February 12, 2013

Economics & Finance

Devaluation is insufficient; further adjustments will be needed

Pressured by a growing fiscal imbalance, the Government has devalued the currency over 32%, taking the official exchange rate from VEB 4.30 to VEB 6.30 per US dollar. This step falls short and further adjustments are expected in the midterm. Luis Vicente León, economist and director of DATANÁLISIS, explains that "with the exchange rate at VEB 6.30 per US dollar, demand for foreign currency will continue to be huge. Consequently, the Government has two choices: either burning a lot of international reserves by selling cheap US dollars or causing shortages." (El Universal, 02-10-2013; http://www.eluniversal.com/economia/130210/devaluation-is-insufficient-further-adjustments-will-be-needed)

Only FOREX board is to manage US dollar sales in Venezuela

Pro-government legislator Ricardo Sanguino, Chairman of the National Assembly Finance Committee, says only the FOREX Administration Commission (CADIVI) will assign dollars to all imports. As for the possibility of creating another mechanism for selling foreign exchange, Sanguino said authorities would await results after the new decisions. (El Universal, 02-11-2013; http://www.eluniversal.com/economia/130211/only-forex-board-is-to-manage-us-dollar-sales-in-venezuela)

Devaluation raises Venezuela's debt burden to 70% of GDP

The move to devaluate creates negative effects on public finances and raises the debt burden. The increased debt burden means that the market perception of risk worsens and the country has to pay higher interest rates for new financing. Also, the government will have to pay higher amounts for current principal and interests. This will absorb most of the budget and limit funds available for areas such as health, education and infrastructure. Economist and Central University professor Jose Guerra, who has researched Venezuelan debt trends along with Luis Oliveros, says devaluation dilutes the Bolivar denominated debt as fewer petrodollars will be needed to repay domestic debt, but the move also shrinks the economy, that is, GDP, and leaves foreign currency debt remains unchanged. (El Universal, 02-11-2013; http://www.eluniversal.com/economia/130211/devaluation-raises-venezuelas-debt-burden-to-70-of-gdp)

Opposition slams Venezuela devaluation, shoppers fret

Opposition leaders derided another currency devaluation by President Hugo Chavez's government as evidence of economic incompetence, while some anxious Venezuelans hit the shops on Saturday in fear of price increases. Although Chavez has not been seen in public since cancer surgery two months ago in Cuba, ministers said he personally ordered the fifth devaluation of the Bolivar in a decade of socialist economics - this time by 32%. Seen as an imperative by economists but widely unpopular among Venezuelans, the measure is the biggest test yet for Vice President Nicolas Maduro, who has been in charge of the government since Chavez's December 11 operation. (Reuters, 02-09-2013; http://www.reuters.com/article/2013/02/09/us-venezuela-economy-idUSBRE91807920130209)

Venezuelan bonds gain after Bolivar devaluation

Venezuelan government bonds rallied, with benchmark yields falling to a five-year low, after the government devalued the Bolivar, helping cut the budget deficit by generating more local currency from its oil exports. The yield on the dollar-denominated bonds maturing in 2027 dropped eight basis points, or 0.08 percentage point, to 8.61% at 1:40 p.m. in New York, according to data compiled by Bloomberg. The yield on state-owned Petroleos de Venezuela SA’s securities due in 2017 slid two basis points to 8.41%. (Bloomberg, 02-11-2013; http://www.bloomberg.com/news/2013-02-11/venezuela-pdvsa-bond-yields-fall-on-devaluation-caracas-mover.html)

Commodities

PDVSA admits it raised debt to sustain dollar sales system

In June 2010, the Venezuelan Government eliminated the swap market and ordered the Central Bank of Venezuela (BCV) to create a system to sell US dollar-denominated bonds in order to put an end to "speculation."  Thirty-two months after its creation, the Transaction System for Foreign Currency Denominated Securities (SITME) was eliminated. Authorities claimed the system failed to meet its goals. While operational, however, SITME forced state-owned oil company PDVSA to increase its debt. When the SITME began, BCV chairman Nelson Merentes said it would be used to meet US dollar demand and tackle "speculation." He also emphasized the system had been created in a way that it could feed back itself; "therefore, it may last 50-100 years." The goal was only partially accomplished,
and fed on bond sales by banks, particularly state-run banks, and PDVSA. Based on official data, the largest numbers of US dollar bonds were issued by the oil company. (El Universal, 02-11-2013; http://www.eluniversal.com/economia/130211/pdvsa-concedes-it-raised-debt-to-sustain-dollar-sales-system)

