International Trade
Cargo that has arrived at Puerto Cabello:
- Over 700 tons of soya oil in 33
containers from Brazil and the Dominican Republic
- Over 265 tons of spaghetti in
10 containers from the Dominican Republic, for state agency CASA
- Over 218 tons of soybean oil from Fabril for state agency Corporación de Abastecimiento y Servicios Agrícolas (Casa)
- Over 203 tons of powdered milk
from Sucesores de Alfredo Williner for Inquivosa Láctea S.A.Over 33,000 tons of corn from Argentina
for state agency CASA
- Over 121 tons of whisky from
Diageo Brands BV for Corporación Venezolana de Comercio Exterior (CORPOVEX)
- Over 71 tons of electric
material from the USA for state agency CORPOELEC
- Spare parts for busses from
Barcelona, Spain
- 25 vans carrying spare parts
for Chrysler Venezuela
- 3 containers carrying paper
waste for Manufacturas de Papel (MANPA)
- 2 containers of automobile
parts for General Motors
- 2 containers of chrome flour
for Venezolana del Vidrio.
- 6 vans carrying scrap metal for
Pirelli de Venezuela.
A ship bearing 41 containers of food arrived in
Margarita island
A press release from
the Governor of Nueva Esparta State, General Carlos Mata, reports six of the
containers were carrying oil, 5 carry beef, two carry wheat flour; 3, powdered
milk; 2, margarine; 5, pasta; 4, pork; 8, liquid milk and 6 carrying chicken,
all of which are to be distributed by state agencies MERCAL and PDVAL. More in
Spanish: (AVN; http://www.avn.info.ve/contenido/barco-41-contenedores-alimentos-llegó-nueva-esparta;
El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/gobierno-anuncia-que-llega-barco-con-alimentos-a-n.aspx;
El Nacional; http://www.el-nacional.com/)
Oil &
Energy
Venezuela cancels
CITGO auction, seeks to raise US$ 2.5 billion, said to offer 67% premium on
loan funding
Venezuela has taken U.S. refining unit CITGO
Petroleum Corp off the auction block and it will now seek to raise US$ 2.5
billion in the debt market to provide funding for the cash-strapped country, according
to a source familiar with the matter said. The auction was canceled on the
advice of CITGO's lawyers after they told CITGO that if the company wished to
raise funds in the debt market, it should remove itself from the auction block,
the source added. Deutsche Bank has announced plans for a US$ 1.5 billion bond
to be issued by CITGO Holdings, with details expected to emerge next week. The
German bank has also scheduled bank meetings in New York to launch a US$1
billion senior secured first lien five-year term loan B, according to IFR. CITGO is offering interest that is 67%t
above market rates, showing how expensive it’s become for riskier energy
companies to borrow after oil prices tumbled. (Bloomberg, http://www.bloomberg.com/news/2015-01-22/citgo-said-to-offer-67-premium-on-loan-funding-pdvsa-dividend.html;
http://www.reuters.com/article/2015/01/21/citgo-pete-issue-idUSL1N0V004S20150121)
Maduro invited the
country to discuss fair prices of gasoline
President Nicolas Maduro has invited all
sectors of the country to discuss a fair and balanced prices scheme of gasoline
sold in the country, saying the price of Venezuelan gasoline is the lowest in
the international market and the income it generates does not cover the
smallest production process. "I want
to express the need to go to a system of balanced prices, fair prices, where we
can charge people the gasoline sold fairly in the domestic market with a new
price rate," he said in his annual report to the nation from the
National Parliament, in Caracas. He reported that Vice President, Jorge Arreaza
will attend the National Assembly (AN) to lead the national debate and make
proposals aimed at fixing a fair price of gasoline. "I think it is a necessity. We want to take that step. I open the debate
in the National Assembly," he said. (AVN, http://www.avn.info.ve/contenido/maduro-invited-country-discuss-fair-prices-gasoline;
Bloomberg, http://www.bloomberg.com/news/2015-01-22/oil-crash-spurs-venezuela-reversal-on-18-year-fuel-freeze.html)
....admitted the price
of oil will not return to US$ 100
President Maduro also said that the price of
crude oil would not return to US$ 100 per barrel. "Oil will not go back to $100 ... We have less foreign currency ... But
God will provide," he said in the speech, promising that all Venezuela's
