April 12, 2013

Economics & Finance

Experts believe Maduro will win, economy will collapse

A group of four analysts meeting in New York believed Nicolas Maduro will win Sunday's presidential election, but the economy will fall apart and jeopardize his regime's stability. Francisco Monaldi, a Professor at the Harvard University Kennedy School, says post-mortem approval of Hugo Chavez's rule stands at 75%.  Francisco Rodríguez, of Bank America Merrill Lynch, estimates currency devaluation at 41%, raging inflation, scarcity in food, medicines and FOREX, unemployment, electricity failures, with no increased production or help from oil prices. Kathryn Rooney Vera, of Bulltick Capital Management says "chavismo is much weaker"...in three years there will be a chance for an opposition win, but not now. The impending crisis is so bad that one would not want to win". More in Spanish: (El Universal, 04-12-2013; http://www.eluniversal.com/economia/130412/maduro-gana-despues-vienen-las-dificultades)

Pro government economists call policies "inadequate", term SICAD ill designed

A group of pro-government economists have prepared a report which calls economic policies devised by Planning and Finance Minister Jorge Giordani, and Central Bank President Nelson Merentes, "inadequate" as they bring on recession, inflation and scarcities. They say March inflation was 2.8% and there are clear signs of economic contraction. The group includes experts from the National Assembly, the Central Bank and the Miranda International Center. "There are widespread complaints from broad swaths of middle and lower classes, including important "revolutionary" thinkers and analysts about living conditions due to the high cost of basic products and scarcity in vital products."  They project this year's inflation between 30-33%. The group also criticized the newly launched Alternate Currency System SICAD as "insufficient, inflexible, ill designed and highly discretionary", adding that exchange controls have fueled capital flight rather than controlled it. More in Spanish:  (El Nacional, 04-12-2013; http://www.el-nacional.com/)

Argentine Foreign Minister denies his nation´s debt to Venezuela

Argentine Foreign Minister Héctor Timerman said a claim made by opposition candidate Henrique Capriles, that his country owes Venezuela U$D 13 billion, is "slander". More in Spanish: (El Universal, 04-12-2013; http://www.eluniversal.com/nacional-y-politica/130412/canciller-argentino-niega-deuda-de-su-pais-con-caracas)

Government spending grows 27% in the first quarter

During the first quarter of 2013, allocations to meet salaries, pensions and regular government operations soared 27%. The Ministry of Planning and Finance reports that the Treasury allocated some U$D 17.17 billion from January-March 2013, a leap from U$D 13.53 billion in the same quarter 2012 (El Universal, 04-10-2013; http://www.eluniversal.com/economia/130410/venezuelas-expenditure-swells-27-in-the-first-quarter)

Spiraling inflation leads to sharp increase in minimum wage

Addressing workers at a rally, acting President Nicolás Maduro announced a 38-45% increase in the minimum wage to be implemented in three stages. The first 20% is to be implemented in May, from U$D 325.55 to U$D 390.66. The next increase (10%) is to be adopted in September, bringing salaries up to U$D 429.73. A final adjustment would come in November, 5-10%, based on inflation. (El Universal, 04-10-2013; http://www.eluniversal.com/economia/130410/spiraling-inflation-leads-to-high-rise-in-minimum-wage-in-venezuela)

Commodities

PDVSA debt at the close of 2012: U$D 7.7 billion

State owned PDVSA's liabilities and accounts payable to suppliers soared 33% in 2012 over 2011, for a total U$D 16.47 billion. Liabilities increased in Exploration and Production (E&P), by some 80% to U$D 7.78, according to an internal report from PDVSA's Vice-President. (El Universal, 04-10-2013; http://www.eluniversal.com/economia/130410/venezuelas-pdvsa-ends-2012-with-a-debt-of-usd-77-billion-in-production)

Russia may sell its 19% share in ROSNEFT

Economy Minister Andrei Belousov announced that Russia is thinking of selling its 19% share in the ROSNEFT state oil company, as part of a plan to accelerate privatization.  ROSNEFT is a PDVSA partner. More in Spanish: (El Mundo, 04-12-2013; http://www.elmundo.com.ve/Noticias/Petroleo/Industria/Rusia-evalua-vender-19--de-su-participacion-en-Ros.aspx)

Logistics & Transport

Port activity will continue during Sunday elections, according to General Henry Montilla, Director of the Puerto Cabello Maritime Terminal, who says "all ships that need service will be serviced". More in Spanish: (Notitarde, 04-12-2013; http://www.notitarde.com/La-Costa/Atenderan-buques-durante-las-elecciones/2013/04/11/178663) 