International Trade

Colgate-Palmolive sees "extraordinary losses" over devaluation in Venezuela

Multinational company Colgate-Palmolive said Monday that due to the devaluation of the Venezuelan currency, it will record extraordinary losses at U$D 120 million, or U$D 25 cents per share, in the first quarter of 2013.
Colgate expects a reduction in its earnings per share of some U$D 5-7 cents per quarter in 2013, because of the conversion of the financial statements to the new Venezuelan exchange rate.
However, the devaluation will have no impact on the company's results or financial position in 2012, said the New York-based firm, according to Reuters. (El Universal, 02-11-2013; http://www.eluniversal.com/economia/130211/colgate-palmolive-sees-extraordinary-losses-over-devaluation-in-venezu)

BBVA, Telefonica exposed to Venezuela devaluation

Venezuela's currency devaluation is likely to take a heavier toll on Telefonica and BBVA than other Spanish companies, shrinking the value of their dividends and assets in the country by as much as a third. Both are major players in Venezuela, which said on Friday it was devaluing the bolivar to 6.3 per U.S. dollar from 4.3 per dollar from Feb. 13 in an attempt to shore up government finances. (Reuters, 02-11-2013; http://www.reuters.com/article/2013/02/11/spain-venezuela-idUSL5N0BBAF720130211)

Logistics & Transport

Port charges to rise 46.5% with new FOREX rate

Devaluation will have an immediate impact on the cost of importing. Although the Government says US dollar requests by some sectors prior to the announcement of the new foreign exchange rate (6.30) will be processed at VEB 4.30 per US dollar, seaport services and charges will go up next Wednesday. As per Article 4 of Official Gazette 40,078, dated December 26, 2012, port charges and services are based on an updated schedule set by the port authority Bolivariana de Puertos (BOLIPUERTOS), which applies the official exchange rate to calculate tariffs and services. (El Universal, 02-11-2013; http://www.eluniversal.com/economia/130211/venezuelan-seaport-tariffs-to-hike-465-upon-new-forex-rate)

Politics

After 2 months without Chavez, Venezuela's government voices optimism but some expect new vote

Two months have passed since President Hugo Chavez climbed the stairs of the presidential jet, blew kisses to his supporters and flew to Cuba to undergo his fourth cancer-related surgery. Chavez hasn’t been seen or spoken publicly since that departure to Havana on Dec. 10, and the mystery surrounding his condition has deepened while the government’s updates have remained optimistic but have lately offered few specifics. (The Washington Post, 02-10-2013; http://www.washingtonpost.com/world/the_americas/after-2-months-without-chavez-venezuela-government-voices-optimism-but-some-expect-new-vote/2013/02/10/bfda3c4a-7396-11e2-9889-60bfcbb02149_story.html; More in Spanish: CNN, http://cnnespanol.cnn.com/2013/02/09/chavez-sin-voz-y-deprimido-no-podra-volver-a-presidir-venezuela-segun-el-diario-abc/?iref=allsearch)

VP: Chávez is going through a slow recovery process

Executive Vice-President Nicolás Maduro said Friday that President Hugo Chávez is going through a "slow" recovery and is "in a battle, clinging to Christ." Maduro said the Venezuelan people are "ready to face difficulties, whatever they are." "None of us is Chávez, but we all together are Chávez, if we are united." (El Universal, 02-09-2013; http://www.eluniversal.com/nacional-y-politica/130209/vp-chavez-is-going-through-a-slow-recovery-process; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=678193&CategoryId=10717)

Foreign Minister says Chavez in charge and making decisions

Upon meeting with his Brazilian counterpart Antonio Patriota, Foreign Minister Elias Jaua said the president is in charge of government and making decisions. "The president is in charge and making decisions for the economic and productive development of the nation," said Jaua and added that he has held meetings with president Chavez in which he has approved resources for the the Housing Mission and a soybean production project that is being developed jointly with Brazil. (AVN, 02-09-2013; http://www.avn.info.ve/contenido/chavez-charge-and-taking-decisions-country039s-development)

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.

February 08, 2013

Economics & Finance

2013 income tax collections projected at VEB 54 billion, an increase of 47% from last year, according to tax authorities. More in Spanish: (AVN, 02-08-2013; http://www.avn.info.ve/contenido/prev%C3%A9n-recaudar-bs-54-millardos-2013-islr)

Banking sector reports the highest return in the region

In a report on banking performance in Venezuela, Colombia, Peru, and Ecuador, FITCH RATINGS shows that the average return on assets of Venezuela's banking system (4.1%) return is among the highest in the region. However, FITCH says returns may drop in 2013 because of lower interest rate spread and higher pressure on banking fees. They warn that "solid return and regulations on the payment in cash of dividends (up to 50% of net profits) led to the preservation of capitalization in Venezuelan banks in 2012." (El Universal, 02-07-2013; http://www.eluniversal.com/economia/130207/venezuelas-banking-sector-reports-the-highest-return-in-the-region)