budget commitments would be honored in 2015 despite the nation's plunging
revenues. (Reuters, http://www.reuters.com/article/2015/01/22/venezuela-economy-oil-idUSC2N0T700K20150122)
.....and accused the U.S. of wielding oil as weapon to
‘destroy’ nation
The U.S. wants to use shale oil as a geopolitical weapon to destroy Venezuela by flooding the market with supply and driving
prices down, according to President Nicolás Maduro. Hydraulic fracturing, the
method used to remove shale oil trapped in rock, is “destructive,” President Nicolas Maduro said during his national
address. Venezuela’s economy shrank 2.8% last year as crude slumped almost 50%
amid the fastest pace of U.S. production in more than three decades while the
Organization of Petroleum Exporting Countries resisted calls to cut output. “The U.S. wants to use oil as a geopolitical
weapon,” Maduro said during his speech: “They’re trying to destroy Venezuela.” (Bloomberg, http://www.bloomberg.com/news/2015-01-22/venezuela-sees-u-s-wielding-oil-as-weapon-to-destroy-nation.html)
The OPEC insisted it would keep its current
production unchanged at
the Economic World Forum in Davos. Its Secretary General Abdalla Salem El Badri
explained they were after an intermediate Price range but emphasized they do
not set prices. He said that if the cartel were to cut oil production now, they
would have to do it again and again. That is why they decided to keep it
unchanged and see how the market reacted, he said. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42478&idc=4)
Commodities
Inventories in the packing industry can only
hold out through April
José Manuel González, President of the Packing
Industry Association says FOREX allocations to their industry has been almost
paralyzed since November and warns that the industry has not had access to
FOREX and their raw material inventories
can only hold out until April. More in Spanish: (El Nacional; http://www.el-nacional.com/)
20 candy and chocolate manufacturers had to
close last year, with
some migrating to Colombia, due to the shortages of sugar in Venezuela. In
addition, over 5,000 workers have been laid off in the last few months, according
to Pedro Malaver, head of the National Candy Makers Association (ANFAC). He
pointed out the government manages 60% of the sugar industry but produces only
20% of the sugar the country consumes. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42486&idc=3)
China's CITIC Group
says it may create construction materials plant in Venezuela
Liang Chuanxin, President of China's Citic
Construction Group, says they are interested in setting up a US$ 40 million
cement and construction materials plant in Venezuela. More in Spanish: (AVN; http://www.avn.info.ve/contenido/empresa-china-citic-group-interesada-instalar-fábrica-cemento-y-materiales-para-construcci; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/empresa-china-quiere-instalar-en-el-pais-fabrica-p.aspx)
Economy
& Finance
IMF: Venezuelan
economy to drop 7% in 2015
The International Monetary Fund (IMF) has
downgraded its growth estimates for the Venezuelan economy, as it predicted it
would shrink by 7% in 2015. Back in October 2014, the IMF had said the
Venezuelan economy was expected to decline by 1%. The institution estimates
that every USD 10 decline in oil prices worsens Venezuela's trade balance by
3.5% of Gross Domestic Product (GDP). IMF Western Hemisphere Director,
Alejandro Werner, predicted that consumption in Venezuela "will suffer an important contraction and
shortages will worsen over current levels." (El Universal, http://www.eluniversal.com/economia/150121/imf-venezuelan-economy-to-drop-7-in-2015)
Summary of Venezuelan
President Nicolás Maduro's Annual Report
During his speech before the Parliament on
Wednesday, President Nicolás Maduro presented his Annual Report. The following
are some of the most important policy decisions announced:
- A 15% increase of the minimum wage as of
February 1.
- Incorporation of a health bonus for
pensioners. The amount of the bonus was not unveiled.
- A new three tiered FOREX system.
- Approval of funds to raise to 200,000 the
number of scholarships for secondary education.
- A census scheduled for January 31-February 1.
- A debate on gasoline, considering "the price of gasoline" needs to be
revised.
- An immediate and in depth inspection of staple
distribution and trade systems.