Politics

US Intelligence Chiefs predicts "Chavez line" will continue after election

James Clapper, Director of US National Intelligence said at a Congressional hearing that "very probably the Chavez tradition will continue" after Sunday´s presidential election. More in Spanish: (El Universal, 04-12-2013; http://www.eluniversal.com/nacional-y-politica/130412/inteligencia-de-eeuu-augura-que-seguira-la-linea-de-chavez)

Analysis: Capriles needs late surge to win Venezuela vote

After beating Venezuelan opposition leader Henrique Capriles in last year's presidential election, Hugo Chavez telephoned him and courteously quipped: "You made me get out and work hard!" Now in his second campaign for the OPEC nation's top job, the tireless Capriles has again pushed himself to the limit to ensure his new rival and election favorite, Chavez's protege Nicolas Maduro, does not have an easy path to victory. "I'm shedding my skin for Venezuela," Capriles, 40, roared this week at the final rallies of a passionate campaign where he has re-energized opposition backers still upset about his loss against the socialist Chavez last October. (Reuters, 04-10-2013; http://www.reuters.com/article/2013/04/10/us-venezuela-election-opposition-idUSBRE9390DT20130410)

In Venezuelan election, food security _ or lack thereof _ can turn votes

Venezuelans complain that what goes into their Sunday dinner plate comes from abroad: Steak, from Brazil; plantains, the Dominican Republic; rice, South Africa; Parmesan cheese, Uruguay; oats, Chile. Even coffee, in a country famed for it, often is Colombian. It’s a complaint heard often these days as Hugo Chavez’s hand-picked successor, Nicolas Maduro, seeks election against opposition candidate Henrique Capriles. Under the socialist government, shoppers cannot count on finding sugar, cornmeal for Venezuela’s beloved arepas and other goods when they go to market. (The Washington Post, http://www.washingtonpost.com/business/in-venezuelan-election-food-security-_-or-lack-thereof-_-can-turn-votes/2013/04/10/49026b98-a1b2-11e2-bd52-614156372695_story.html; Fox News, http://www.foxnews.com/world/2013/04/10/in-venezuelan-election-food-security-or-lack-thereof-can-turn-votes/)

Venezuela election to test Chavez's socialist legacy

The late Hugo Chavez's self-declared socialist revolution will be put to the test at a presidential election on Sunday that pits his chosen successor against a younger rival promising change in the nation he polarized. Most opinion polls give his protege, acting President Nicolas Maduro, a strong lead thanks to Chavez's endorsement and the surge of grief and sympathy over his death from cancer last month. (Reuters, 04-11-2013; http://www.reuters.com/article/2013/04/11/venezuela-election-idUSL2N0CX1IJ20130411)

Top military officers vow to respect and enforce election result

Venezuela's military high command and representatives of the National Electoral Council (CNE) met to refine details for the presidential election that will take place next April 14. Defense Minister Diego Molero said the Bolivarian National Armed Force would not tolerate any "disturbances" during the vote. "The Bolivarian Armed Force is the guardian of the Constitution, the laws, and all the guidelines outlined by the National Electoral Council. We will not allow disturbances of any kind, nor will we allow non-compliance with the laws during the development of the activities next April 14," the defense minister remarked. (El Universal, 04-10-2013; http://www.eluniversal.com/nacional-y-politica/130410/top-military-officers-vow-to-respect-and-enforce-election-result)

Nearly 5,000 reportedly people killed in Venezuela under Maduro

Experts from the opposition United Democratic Conference (MUD) announced that 4,700 people have been assassinated in Venezuela in over 100 days that Nicolás Maduro has been leading the country, and called government security plan Misión a Toda Vida Venezuela (Full Life for Venezuela) a failure. (El Universal, 04-10-2013; http://www.eluniversal.com/nacional-y-politica/130410/nearly-5000-reportedly-people-killed-in-venezuela-under-maduro)

OAS sending Bill Richardson as special envoy to Sunday's election

OAS Secretary General José Miguel Insulza has named former New Mexico Governor Bill Richardson as his representative during upcoming presidential elections in Venezuela. Insulza clarified this visit cannot be considered "observation". More in Spanish: (Tal Cual, 04-12-2013; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/130412/oea-designa-a-bill-richardson-como-enviado-especial)

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.