Total stability for workers in both the public and private sectors has been established, even if they commit faults, according to labor attorneys analyzing the new Labor Law (LOTT). This comes along with a job freeze extended constantly since 2002. VENAMCHAM’s latest poll, shows 60.47% of businessmen report that a key impact is difficulty in hiring hire new staff. (Veneconomy, 02-06-2013;http://www.veneconomy.com/site/index.asp?ids=44&idt=33659&idc=3)

Government approves cuts Chavez once slammed, to delay devaluation

Last week the government cut PDVSA's contribution to an off-budget fund - the second-biggest source of public spending - by U$D 2.9 billion. Central government outlays, which surged 26% in the year before the October 7 election, have declined 7% since then, according to Bank of America Corp. At the same time, consumer prices jumped the most in over two years in December, pushing inflation to 20.1%. (Bloomberg, 02-06-2013; http://www.bloomberg.com/news/2013-02-06/chavez-enacts-cuts-he-once-slammed-to-delay-devaluing-economy.html)

Commodities

SIDOR records no exports in eight months, subjected to inspection by the military

It has been eight months since Venezuela's state-owned steelmaker SIDOR halted exports to meet domestic demand, and domestic steel supply continues running low.   Although SIDOR's liquid steel output in January 2013 was 157,258 tons, 18.6% more than last year, the total remains 58% under January 2007 (373,000 tons), just one year before the company's nationalization.  The company was inspected this week by military representatives on orders from the Vice President's office. The group was led by General Justo Noguera Pietri, head of the Central Planning Committee Control Office, but CVG and SIDOR President Rafael Gil denied it was an "intervention". (El Universal, 02-06-2013; http://www.eluniversal.com/economia/130206/venezuelas-steelmaker-sidor-records-no-exports-in-eight-months, and more in Spanish: http://www.eluniversal.com/economia/130208/equipo-de-la-fanb-inspecciona-y-recorre-instalaciones-de-sidor)

Venezuela's grain output stagnant in 2012

Venezuela's grain output in 2012 failed to meet demand. The gap was 66% in corn, 42% in rice, and 96% in sorghum, according to estimates of the Venezuelan Farmers' Federation (FEDEAGRO). Private sector production estimates for 2012 were 1.31 tons of corn (white/yellow), 0.71% above 2011. Paddy rice gained 7.79% and stood at 695,232 tons. Sorghum output hiked 27% with respect to last year and accounted for 99,670 tons. The results reveal stagnation in cereal production despite joint efforts of the agriculture sector and the government. (El Universal, 02-06-2013; http://www.eluniversal.com/economia/130206/stagnant-venezuelas-grain-output-in-2012)

International Trade

MOVISTAR invests strongly in Venezuela

The Spanish telecommunications giant, Telefónica, announced it would invest U$D 790 million in Venezuela this year, mostly in 4G technology in order to consolidate the smart phones segment. (Veneconomy, 02-06-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33657&idc=3)

Politics

Chavez reported improving, meeting with officials, but remains invisible

After two months since President Chavez told the nation his cancer had returned and required an emergency trip to undergo a fourth surgery, he remains invisible to all but very close relatives and associates. To date there have been 14 official communiqués read by the Information Minister, and recent ones speak of improvement. Foreign Minister Elías Jaua was recently written in his Twitter account that he, Vice President Maduro and Attorney General Cilia Flores have now had a "deeply human, lovely encounter with our Commander Chavez, and he is doing battle!". More in Spanish: (El Nacional, 02-08-2013; http://www.el-nacional.com/, AVN; http://www.avn.info.ve/contenido/presidente-ch%C3%A1vez-se-reuni%C3%B3-equipo-gobierno-este-jueves)

Corruption accusations, insults flying as Venezuela politics heat up amid Chavez’s absence

Corruption accusations and insults are flying between allies and opponents of President Hugo Chavez nearly two months after he disappeared from the political stage to undergo cancer surgery in Cuba. Analysts say the increasingly heated attacks between the two camps could be a preamble to a bruising campaign ahead of a possible new presidential election this year. National Assembly President Diosdado Cabello has accused three lawmakers in the Justice First party of involvement in corruption. Opposition leaders responded by saying that members of the party are totally innocent and that senior government officials are the ones who have enriched themselves during Chavez’s 14 years in office. (The Washington Post, 02-06-2013; http://www.washingtonpost.com/world/the_americas/corruption-accusations-insults-flying-as-venezuela-politics-heat-up-amid-chavezs-absence/2013/02/06/e1e25b4a-7087-11e2-b3f3-b263d708ca37_story.html)

No date for presidential elections

National Electoral Council Vice President Sandra Oblitas denied rumors of a possible presidential election to be held on March 31 (Easter) or jointly with the local elections on July 14. She said the electoral body works from “concrete facts and not speculation;” consequently, they are based on a calendar and for this year only the municipal elections have been scheduled. (Veneconomy, 02-06-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33655&idc=1)