(El Universal, http://www.eluniversal.com/economia/150122/summary-of-venezuelan-president-nicolas-maduros-annual-report)
Maduro promises
private currency market to fix dollar drought
Venezuela will create its fifth parallel
currency market in 12 years to boost U.S. dollar supplies as plunging oil
revenue worsens food and medicine shortages and pushes the nation deeper into
recession. The new market will allow private companies and individuals to trade
the greenback through brokerages, President Nicolas Maduro told Congress. The
government will continue importing essential products at the primary exchange
rate of 6.3 bolivars a dollar, while combining two other existing currency
auctions into one, he said. “This is the
decision I have taken: a system of three markets,” he told lawmakers. “This exchange system is a transitory system
to attend the country’s development needs” while oil prices stabilize, he
said. Hernan Yellati, Miami-based head of research at brokerage BancTrust commented:
“The set of reforms announced in the
annual report were incomplete and insufficient to disentangle accumulated
distortions over 15 years.” Siobhan Morden, head of Latin America strategy
at Jefferies LLC, says: “If these measures were introduced a year ago
then the market reaction would have been euphoric... The measures may not prove
sufficient considering the extent of the oil shock while commitment is still
uncertain for an extremely weak government.” (Bloomberg: http://www.bloomberg.com/news/2015-01-22/venezuela-vows-new-private-currency-market-to-fix-dollar-drought.html;
http://www.bloomberg.com/news/2015-01-22/maduro-blames-criminal-gangs-for-venezuela-s-economic-woes.html;
http://www.bloomberg.com/news/2015-01-22/venezuela-vows-new-private-currency-market-to-fix-dollar-drought.html;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42492&idc=2;
El Universal, http://www.eluniversal.com/economia/150122/three-forex-systems-to-operate-in-venezuela-in-2015)
Maduro trusts "God will provide" resources to
overcome the economic crisis
In his address to the National Assembly,
President Nicolás Maduro said that "Venezuelan
oil has suffered a serious collapse. It closed today at US$ 38 per barrel. This
means less FOREX...but we will not lack resources. Oil will never be back up to
US$ 100 per barrel, but God will provide. We will never lack". Maduro said nothing about the international
financial aid he was to have obtained during his tour to Russia, China and Arab
nations, a tour that ended in an obvious failure. More in Spanish: (ABC Madrid,
http://www.abc.es/internacional/20150122/abci-venezuela-maduro-confia-dios-proveera-recursos-crisis-201501221934.html)
EURASIA Group:
Economic adjustments will have limited impact
Overall, the measures announced yesterday are
unlikely to meaningfully reduce economic distortions, which in turn will ensure
that social dynamics remain tense, and that the risk of some sort of social
crisis will remain high. In addition, given the low probability of a gasoline price
hike, the government will continue to face significant liquidity constraints
which point to a potential credit event in the fourth quarter of the year
unless oil prices meaningfully recover. (Eurasia Group, grais-targow@eurasiagroup.net)
Bonds slip, foes gripe
at Venezuela's economic changes
Venezuelan bond prices edged down on Thursday
while opponents savaged economic changes by President Nicolas Maduro that
included a seeming devaluation of the currency and an imminent rise in domestic
gasoline prices. Under pressure over recession, product shortages and plunging
oil revenues, Maduro has opted to keep a complex three-tier currency control
system, though bands have been shifted to ensure more dollars are sold at
higher levels. In a speech on Wednesday, he also bit the bullet on the
sensitive subject of fuel prices, currently the world's cheapest, saying a rise
was inevitable this year. But without price specifics on either, or any major
structural changes to the socialist model, critics said Maduro had not done
enough to rescue a shrinking economy and combat shortages plaguing Venezuela's
30 million people. (Reuters, http://www.reuters.com/article/2015/01/22/us-venezuela-economy-idUSKBN0KV1QP20150122)
Maduro calls for inspection
of wholesalers
President Nicolás Maduro also announced
inspections of the distribution and commercialization system for basic
products. He said Miguel Pérez Abad, the president of the pro government Federation
of Small and Medium Industries (FEDEINDUSTRIA), will coordinate a group of
consultants and economists to work with authorities. Perez Abad says the new
exchange system will bring in US$ 15 billion in 2015 through those who hold
foreign currency "and want to invest
in Venezuela... who will surely obtain very convenient yields". (El
Universal, http://www.eluniversal.com/economia/150121/maduro-launches-inspections-of-wholesale-distributors;
and more in Spanish: El Universal, http://www.eluniversal.com/economia/150123/preven-que-ingresen-al-pais-15000-millones-en-2015;
El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/fedeindustria-preve-llegada-de--15-000-millones-co.aspx;
El Nacional; http://www.el-nacional.com/)
Venezuela should be
rich, but its government has destroyed its economy
The problem with socialism isn't that you