April 09, 2013

Economics & Finance

With elections Sunday, Venezuela's next leader inherits headaches

As acting President Nicolás Maduro and opposition leader Henrique Capriles prepare to face off in elections on April 14, many analysts and economists say the victor will inherit a country with a toxic mix of inflation, government overspending and a shortage of hard currency that is rapidly becoming unsustainable. In one effort to stem the problems, the government created a new foreign-exchange agency that will auction dollars in an effort to reduce shortages of basic goods, as a dollar liquidity squeeze has depreciated the value of the local currency on the country's black market to about a quarter of its official fixed exchange rate. But analysts say the new exchange mechanism, launched in March and jointly administered by the central bank and the Finance Ministry, is little more than a band-aid for the country's economic woes. The lack of transparency and the limited access to the new exchange system also raised concerns that it will be unsuccessful in meeting the dollar needs of a local economy that relies heavily on imports. The economy will run into major problems with inflation if the new president keeps his foot on the gas, analysts say. But the economy could slow sharply if there is a pullback in state expenditures. Annual inflation is above 22% and could top 30% this year, analysts say, after the government devalued the Bolívar in February. Analysts speculate that if Mr. Maduro wins he will replace the country's finance minister, Jorge Giordani, a devoted Marxist and one of the main architects of Venezuela's economic system. Former finance minister José Alejandro Rojas, seen as more pragmatic than Mr. Giordani, is one person who could replace him, according to several people close to the government. (The Wall Street Journal, 04-06-2013; http://online.wsj.com/article/SB10001424127887323646604578402972929434996.html)

Venezuela to hold new dollar auction after election this month

Venezuela will hold a second dollar auction on a complementary currency system created last month after presidential elections are held on April 14, Oil Minister Rafael Ramirez told reporters yesterday during an interview. The government won’t publish the exchange rate used in future auctions, he said. It will publish a set schedule and plans to make it easier for importers to participate in the process, Ramirez, who sits on a new currency supervising board, said from his Caracas office. “Companies involved in the process know the parallel exchange rate does not represent the economy,” Ramirez said. “The first dollar auction was a test run.” (Bloomberg, 04-08-2013; http://www.bloomberg.com/news/2013-04-08/venezuela-to-hold-new-dollar-auction-after-election-this-month.html)

Commodities

Ramírez says crude, liquids output stable at 3.12 million bpd

Venezuela's production of crude and natural gas liquids has stabilized at 3.12 million barrels per day after state oil company PDVSA halted a decline in output from the OPEC nation's second-most-productive region, Oil Minister Rafael Ramirez said in an interview on Monday. Ramirez told Reuters that PDVSA has found new reserves of 1 billion barrels of light crude in the eastern Monagas region, where production had been slowly but steadily declining since last year.

"Production is going up, particularly in the (central) Orinoco oil belt. The situation in the east has been solved and output there will continue to rise following the discovery we've made in El Furrial," he said in a telephone interview. (Reuters, 04-08-2013; http://www.reuters.com/article/2013/04/08/us-venezuela-oil-idUSBRE9370WA20130408)

Oil sales to the US down in January

Venezuelan oil exports to the Unites States in January 2013 averaged 898,000 barrels per day (bpd). Although the figure is actually higher (19.7%) than in the same period in 2012 (750,000 bpd), it is 5.6% below the average reported in 2012 (952,000 bpd), according to the US Department of Energy. The figure recorded in January 2013, is also a below the second half of 2012, when oil exports to the US exceeded 950,000 bpd. According to 2012 reports by the Ministry for Petroleum and Mining, oil exports to the US in 2012 dropped by 15% to 990,000 bpd as against 2011 (1.16 million bpd).(El Universal, 04-08-2013; http://www.eluniversal.com/economia/130408/venezuelan-oil-sales-to-the-us-down-in-january)

Venezuela spends 5.5% of GDP on fuel subsidies, according to a report on 176 nations prepared by the International Monetary Fund (IMF) found in a report prepared with a database of 176 nations. Latin America and the Caribbean were 7.5% of the energy global subsidy in 2011, which was U$D 1.9 trillion or 2.5% of the world GDP. The IMF highlighted that energy subsidies (oil, gas, electric power and coal) in Venezuela and Ecuador exceeded 5% of national GDP. (El Universal, 04-06-2013; http://www.eluniversal.com/economia/130406/venezuela-spends-55-of-the-gdp-for-fuel-subsidy)

International Trade

Shipments to PETROCARIBE rose 14% in 2012, according to reports from Venezuela's Petroleum and Mining Ministry- for an average 108,000 barrels per day (bpd) of hydrocarbons, a 14% hike above 95,000 bpd in 2011.(El Universal, 04-06-2013; http://www.eluniversal.com/economia/130406/shipments-to-petrocaribe-up-14-in-2012)