Brazilian FM to visit Venezuela

Brazilian foreign minister Antonio Patriota will visit Venezuela tomorrow to meet with his Venezuelan counterpart Elias Jaua, prior a visit to the United States. The meeting with Jaua is the only official event expected by the chief of Brazil's diplomacy in Caracas, according to the agenda released by the Brazilian Ministry of Foreign Affairs. (AVN, 02-06-2013; http://www.avn.info.ve/contenido/brazilian-fm-visit-venezuela-next-saturday; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=33639&idc=1)

Iranian Embassy to Venezuela disclaims any involvement with former official

Iran's Ambassador to Venezuela Hojattolah Soltani says that Tahmasb Mazaheri, an Iranian citizen detained in Germany over a U$D 70-million check, has nothing to do with the Government of Teheran.
Tahmasb Mazaher "is by no means an official of the Government (of Iran); neither has his name been affixed to the confiscated check", said the Ambassador in an interview. He stressed that Mazaheri is an advisor to Iranian company KAYSON, which is currently building some 17,000 homes in Venezuela and has already completed the construction of additional 10,000. (El Universal, 02-05-2013; http://www.eluniversal.com/nacional-y-politica/130205/iranian-embassy-to-venezuela-disclaims-any-involvement-with-ex-officia; http://www.eluniversal.com/nacional-y-politica/130204/iranian-former-minister-detained-in-germany-over-usd-70-million-check; http://www.eluniversal.com/nacional-y-politica/130205/germany-delves-into-iranian-ex-minister-detained-over-usd-70-million-c; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuela-opposition-government-should-explain-why-iranian-had-check-worth-about-70-million/2013/02/04/b4b4f172-6f2a-11e2-b35a-0ee56f0518d2_story.html; Fox News, http://www.foxnews.com/world/2013/02/05/check-found-on-former-iranian-official-was-for-iranian-company-work-in/)


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.

February 05th, 2013

Economics & Finance

Foreign Minister Jaua in China for more loans as shortages bite at home

Foreign Minister Elías Jaua Milano is in Beijing for meetings with his counterpart of the People's Republic of China, Yang Jiechi, as well as Senior Communist Party of China (CPC) leader Yu Zhengsheng, seeking further loans as shortages of goods caused by a lack of foreign currency as well as price controls continue to frustrate consumers in the oil rich Latin American nation. There have been no announcements of new loans after days of meetings, though both sides have noted that they will continue strengthening bilateral relations. (Latin American Herald Tribune, 02-03-2013; http://www.laht.com/article.asp?ArticleId=669461&CategoryId=10717)

Venezuela seeks U$D 4 billion China loan, U$D 2 billion Chevron credit

Venezuela's government and state oil company PDVSA are in urgent talks over a long-awaited U$D 6 billion in loans from China and U.S. energy giant Chevron that would help relieve the nation's strained finances, sources close to the discussions said. Oil Minister Rafael Ramirez said this week that PDVSA had no plans to issue any more dollar-denominated bonds, confounding widespread speculation that one was planned to address a chronic shortage of dollars for local businesses. (Reuters, 02-01-2013; http://www.reuters.com/article/2013/02/01/us-venezuela-chavez-funding-idUSBRE91011L201302019

Shoppers vie to buy scarce staples amid the worst shortages in nearly four years

Shortages have become the government's latest challenge, as it deals with political uncertainty. The central bank's Scarcity Index, a measure of the percentage of products missing from store shelves, jumped to 16.3% in December, the highest level since May 2008 due to price controls that were too low.  Some owners sell to preferred customers ready to spend anywhere from 30% to 90% above state-regulated levels. Many supermarkets remind shoppers they can purchase no more than two packages of cooking oil or corn flour, products whose prices are regulated. Long lines of customers buying rationed goods are a common sight. Angel García Banchs, head of local economic-research house ECONOMETRICA, said in an opinion column: "There's only one strategy left for the government, even though it's a failed one from my point of view: to design and execute a media campaign to blame the shortages on private national companies." (The Wall Street Journal; http://online.wsj.com/article/SB10001424127887323854904578261933682923580.html?mod=googlenews_wsj)

Maduro warns businesses against hoarding amid food shortages

The government has warned businesses against hoarding food amid problems with shortages, saying authorities are poised to take action. Shortages of some basic foods such as sugar and cornmeal have worsened recently while the government has been making available fewer dollars at the fixed exchange rate. Business leaders say the limited supply of dollars, along with decreased industrial and agricultural production, has caused shortages.  Vice President Nicolas Maduro said Friday the government would crack down on businesses caught hoarding food. (The Washington Post, 02-01-2013; http://www.washingtonpost.com/world/the_americas/venezuelas-vice-president-warns-businesses-against-hoarding-amid-food-shortages/2013/02/01/d95c35d0-6cc3-11e2-8f4f-2abd96162ba8_story.html)