eventually run out of other people's money. It's that you eventually run out of
oil money. Well, at least in Venezuela. It doesn't have an economy, you see, so
much as a poorly run oil exporting business that isn't enough to subsidize
everything else. And that was true even when oil was more than US$ 100 a
barrel. So now that it's under US $50 a barrel, Venezuela's government has gone
from defaulting on its own people, as former minister Ricardo Hausmann put it,
in the form of rampant inflation and shortages, to really doing so, to the
point that it might have to start defaulting on its debt, too. Venezuela should
be rich. But it isn't, and it's getting even poorer now, because of economic
mismanagement on a world-historical scale. The problem is simple: Venezuela's
government thinks it can have an economy by just pretending it does. That it
can print as much money as it wants without stoking inflation by just saying it
won't. And that it can end shortages just by kicking people out of line. It's a
triumph of magical thinking that's not much of one when it turns
grocery-shopping into a days-long ordeal that may or may not actually turn up
things like food or toilet paper. So it turns out Lenin wasn't just right that
the best way to destroy the capitalist system is to debauch the currency. It's
also the best way, as Venezuela can tell you, to destroy the socialist one. (The
Washington Post, http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/21/venezuela-should-be-rich-but-its-government-has-destroyed-its-economy/)
Politics and
International Affairs
Capriles: calls Maduro's
announcements "devaluation in
disguise"
Following the announcements made by President
Nicolás Maduro during his Annual Report, opposition leader and Miranda state
governor Henrique Capriles called the announcements ”devaluation in disguise" by combining the SICAD 1 and SICAD 2
exchange rates. He said: "Nothing
was announced. What Nicolás did was hit the people with another
devaluation...it was a devaluation in disguise". Capriles added that the message was not a
serious contribution because a "solution
involves understanding and correcting mistakes, not deceiving oneself and
repeating the same old failed expressions, the same old empty phrases."
He added: "Will there be no lines
(to buy foodstuffs, etc.) in markets tomorrow? After hours of meaningless talk,
did they (the government) propose solutions to overcome food and medicine
shortage?" Opposition legislator Henry Ramos Allup said, "when the speech ended, I still had the same
expectations I had before listening to Maduro's message". He said Venezuela
was expecting economic moves intended to solve issues such as long lines to buy
staples, scarcity, and high prices. Instead, Maduro uttered "the same discourse: accusation, explanation,
defense (...). I was stunned, like the rest of Venezuelans". DATANÁLISIS
President Luis Vicente León said "the president is sticking to the classic
strategy of blaming others to avoid government responsibility", and added
that the recent announcement is really an implicit devaluation. (El Universal, http://www.eluniversal.com/nacional-y-politica/150122/capriles-maduros-announcements-fail-to-solve-venezuelan-crisis;
http://www.eluniversal.com/nacional-y-politica/150122/opposition-deputy-terms-insufficient-venezuelan-presidents-announcemen;
and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/luis-vicente-leon--medidas-representan-una-devalua.aspx#ixzz3Pdkrs5oU; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/capriles-asegura-que-anuncios-de-maduro-implican-u.aspx#ixzz3PdmkEl3I)
Single exchange rate was not implemented due to
fear of additional inflation
Planning Minister Ricardo Menéndez says the new FOREX
system seeks a "free fluctuation"
of the rate of exchange by eliminating SICAD 2 and making a third market legal
in order to have free fluctuation "through
public and private stock exchanges". He said the possibility of a
single exchange rate was discarded for fear of "inflationary processes". More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/menendez--se-descarto-unificacion-cambiaria-por-ri.aspx#ixzz3PdkTywmB)
Cabello says the country does not need a
capitalist system
Captain Diosdado
Cabello, head of the National Assembly and Vice President of the government's
Socialist Party (PSUV) said "this
who expected an economic "package" fell to the ground" and
added that the country does not need a capitalist model to progress, all to the
contrary, of needs a "socialist
model". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/150123/cabello-quienes-esperaban-un-paquetazo-rodaron)
Maduro attends Evo
Morales's inauguration
President Nicolas Maduro has arrived in Bolivia
to attend the inauguration of his Bolivian counterpart Evo Morales. Upon
arrival, he said he came to Bolivia to "accompany the dreams of independence, equality, freedom, justice but
mostly union of peoples." (AVN, http://www.avn.info.ve/contenido/maduro-attends-evo-morales039s-inauguration)
Another Voluntad Popular mayor charged with
inciting violence
Delson Guarate, a mayor in Aragua state, has
been formally charged with incitement, “for
his alleged involvement with violent events that occurred between February 12
and the end of June in Aragua state.” (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42476&idc=1)