Politics

Analysis: Venezuela's Maduro faces tricky post-Chavez panorama

Acting President Nicolas Maduro may struggle to advance the late Hugo Chavez's socialist policies if he wins Venezuela's election on Sunday, lacking both his predecessor's iron grip on a disparate ruling coalition and the robust state finances that cemented his rule. Widely liked among Chavez supporters but lacking his mentor's charisma, the former bus driver and union organizer may also have trouble controlling "Chavismo," a movement ranging from military officers and oil executives to slum community organizers and ideologues. "Chavez was a barrier to a lot of the crazy ideas that occurred to us," said Diosdado Cabello, a powerful party leader seen by many Venezuelans as a potential rival to Maduro. "He imposed his leadership, his prudence and his conscience, and in many cases ensured we did not carry on." Cabello has considerably greater sway than Maduro in important areas such as the military, the legislature and state governorships, and Maduro could come under pressure from inside the coalition. Despite maintaining his late boss's shrill rhetoric - including calling foes heirs of Hitler - Maduro is unlikely to maintain Chavez's torrid pace of nationalizations, his regular confrontations with private enterprise, or the diplomatic run-ins with the United States and its allies. (Reuters, 04-08-2013; http://www.reuters.com/article/2013/04/08/us-venezuela-election-maduro-idUSBRE9370PZ20130408)

Plots and sabotage: Chavez candidate spins conspiracy theories ahead of Venezuelan election

Salvadoran mercenaries are plotting with Venezuela’s opposition candidate to assassinate interim President Nicolas Maduro. But wait, the plot thickens. Central American agents, along with former U.S. diplomats, are also plotting to kill the opposition candidate, Henrique Capriles. Those are just two of the conspiracy theories that Maduro has put forth ahead of Sunday’s election to replace Hugo Chavez. Maduro, who is running as Chavez’s hand-picked successor, also says the government has launched an investigation to determine if someone — U.S. agents, he has hinted — inoculated Chavez with the cancer that killed him March 5. (The Washington Post, 04-08-2013; http://www.washingtonpost.com/world/the_americas/plots-and-sabotage-chavez-candidate-spins-conspiracy-theories-ahead-of-venezuelan-election/2013/04/08/2696601a-a07b-11e2-bd52-614156372695_story.html; Fox News, http://www.foxnews.com/world/2013/04/08/plots-and-sabotage-chavez-candidate-spins-conspiracy-theories-ahead-venezuelan/)

Opposition holds huge rally in Venezuelan capital

Hundreds of thousands of Venezuelan opposition supporters rallied in a staunchly pro-government part of the capital on Sunday, answering a call by their candidate Henrique Capriles and showing strength a week before the presidential election. "Today the streets of Caracas are full of happiness and hope, confirming what will happen next Sunday," Capriles, the 40-year-old governor of Miranda state, told the crowd. (Reuters, 04-08-2013; http://www.reuters.com/article/2013/04/08/us-venezuela-election-idUSBRE93600G20130408; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=738179&CategoryId=10717; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelan-opposition-floods-streets-of-capital-in-show-of-support-for-candidate/2013/04/07/e658fa30-9fb7-11e2-bd52-614156372695_story.html)

Capriles: "Do not leave polls on April 14"

Opposition candidate Henrique Capriles Radonski urged his supporters to remain at polling centers after voting, saying they "need to be there for the auditing procedures. If each of you fulfills this task, there will be no cheating that can defeat us next Sunday. Remember that Elections Board is against us". More in Spanish: (El Universal, 04-09-2013; http://www.eluniversal.com/nacional-y-politica/130409/capriles-no-me-abandonen-las-mesas-de-votacion-el-14a)

The Carter Center will attend elections, after accepting an invitation from the Elections Board. More in Spanish: (El Universal, 04-09-2013; http://www.eluniversal.com/nacional-y-politica/130409/centro-carter-enviara-delegacion-para-las-votaciones)

Guyana confirms concession at Venezuelan Atlantic front

Guyana's Finance Minister Ashni Kumar Singh confirmed that the concession for the Stabroek oil block, partly located off Venezuela's Atlantic front, has been renewed. The minister said, "The acquisition of new marine 3D seismic data by CGG Veritas at the prospecting area licensed to Esso-Shell commenced in November 2012 and new oil prospecting licenses were issued or renewed for further work at several locations including the Takutu Basin, the deepwater Stabroek block, and the Corentyne block." (El Universal, 04-08-2013; http://www.eluniversal.com/nacional-y-politica/130408/guyana-confirms-concession-at-venezuelan-atlantic-front)