Government spending rose 67% in January

Although outflows typically shrink in January, government payroll and management expenses rose 67% last month, from VEB 26 billion to VEB 43.6 billion, according to a SINTESIS FINANCIERA report which says "there is no sign of reduction". More in Spanish: (El Universal, 02-05-2013; http://www.eluniversal.com/economia/130205/gasto-del-gobierno-central-se-disparo-67-en-enero)

Venezuela's Big Mac world's most expensive

The Big Mac index prepared by "The Economist", shows Venezuela with the world's most expensive hamburger: U$D 9.08 at the official rate of VEB 4.30 to the U$D, making the Bolivar the most overvalued currency in thw world.  More in Spanish: (El Mundo, 02-05-2013; http://www.elmundo.com.ve/Noticias/Economia/Politicas-Publicas/En-Venezuela-se-come-el-Big-Mac-mas-caro-del-mundo.aspx)

Daily FOREX supply via SITME dropped 57.55% in January, compared to the same period last year. The average amount available during January 2013 via the system was U$D 15.7 million while the daily average offer in January 2012 was U$D 37.1 million. (VENECONOMY, 02-04-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33618&idc=2)

Commodities

Steelmaker SIDETUR's UD$100 million bond issue in default

Deutsche Bank, trustee for a U$D 100 million bond issued by steelmaker SIDETUR, has issued a notice of default saying the company violated one of the provisions of the bond sale. Deutsche Bank said that SIDETUR, nationalized by President Hugo Chavez in 2010, failed to make necessary deposits to a debt servicing reserve fund required by the covenants of the financing deal. The company, which makes rebar, flat and angle steel products, did not respond to phone calls seeking comment. (Reuters, 02-01-2013; http://www.reuters.com/article/2013/02/02/venezuela-sidetur-idUSL1N0B1LDG20130202; Bloomberg, http://www.bloomberg.com/news/2013-02-01/sidetur-trustee-said-to-declare-steelmaker-in-default.html)

Energy minister predicts mining arc will be like Orinoco Oil Belt

With state oil holding Petróleos de Venezuela (PDVSA) now responsible for gold exploitation, Petroleum and Mining Minister and PDVSA President Rafael Ramirez is saying the mining arc will be similar to the Orinoco Oil Belt. "There will be a mining arc, which will be like the Belt. We will do with gold the same as we have done with oil". The state-owned oil company, through the Venezuelan Mining Corporation, will carry out operations and has already allocated three blocs, containing reserves for 85 million ounces. (El Universal, 02-02-2013; http://www.eluniversal.com/economia/130202/energy-minister-mining-arc-will-be-like-orinoco-oil-belt)

VP says Chavez signed order enlarging PDVSA project

Vice President Nicolás Maduro says President Hugo Chavez authorized a PDVSA project to enlarge a state oil company PDVSA project in Zulia. Oil Minister Rafael Ramirez said that Chavez had approved terms and conditions to annex areas to the PETROCABIMAS joint venture, including Tia Juana Tierra and exploratory areas in Cabimas East and Cabimas South. (Latin American Herald Tribune, 02-03-2013; http://www.laht.com/article.asp?ArticleId=669167&CategoryId=10717)

Expert predicts oil prices will go down

Ramón Castro Pimentel, an analyst and professor at Venezuela´s Central University says shale oil entering global markets will lower oil prices globally and cut short currently rising trends. More in Spanish: (El Mundo, 02-05-2013; http://www.elmundo.com.ve/Noticias/Petroleo/Industria/Nueva-oferta-de-crudo-para-este-ano-tumbara-altos-.aspx)

International Trade

Oil over 60% of Venezuelan exports to China

Venezuela's relation with China has become vital as never before. The Asian country is now Venezuela's top funding source, with Beijing granting loans to Caracas in exchange for oil. By the end of 2011, oil was 62.2% of Venezuela's exports to China, with oil byproducts at 28.5%, iron (8.1%), ferroalloys (1.6%), and common metal scraps (0.4%), according to a report compiled by the Economic Commission for Latin America and the Caribbean (ECLAC): "The People's Republic of China and Latin America and the Caribbean: Dialogue and cooperation vis-a-vis the new challenges of the global economy". In 2011, Venezuela-China trade was U$D 18 billion, 24 times higher than in 2003 (U$D 742 million). (El Universal, 02-04-2013; http://www.eluniversal.com/economia/130204/oil-represents-more-than-60-of-venezuelas-exports-to-china) 

