Venezuela closed at 10.3% in January 2012, according to the Monthly Workforce Report presented by the president of the National Statistics Institute (INE), Elias Eljuri, who said this figure "showed barely a reduction of 0.1% between January 2011 and January 2012." (AVN, 02-29-2012; http://www.avn.info.ve/node/101240)

Commodities

Aluminum and steel production under 1997 numbers

Official statistics show that output for subsidiaries of the Venezuelan Guayana Corporation (CVG) and private manufacturing, essential in order to diversify exports and supply raw materials to the economy, is seriously shrinking.

At September 2011, latest data released by the Central Bank of Venezuela (BCV), the output of iron, steel and aluminum, items produced by the CVG, is 15%, 30% and 50% below 1997 output. At the same time, the schedule for private manufacturing shows that in 2011, the output of textiles, vehicles, electrical items, machinery and equipment was also lower than 1997 levels. (El Universal, 02-29-2012; http://www.eluniversal.com/economia/120229/venezuelas-aluminum-and-steel-production-below-1997-numbers)

Oil shipments to China total 200,000 bpd

Venezuela-China financial relationship adds up U$D 38 billion, including the agreements under the Chinese Fund, loans to state-run Petróleos de Venezuela (PDVSA) and joint ventures where the oil holding company has a majority interest. In exchange for Chinese lending, Venezuela sends around 200,000 barrels per day of crude oil, according to Rafael Ramirez, Minister for Energy and Petroleum. (El Universal, 02-29-2012; http://www.eluniversal.com/economia/120229/oil-shipments-to-china-under-agreements-total-200000-bpd)

PDVSA Says PETROMONAGAS project producing 120,000 Barrels a Day

The PETROMONAGAS project, a joint venture between state oil company Petroleos de Venezuela SA and Russia’s TNK-BP (BP/), is producing 120,000 barrels of oil a day and will increase production to 145,000 barrels a day by the end of the year, PDVSA’s Vice President of Exploration and Production Eulogio del Pino said. (Bloomberg, 02-29-2012; http://www.bloomberg.com/news/2012-02-29/pdvsa-says-petromonagas-project-producing-120-000-barrels-a-day.html)

373 oil drills to be operative in Venezuela at the end 2012

Rafael Ramirez, Petroleum and Mining minister says that by the end of this year, 373 oil drills should be operative in the country. "It is a historic figure, unprecedented in our country". It is estimated that 202 drills shall be operating in the Orinoco Oil Belt. He also claimed they have already drilled and connected 88 oil drills in the Belt (AVN, 03-01-2012; http://www.avn.info.ve/node/101380) and http://www.avn.info.ve/node/101402)

Politics

Chavez on state TV: 'I am doing well'

President Hugo Chavez made his first live communication with his country's news media in nearly a week Thursday, saying he was in good shape and recovering quickly from tumor surgery in Cuba. In a five-minute phone conversation broadcast on state television, Chavez said he is keeping active, eating well and even working just days after the operation to remove a possibly cancerous growth. "We're here in battle, and sooner rather than later I will be with you physically as well." His campaign rival, Henrique Capriles, repeated his wish for the president to have a full and quick recovery, but also criticized authorities for being less than forthcoming about the president's health situation. "If I were president, my health, my life in general, due to the very high responsibility I have, should be a matter of public knowledge," Capriles said. (Newsok, 03-02-2012; http://newsok.com/venezuelas-chavez-on-state-tv-i-am-doing-well/article/feed/354431#ixzz1nxQAH82C; also Reuters, 02-29-2012; http://www.reuters.com/article/2012/03/01/us-venezuela-chavez-idUSTRE81S19V20120301; El Universal, 03-01-2012; http://www.eluniversal.com/nacional-y-politica/120301/president-chavez-reappears-on-his-twitter-account; CNN, http://edition.cnn.com/2012/03/01/world/americas/venezuela-chavez/index.html?iref=allsearch)

Chavez illness changes the game for Venezuelan election

The possibility that poor health may prevent Venezuelan President Hugo Chavez from being re-elected in October has altered the country's political landscape. On Monday, Chavez underwent an operation in Cuba to remove a tumor from his abdomen. He also was diagnosed with cancer last June, though the type wasn't revealed. The detection of the tumor comes at a bad time for the ruling United Socialist Party. With the presidential election campaign scheduled to start soon, the opposition Democratic Unity alliance is in better shape than ever. Just days before the president announced his health issues, the alliance had elected its own presidential candidate in primaries featuring an unexpectedly high turnout of 3 million voters. (CNN, 01-03-2012; http://edition.cnn.com/2012/02/29/world/americas/chavez-re-election/index.html?iref=allsearch)

In a world without Chavez, analysts see greater potential for turmoil in Venezuela

It’s hard to imagine an election in Venezuela without Hugo Chavez, the larger-than-life personality who gazes down from billboards and murals and fills the airwaves for hours at a stretch with his unique mixture of fiery speeches and folksy banter. Yet that’s just the scenario this South American nation must contemplate as the charismatic populist, who has dominated the political landscape during 13 years as president, is treated in Cuba for a possible return of the cancer he thought he had licked. (The Washington Post, 02-29-2012; http://www.washingtonpost.com/world/the_americas/in-a-world-without-chavez-analysts-see-greater-potential-for-turmoil-in-venezuela/2012/02/29/gIQAXI0UiR_story.html)

Fitch Ratings reflect the continuous concentration of power and decision making in the hands of President Chávez, and the erosion of the country’s institutional strength is perceived as the greatest obstacles for overcoming uncertainties over the political and economic outlooks after the elections now that Chávez is seriously sick. (Veneconomy, 03-01-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29619&idc=3)

Total population estimated at 28.8 million people

Elias Eljuri, President of the National Statistics Institute (INE) says the 14th national census on population and housing may result in a total 28 million 800 thousand inhabitants in Venezuela. The figure includes the overall population effectively registered in the census, which add up to 27,150,095 people, plus census omissions, which rates about 6%, according to an INE press release. (AVN, 03-01-2012; http://www.avn.info.ve/node/101388)