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 30, 2012

Economics & Finance

By degree, Chavez grants himself unlimited powers to spend and increase debt

Through a decree based on the Enabling Act, President Chavez has reformed the Basic Law on Public Sector Financial Management in order empower the President to create debts above and beyond limits set by the Annual Credit Law. The reform says additional debt can be created in "unforeseen circumstances, not planned or difficult to project", and the amount of these transactions will be added into the debt cap for the next fiscal year. It also authorizes the President to directly approve spending. Article 81 of the new decree says: "It will not be necessary to have authorization from the National Assembly nor take into account the opinion of the Central Bank". More in Spanish: (El Nacional, 03-30-2012; http://www.el-nacional.com/; El Universal; http://www.eluniversal.com/economia/120330/gobierno-puede-emitir-deuda-sin-opinion-previa-de-an-y-bcv)

Expert cites Venezuela as an example of misuse of oil revenue

Venezuela and Argentina are not implementing sound oil policies, cautioned Zimbabwean oil and gas expert Duncan Clarke. Speaking to Efe in Nairobi, where he presented his new book "Africa's future," Clarke said that "Venezuela, and particularly (President Hugo) Chávez is an example of misuse of the cash generated by oil and gas." The expert knows the energy situation in Latin America, where he has been an adviser to governments and companies. He is the chairman of Global Pacific & Partners, a natural resources consultancy group. (El Universal, 03-28-2012; http://www.eluniversal.com/economia/120328/expert-puts-venezuela-as-an-example-of-misuse-of-oil-revenue)

BARCLAY's says dollar denominated bond issues to increase to U$D 12 billion in 2012

A report by BARCLAYS Capital on Venezuelan government bonds says dollar denominated bond issues will increase over the next few months and projects operations for 2012 at U$D 12 billion. It reports that at least U$D 5 billion  will go to the SITME operation managed by the Central Bank in order to allocate foreign currency to the private sector in order to increase supplies and curb inflation. More in Spanish: (El Universal, 03-29-2012; http://www.eluniversal.com/economia/120329/estiman-que-se-aceleraran-colocaciones-de-bonos-en-dolares)

Statistics are in chaos in Venezuela, according to a report by TAL CUAL Daily, which reports on the substantial differences between figures supplied by international organizations and those provided by official agencies in Venezuela. More in Spanish: (Tal Cual, 03-30-2012; http://www.talcualdigital.com/index.html)

Commodities

Colombia's ECOPETROL to drill for oil In Venezuela

Colombia's largest company, state-controlled energy firm ECOPETROL SA, plans to drill for crude oil in neighboring Venezuela as the two countries continue to improve once-strained relations. Colombian Energy Minister Mauricio Cardenas announced the plans Wednesday after a meeting with his Venezuelan counterpart, Rafael Ramirez, in the coastal resort city of Cartagena. Cardenas said ECOPETROL will work alongside Venezuela's national oil company, Petróleos de Venezuela SA, or PDVSA, to revitalize already-developed oil fields in western Venezuela's oil-rich Lake Maracaibo. The joint venture is expected to produce somewhere between 40,000 and 100,000 barrels a day of crude oil. (Fox Business, 03-28-2012; http://www.foxbusiness.com/news/2012/03/28/colombias-ecopetrol-to-drill-for-oil-in-venezuela/#ixzz1qc02tjt0; Bloomberg, 03-28-2012; http://www.bloomberg.com/news/2012-03-28/colombia-venezuela-to-study-ecopetrol-ventures-pipeline.html)

PDVSA is ending NYNAS partnership

Venezuela is selling its stake in a refinery project with Finland's Neste Oil that operates facilities in Sweden and Britain, according to Energy Minister Rafael Ramírez in comments published on Friday. Venezuela's state oil company PDVSA and Neste Oil are 50-50 partners in Nynas AB, which runs four refineries with a combined capacity of 67,000 barrels per day. The planned sale will leave PDVSA without any downstream refinery assets in Europe. (Diplodemocracia, 03-20-2012; http://diplodemocracia.blogspot.com/2012/03/pdvsa-is-ending-nynas-partnership-pdvsa.html)