Logistics & Transport

22 ships at bay in Puerto Cabello

This includes 2 vessels laden with rice from the US and 2 others bearing sugar from Brazil and Nicaragua. There are also 2 tankers, 9 bearing containers, 2 general cargo and 3 with ballast, awaiting instructions. More in Spanish: (Notitarde, 02-05-2013; http://www.notitarde.com/La-Costa/Embarcaciones-con-az%C3%BAcar-y--arroz-permanecen-en-la-bah%C3%ADa/2013/02/04/164080)

Economist claims 40% of government imports are fake

Economist Asdrúbal Oliveros says that according to an ECOANALITICA report government companies overcharge for imports and receive FOREX for them, but do not actually bring in products. He says private companies also do this, but on a much smaller scale; and adds that 16% of all total "imports" are dollars assigned to fake purchases. Oliveros points out that total Central Bank disposable reserves are barely above U$D 2 billion but adds that devaluation is "not strictly necessary". More in Spanish: (El Nacional, 02-05-2013; http://www.el-nacional.com/)

Politics

Officials say Chávez recovering, signs documents and makes decisions

"The president (Hugo Chávez) affixed his signature to these accounts," says Congress Speaker Diosdado Cabello, adding that Chávez "continues moving forward slowly and steadily towards his recovery (...) The president has signed and given instructions regarding some decisions that must be adopted in the party (ruling United Socialist Party of Venezuela) and the Government". He adds that "the health of Commander (Hugo) Chavez is clearly recovering, complying with medical treatment." (El Universal, 02-04-2013;

http://www.eluniversal.com/economia/130204/venezuelan-officials-say-chavez-signed-documents-and-made-decisions; AVN, 02-03-2013; http://www.avn.info.ve/contenido/chavez-recovering-undergoes-medical-treatment; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=668165&CategoryId=10717; Fox News, http://www.foxnews.com/world/2013/02/03/venezuela-military-chief-says-president-hugo-chavez-experiencing-best-moment/)

Castro says Chavez improving after tough cancer fight

Former Cuban leader Fidel Castro said Venezuelan President Hugo Chavez is getting "much better" as he recovers from cancer surgery almost two months ago in Havana. (Reuters, 02-04-2013; http://www.reuters.com/article/2013/02/04/venezuela-chavez-castro-idUSL1N0B462L20130204; Fox News, http://www.foxnews.com/world/2013/02/04/fidel-castro-says-hugo-chavez-condition-improving-in-battle-against-pelvic/)

VP leads rally in commemoration of February 4, 1992

President Hugo Chávez's supporters rallied in Caracas to commemorate the 21st anniversary of a failed coup d'état in 1992. The event, which took place at the Historic Military Museum, west Caracas, was broadcast nationwide and attended by several senior officials, including the Vice-President Nicolás Maduro and Congress Speaker Diosdado Cabello. High-ranking members of the Armed Forces were also present. (El Universal, 02-04-2013; http://www.eluniversal.com/nacional-y-politica/130204/venezuelas-vp-leads-rally-in-commemoration-of-february-4-1992; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-government-supporters-mark-anniversary-of-1992-coup-attempt-with-chavez-absent/2013/02/04/33a23ad8-6eec-11e2-b35a-0ee56f0518d2_story.html; Fox News, http://www.foxnews.com/world/2013/02/04/venezuela-government-supporters-mark-anniversary-12-coup-attempt-with-chavez/)

Elections Board sets tentative timetable for presidential elections for March 31st

Inside sources report meetings led by IT Director Carlos Quintero have discussed a timetable for presidential elections, setting March 31st as a tentative date, obviously subject to the health of President Chavez, his return, and official decisions once he is back. More in Spanish: (El Nacional, 02-05-2013; http://www.el-nacional.com/)

COPEI spokesman reports 170 municipalities have more voters than people

COPEI Party VP Enrique Naime has claimed that there are more voters than people in 170 municipalities, comprising 90 election circuits. His report is based on a study by the Andrés Bello Catholic University, and once again calls transparency at the Elections Board into question. He specifically points out municipalities in Nueva Esparta, Delta Amacuro, Mérida, Táchira and Portuguesa states, and this is 34% of all 375 Venezuelan municipalities. More in Spanish: (Tal Cual, 02-05-2013; http://www.talcualdigital.com/index.html)


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

February 01st, 2013

Economics & Finance

China refuses new financing

An unofficial source confirmed that a request by the Bank of Economic and Social Development (BANDES) to sign a new agreement for U$D 15 billion was rejected by China. The Chinese Government is refusing to sign a new financing agreement based on Venezuelan oil, arguing they have complied with the provisions of the Fund contracts Large Volume I and II and Heavy or Binational Fund. More in Spanish: (El Nacional, 01-31-2013; http://www.el-nacional.com/)

Venezuela seen delaying devaluation amid Chavez’s cancer

President Hugo Chavez’s battle with cancer will defer an expected devaluation by three months as his convalescence in a Cuban hospital delays economic decision-making, according to a survey of analysts. Venezuela will weaken the official Bolivar rate 33% to 6.4 per dollar in the second quarter, generating more revenue in local currency from each dollar of crude exports, according to the median estimate of 12 analysts surveyed by Bloomberg. In a poll taken in July, economists expected a devaluation of the same size in the first quarter. (Bloomberg, 01-31-2013; http://www.bloomberg.com/news/2013-01-31/venezuela-seen-delaying-33-devaluation-as-chavez-treats-cancer.html)

Central Bank told to transfer U$D 3.4 billion to FONDEN this year. The National Development Fund's 2013 budget sets an initial income of U$D 13 billion, of which a third - U$D 3.4. billion - must come from the Central Bank. More in Spanish: (El Universal, 02-01-2013; http://www.eluniversal.com/economia/130201/34-millardos-aportara-el-bcv-al-fonden-este-ano)

"There is a 30% scarcity index in the country which is the high point of an irregular situation in food distribution that has been recurrent since 2012 and has grown in 2013,” says DATANÁLISIS Director Luis Vicente León. He explains that one cause for shortages is reduction and delay in FOREX allocations. (Veneconomy, 01-30-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33575&idc=3)

Petrodollars to raise FOREX supply in Venezuela by U$D 10 million per day

The Government has raised by U$D 2.47 billion the amount of petrodollars that state-run oil company Pdvsa will transfer to the Central Bank of Venezuela (BCV). By doing this, the BCV will be able to sell more US dollars to companies through the Foreign Exchange Administration Commission (CADIVI). Although the move is a relief, a lot more is required. Think tank ECOANALÍTICA's CEO Luis Saboin explains that with this decision, CADIVI can increase its daily US dollar sales for imports, travel, and remittances by U$D 10 million daily, which is certainly not a significant change. (El Universal, 01-30-2013; http://www.eluniversal.com/economia/130130/petrodollars-to-raise-forex-supply-in-venezuela-by-usd-10-million-per-)

SITME U$D supply down 57.55% in January from last year, according to Central Bank data The System for Transactions in FOREX denominated certificates dropped from a daily average of U$D 37.1 million to U$D 15.7 million January to January. More in Spanish: (El Nacional, 02-01-2013; http://www.el-nacional.com/)

66-67% businessmen believe they will have "some problems in supplying goods and services in the next 6 months", according to a poll taken by the Venezuelan American Chamber of Commerce and Industry (VENAMCHAM). Key causes mentioned are "input shortages" and "labor issues"; and pointed to "lack of legal protection and judicial inefficiency",  "foreign exchange management", "difficulties in repatriating capital and  dividends", and "price controls" as conditions that influence corporate policy making. More in Spanish: (El Universal, 02-01-2013; http://www.eluniversal.com/economia/130201/empresarios-temen-problemas-para-abastecer-al-mercado)

Inflation could be 25-30% this year says economist Pedro Palma, with devaluation, more price adjustments, increased taxes - such as income, value added and bank operations; unless the government takes other steps such as reducing subsidies for production costs and gasoline and lowering public spending. More in Spanish: (El Nacional, 02-01-2013; http://www.el-nacional.com/)

Chavez’s 681% returns mean Socialism buoys Goldman

Since taking office in 1999, Hugo Chavez has spread his socialist revolution in Venezuela by seizing more than 1,000 companies. For bondholders that stuck by him, he’s also delivered returns that are double the emerging- market average. The 681% advance, equal to 14.7% annually, has enriched investors from Oppenheimer Funds Inc. to Goldman Sachs Asset Management LP that counted on Chavez’s willingness to siphon the country’s oil wealth to pay its creditors in the face of start-stop growth and falling reserves. While his policies drove away enough investors to keep Venezuela’s borrowing costs over 12% on average during his tenure, or 4 percentage points higher than those of developing nations, he’s never missed a bond payment. (Bloomberg, 01-30-2013; http://www.bloomberg.com/news/2013-01-30/chavez-s-681-bond-returns-buoy-goldman-andes-credit-correct-.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=666746&CategoryId=10717)

Commodities

46% of gold producing areas reserved for private companies.