SIDOR in the red U$D 358 million during 2011

State-run steelmaker Siderúrgica del Orinoco (Sidor) reported U$D 358 million losses in 2011, despite rising production and sales. In 2010, the steel mill had reported profits amounting to U$D 57 million. Venezuela's main steelmaker reported a positive operating income (gross sales and net sales of goods) amounting to VEB 6.43 billion (U$D 1.49 billion), while the cost of sales of goods and services was U$D 1.57 billion translated into a negative balance of U$D 80 million. (El Universal, 03-28-2012; http://www.eluniversal.com/economia/120327/sidors-losses-at-usd-358-million-in-2011)

SMURFIT land takeover endangers supply of packaging for foodstuff

With 42% of SMURFIT owned land taken over by the government, company workers fear lumber supply from 7,000 plus hectares - which produce around 200,000 tons of wood - could severely hit the manufacture of packing materials. SMURFIT says around 53% of its production goes to the food industry, all of which could lead to a deficit in agribusiness. More in Spanish: (El Mundo; 03-13-2012; http://www.elmundo.com.ve/noticias/economia/empresas/toma-de-fincas--de-smurfit-pone-en-riesgo-empaques.aspx)

Politics

Chavez back after radiation therapy, facing elections on October 7th

President Hugo Chavez returned home to Venezuela on Thursday after a first session of radiation treatment in Cuba that he hopes will cure his cancer and allows him to win a new six-year term in October. Very little is known about Chavez's condition - he has had three cancer operations in less than a year - so doubts remain about the future of the man who has dominated politics in South America's biggest oil exporter for the last 13 years. He said he expected to return to Cuba on Saturday to resume the radiation treatment, and to stay there for four more days.  Separately on Thursday, Venezuela's national electoral authority confirmed October 7 as the election date - squashing rumors that the poll might be brought forward, or delayed, due to Chavez's cancer treatment. (Reuters, 03-29-2012; http://www.reuters.com/article/2012/03/29/us-venezuela-chavez-idUSBRE82S15220120329; The Washington Post, 03-29-2012; http://www.washingtonpost.com/world/the_americas/hugo-chavez-back-in-venezuela-after-1st-round-of-radiation-therapy-in-cuba-for-cancer/2012/03/29/gIQA9wP3hS_story.html; AVN, 03-29-2012; http://www.avn.info.ve/node/105693)

Chavez threatens banks, private business for supporting his opponents

President Hugo Chávez says he has information on alleged opposition plans to destabilize the country and threatened some banks and private companies with nationalization if they support his opponents. He said he is drawing up a list of actions to take in case the opposition takes it upon itself to "attach the people". More in Spanish: (El Nacional, 03-30-2012; http://www.el-nacional.com/)

Latin America Security: Venezuela Worse, Panama Safer

Venezuela, along with Haiti and three Central American countries, is getting more dangerous for foreign multinational executives, according to the sixth annual Latin Security Index developed by FTI Consulting Ibero America for Latin Business Chronicle. Meanwhile, Panama has seen an improvement. Overall, security for multinational executives in Latin America has worsened slightly the past year, the index shows. The Latin Security Index takes into account how each country in the region is doing related to public insecurity, with a special focus on the business community. (Latin Business Chronicle, 03-28-2012; http://www.latinbusinesschronicle.com/app/article.aspx?id=5580)

Caracas: “A War Zone”

In Venezuela these days, no one is safe, especially local and foreign business people. “Caracas is the most dangerous capital city in the world, more dangerous than Baghdad,” says Roberto Briceño Leon, who heads the Observatorio Venezolano de Violencia, a non-government watchdog that monitors crime in the country. (Latin Business Chronicle, 03-28-2012; http://www.latinbusinesschronicle.com/app/article.aspx?id=5581)

Chavez objects to US government statement to travelers about crime in Venezuela

President Hugo Chavez is taking issue with the U.S. State Department for posting a statement advising travelers to beware of rampant violent crime in his country. Chavez said that the South American country’s security situation ought to be compared to that of the United States. “Where would there be greater lack of public security on the streets? In Venezuela or in the United States?” Chavez said. “Let’s look at the figures.” (The Washington Post, 03-27-2012; http://www.washingtonpost.com/world/the_americas/hugo-chavez-objects-to-us-government-statement-to-travelers-about-crime-in-venezuela/2012/03/27/gIQAM8h0eS_story.html)

Chávez, 44%; Capriles Radonsky, 31%

President Hugo Chávez has a 13-pecentage point lead over his challenger Henrique Capriles Radonski, the candidate of Venezuelan opposition umbrella group Unified Democratic Panel (MUD), according to the latest opinion poll released by polling firm DATANÁLISIS. As per the poll conducted in March, 44% of voters favor Chávez compared to 31% for Capriles, amid a war of figures that broke out in the media following opposition primary election held in February. According to DATANALISIS Director Luis Vicente León, although Chavez's cancer impacts his image and creates uncertainty among his supporters, it also overshadowed the "political impact of opposition primaries". (El Universal, 03-27-2012; http://www.eluniversal.com/nacional-y-politica/120327/chavez-44-capriles-radonsky-31 and more in Spanish: El Universal, 03-30-2012; http://www.eluniversal.com/nacional-y-politica/120330/misiones-y-cancer-de-chavez-afectaron-intencion-de-voto)

March 23, 2012

Economics & Finance

Industries required to register

The Ministry of Industries has now established an operation aimed at recording all individuals and companies involved with manufacturing. The information will then be a part of the Industry and Commerce Integrated Authority (SIGESIC), which in turn will establish requirements and procedures to be met in registering all persons or corporations, public or private, that carry out any activity that involves adding value, sale of goods, services, including not for profit institutions. It has been announced that this will provide reliable information for establishing procedures and policies aimed at promoting industrial development. More in Spanish: (Tal Cual, 03-22-2012; http://www.talcualdigital.com/index.html)

New Labor Law will eliminate outsourcing

The new Labor Law (LOT) aims at eliminating outsourcing and protecting the social rights of workers, according to Foreign Minister Nicolas Maduro, who also coordinates the presidential commission that is working on the project. The commission met with workers and members of the National Assembly and reviewed key issues such as the new system of social benefits, salaries and wages, working hours and new working relationships. More in Spanish: (AVN, 03-22-2012; http://www.avn.info.ve/node/104576)

61.07% of food sold by the Government was imported

A report by the Ministry for Nutrition shows purchases for the basic basket at 4,004,867, of which 3,484,367 tons were distributed directly to the MERCAL network and third parties, mainly the private sector and 520,500 tons went to the strategic reserve. The report noted that of the 3,484,367 tons of food distributed through official networks and private trading, 61.07% was purchased abroad by CASA. Another 461,323 tons were negotiated under oil compensation agreements with other countries, exchanging oil for food. More in Spanish: (El Nacional, 03-21-2012; http://www.el-nacional.com/)

BANDES debt to China is 8.6 times equity

2011 results for the Economic and Social Development Bank, published by the Ministry for Planning and Finance, show that total debt with banks abroad, basically with BDCarrojan, is now 8.6 times equity, which is above the limits set by the law that establishes the bank. More in Spanish: (El Nacional, 03-21-2012; http://www.el-nacional.com/)

Ricardo Hausmann: "Venezuela is prostrated and trying to provide artificial oxygen for the economy"

The economist and professor at Harvard University criticizes the disregard for private property, high inflation, lack of interest in children not attending school, lack of teachers, the collapse of PDVSA and the heavy indebtedness of an economy whose mismanagement "is unforgivable." More in Spanish: (El Nacional, 03-21-2012; http://www.el-nacional.com/)

Devaluation expected for 2013

Asdrúbal Oliveros,  the director of ECOANALÍTICA, says a "wait and see" mode is in place because the next 3 years will be very complex, particularly for the private sector which must be prepared to operate in a difficult and changing environment. He says the private sector must take advantage of the increase in spending and consumption, and should take special care of inventories, particularly those for which it is more difficult to obtain foreign currency, such as food and medicines. More in Spanish: (Tal Cual; http://www.talcualdigital.com/index.html; El Universal,  http://www.eluniversal.com/economia/120323/senalan-que-stock-del-sitme-llega-hasta-abril)

Commodities

Government claims oil output rose to 2.99 mln bpd in 2011

Venezuela's efforts to boost oil production have apparently gained traction as the country's energy ministry reported 2011 production at 2.99 million barrels per day, up 5% from the year before. The socialist administration of President Hugo Chavez wants to increase production to 3.50 million bpd by the end of this year, with much of the new output coming from the huge Orinoco extra heavy crude belt. While production from the country's traditional western oil heartland around the city of Maracaibo has continued to decline, output from fields in the east and in the central Orinoco region has been growing. The ministry's report said crude exports averaged 2.47 million bpd in 2011, up from 2.42 million the year before. (Reuters, 03-21-2012; http://www.reuters.com/article/2012/03/21/venezuela-oil-idUSL1E8ELSYO20120321)