Oil and Mining Minister Rafael Ramírez announced 46% of gold producing areas nationwide have been reserved for local and international private producers. More in Spanish: (Ultimas Noticias, 02-01-2013; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-reserva-a-empresas-privadas-46-de-las-ar.aspx)

Guayana region basic industries operate at 23-32% capacity, according to Leonardo Calderón, Claims Secretary at the United Aluminum Workers Union. VENALUM is operating at under 27% capacity. More in Spanish: (El Universal, 02-01-2013; http://www.eluniversal.com/economia/130201/empresas-basicas-operan-a-32-de-su-capacidad)

International Trade

Finance Ministry extends expedited import procedures, for capital goods, supplies and raw material up to U$D 50,000. The number of customs items covered by the expedited procedure remains at 2,176, covering a broad range of supplies, machinery and products. Industry sources indicate this will only benefit small and medium companies as this amount is insignificant for large companies. More in Spanish: (El Universal, 02-01-2013; http://www.eluniversal.com/economia/130201/finanzas-mantiene-condiciones-para-importacion-rapida)

Agriculture related exports have dropped 90% over past 10 years, according to Antonio Pestana, Vice President of the national Agriculture Producers Federation. The drop in Venezuelan exports contrasts sharply with a 304% increase in agriculture related exports in other MERCOSUR nations, he says this "should make us open our eyes and realize things aren't working". More in Spanish: (Ultima Hora Digital, 02-01-2013; http://ultimahoradigital.com/ultimahora/detalles_noticias.php?id=36790)

Venezuela-Colombia trade up 40.4% in 2012, according to preliminary data from Colombian statistics and tax authorities. U$D 3.289 billion was traded, 81.8% of which were Colombian exports to Venezuela. More in Spanish. (AVN, 02-01-2013; http://www.avn.info.ve/contenido/intercambio-comercial-entre-venezuela-y-colombia-creci%C3%B3-404-2012)

Venezuela and Russia signed a contract for the largest Russian drill company to supply oil drills to Venezuela, according to Oil and Mining Minister Rafael Ramírez, speaking after a meeting with a delegation from Russian State company ROSNEFT, headed by its CEO Igor Sechin. A memorandum of understanding was also signed for development off-shore gas. (Veneconomy, 01-30-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33557&idc=4; AVN, http://www.avn.info.ve/contenido/russia-venezuela-ink-new-accords-oil-matters; El Universal, http://www.eluniversal.com/economia/130129/venezuela-signs-new-oil-cooperation-agreements-with-russia; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=666708&CategoryId=10718)

Asian markets have been consolidated, says Oil and Mining Minister Rafael Ramírez, who points out China and India are growing at 6-7% yearly, while the US has been in a significant crisis since 2008. He says Venezuela is also selling oil to India and Japan, and that "based on this reality and situation we have created, we have structured financing plans for our development programs." More in Spanish: (AVN, 02-01-2013; http://www.avn.info.ve/contenido/ministro-ram%C3%ADrez-hemos-podido-establecer-nuevo-mercado-pa%C3%ADses-asi%C3%A1ticos)

Logistics & Transport

Carriers raise bulk freight cost 50%

Freight charges will increase 50% as per a new rate approved by members of the Association of Smallholders and Container Freight Drivers and Allied Puerto Cabello (ASOTRACONTAINER). More in Spanish: (El Universal, 01-31-2013; http://www.eluniversal.com/economia/130131/transportistas-elevan-50-el-precio-de-fletes-de-carga)

Politics

Chavez improving, official says

President Hugo Chavez is gradually recovering and handling more presidential duties, a government official said Tuesday. "He's constantly thinking, making decisions, in meetings he's been giving out orders," the Minister of Science, Technology and Innovation Jorge Arreaza, who is also the President's son-in-law. (CNN, 01-30-2013; http://edition.cnn.com/2013/01/30/world/americas/venezuela-chavez/index.html?iref=allsearch)

Maduro says an alliance with Russia will empower Venezuela

After a meeting with a delegation of Russian businesspeople in Caracas, Executive Vice President Nicolas Maduro said that the second socialist government plan of the nation "perfectly matches the goals of our full alliance, in energy, industrial, technological, agrifood, commercial, technical-military, financial matters." (AVN, 01-30-2013; http://www.avn.info.ve/contenido/alliance-russia-empower-venezuela; http://www.avn.info.ve/contenido/russia-venezuela-relations-based-alliance-reach-world-peace-equilibrium)

Municipal elections scheduled for July 14

National Electoral Board (CNE) chair Tibisay Lucena has announced that municipal elections will be held on Sunday, July 14. Nomination of candidates will be 11-15 and the campaign, from June 12 to July 11. The Board also decided to extend registration through February 15 as well as obligation to serve for polling station members 2012. (Veneconomy, 01-30-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33559&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/130129/nomination-of-municipal-candidates-on-april-11-15)

Canada closes Visa and Immigration section in Caracas

The Visas and Immigration section at the Embassy of Canada in Venezuela shut down on January 29, 2013. According to a press release by the Canadian government, the action is part of a plan to streamline related operations. Canada's consulates in Detroit and Seattle will be closed as well. Ongoing applications for visas or provisional residence permits previously filed at the Caracas office will be handled by the Canadian consulate in Mexico. (El Universal, 01-30-2013; http://www.eluniversal.com/nacional-y-politica/130130/canada-closes-visas-and-immigration-section-in-caracas)


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.