PDVSA's receivable accounts up 44% in 2011

Crude oil sales via international agreements, as well as sales of fuel to governmental bodies, have had an impact on Venezuelan state-run oil company PDVSA's finances. Preliminary numbers on the management of the oil industry -published in PDVSA's 2011 Report - show that accounts receivable rose 44% in a year, from U$D 20 billion in 2010 to U$D 28.9 billion in 2011. In the report, PDVSA explains that "this increase in accounts receivable was influenced by the increase in the price of the Venezuelan oil basket, and the debts contracted by CORPOELEC, PEQUIVEN and CVG on sale of liquid and gaseous fuels." (El Universal, 03-22-2012; http://www.eluniversal.com/economia/120322/pdvsas-accounts-receivable-up-44-in-2011)

Government negotiating asset compensation with Canada-based miner

The government is negotiating a deal to compensate Canada-based RUSORO Mining for the takeover of its gold-mine assets, Oil and Mines Minister Rafael Ramirez said. “We’re in talks with the RUSORO company ... which, as in all the nationalization processes, happens because the government compensates companies for their assets ... but we have to reach agreement on the price,” said Ramirez. (Latin American Herald Tribune, 03-21-2012; http://www.laht.com/article.asp?ArticleId=481341&CategoryId=10717)

Politics

Presidential elections have been confirmed for October 7, according to an announcement by National Election Board Chair Tibisay Lucena. Regional elections will be held on December 16th. More in Spanish: Tal Cual, 03-23-2012; http://www.talcualdigital.com/index.html)

Chavez, Capriles tied ahead of election, poll shows

President Hugo Chavez is locked in a statistical tie with his rival Henrique Capriles Radonski seven months before presidential elections, according to a poll by Consultores 21. Chavez was favored by 46% of those surveyed compared with 45% for Capriles, said Saul Cabrera, vice president of the Caracas-based pollster. Another 9% of the 2,000 people polled between March 3 and 13 were undecided, Cabrera said today in an interview. Chavez, who is battling cancer, had 47.3% support in a December poll by Consultores 21. That was before Capriles won a primary to select a single opposition candidate to oppose Chavez in the October vote and before the president underwent a third cancer operation in less than a year. The poll had a margin of error of plus or minus 2.3 percentage points, Cabrera said. Should Chavez be unfit to run in the October elections, Capriles would beat all four of the government officials best positioned to succeed the president, the poll shows. (Bloomberg, 03-22-2012; http://www.bloomberg.com/news/2012-03-22/chavez-rival-tied-ahead-of-venezuela-election-poll-shows-1-.html)

Chavez denounces plot to kill rival in repeat of 2006 vote

President Hugo Chavez said he had evidence of a plot to kill the opposition presidential candidate Henrique Capriles Radonski, without giving details. Before the 2006 election, Chavez also said security forces had broken up a plot by “radical fascists” to assassinate opposition candidate Manuel Rosales.  In a television interview Capriles replied: “Yesterday someone on television was saying that they had information that someone was preparing an assassination attempt against me,” “Quite honestly, I’ll tell you one doesn’t know if that’s a warning or a threat.” On his Twitter account, Capriles added; “When you’re in an important position such as leading a country, you need to speak the language of peace,” Capriles said. “It’s not about offering security to me, you need to offer security to all the people you serve.” (Bloomberg, 03-20-2012; http://www.bloomberg.com/news/2012-03-20/chavez-warns-of-plot-to-assassinate-electoral-rival-capriles.html)

The White House wishes President Chávez "good health"

"We have no details about his health, except that he is back in Venezuela, but we wish him well," said US State Department Acting Assistant Secretary for Public Affairs Mike Hammer, when asked about unofficial reports published in various countries regarding the health condition of Venezuelan President Hugo Rafael Chávez. (El Universal, 03-22-2012; http://www.eluniversal.com/nacional-y-politica/120322/the-white-house-wishes-president-chavez-good-health)

Petitions from 4 countries affect Venezuelan atlantic coast

The Commission on the Limits of Continental Shelf of the United Nations (CLCS for its acronym in English) will evaluate applications for marine extension affecting the Atlantic coast from Venezuelan Guyana, Barbados and Trinidad and Tobago. Furthermore, having delivered its recommendation in the case of Suriname.

Of these four applications, Venezuela has established its position only if the presentations of Barbados and Guyana recently. More in Spanish: (El Universal, 03-21-2012; http://www.eluniversal.com/nacional-y-politica/120321/petitorios-de-4-paises-afectan-fachada-atlantica-venezolana)