June 28, 2013

Economics & Finance

Analysts say Venezuela to devalue Bolivar by stealth

Venezuela will look to weaken the bolivar this year without making an official devaluation of the currency, as it tries to boost revenue and narrow the budget deficit, according to a survey of analysts. The nation will step back from formally devaluing the bolivar for the sixth time in nine years, said eight out of 11 analysts surveyed by Bloomberg. The government could instead restart an internal swap market for dollar-denominated bonds after October, said Efrain Velazquez, partner in economic consultancy Azpurua Garcia-Palacios & Velazquez. In that market, companies would be allowed to trade bonds for dollars at a weaker rate to finance imports, he said. Caracas-based Ecoanalitica calculates an alternative market could trade at about 15 bolivars per dollar, more than double the official rate of 6.3 per dollar. “Such a market would be an implicit devaluation, as it would improve the fiscal accounts of the government and state oil company,” said Jose Luis Saboin, an economist at ECOANALITICA. (Bloomberg, 06-26-2013; http://www.bloomberg.com/news/2013-06-26/venezuela-to-devalue-bolivar-by-stealth-analyst-survey.html)

Finance ministry: Second sale of US dollars through SICAD will take place in July

Authorities have announced both a reduction in the waiting time for acquiring US dollars and a re-launch of the Ancillary Foreign Currency Administration System (SICAD). According to Finance Minister Nelson Merentes says the waiting time for acquiring US dollars was cut in June from 223 days to 103 days, approximately. Merentes said key economic areas will be a priority within the revamped SICA system, which can be allocated by geographic and economic areas. (El Universal, 06-27-2013; http://www.eluniversal.com/economia/130627/finance-ministry-second-sale-of-us-dollars-through-sicad-in-july; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/merentes-ratifica-que-en-julio-se-pondra-de-nuevo-.aspx#ixzz2XVUOGZIK)

U$D 10 billion needed to reactivate Venezuela's economy

Outgoing FEDECÁMARAS President Jorge Botti says announcements by Minister Merentes are "positive", but adds that the economy needs FOREX to go back to normal. "We need to inject much more FOREX into the economy to get it started." He estimated at at least U$D 10 billion will be needed to pay foreign creditors, restart imports, and increase production. More in Spanish: (El Universal, 06-28-2013; http://www.eluniversal.com/economia/130628/se-requieren-10-millardos-para-reactivar-la-economia)

Venezuela's capital outflows in 14 years estimated at U$D 200 billion

During Hugo Chávez's 14 year tenure in office (1999-2012) and despite almost 10 years of foreign exchange controls (2003-2012), capital outflow from Venezuela amount to some U$D 200 billion, according to Economist Humberto García Larralde. He says price controls have historically failed. Referring to the foreign exchange control policy, he said, "It does not aim at avoiding the outflow of foreign currencies or protecting international reserves, but at the discretionary use of such reserves in the hands of the public sector." (El Universal, 06-27-2013; http://www.eluniversal.com/economia/130627/venezuelas-capital-outflow-in-14-years-estimated-at-usd-200-billion)

Central Bank of Venezuela to define optimum level of liquid reserves

Finance Minister Nelson Merentes says the Central Bank and the Finance Ministry are establishing the adequate level of liquid international reserves used to pay for imports, debts, and other liabilities. "We are working on the reserves. The reserves must be above a certain amount," Merentes said. Over 70% of total reserves are held in gold, and the rest in cash. Based on Central Bank data, reserves were U$D 25.7 billion by May, U$D 1.7 billion of them in cash. Official figures also indicate that assets have continued diminishing and by June 25 international reserves were U$D 24.9 billion. (El Universal, 06-27-2013; http://www.eluniversal.com/economia/130627/central-bank-of-venezuela-to-define-optimum-level-of-liquid-reserves)

Foreign exchange for tourists discussed

Tourism Minister Andrés Izarra is meeting officials from the Central Bank and the Foreign Exchange Administration Commission (CADIVI) to “fine tune” the foreign exchange processes for tourists visiting the country. (Veneconomy, 06-26-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=35245&idc=2)

Commodities

PDVSA cut to B from B+ by S&P - "Outlook Negative"

Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings on Petroleos de Venezuela S.A. (PDVSA) to 'B' from 'B+'. The outlook remains negative. "Prior to this rating action we assessed the company's stand- alone credit profile (SACP) at 'b+'. "We will reassess PDVSA's SACP during the next 60 days in light of the recent sovereign downgrade but the outcome will not affect our 'B' rating on PDVSA due to the company's GRE (Government Related Entity) status and the likelihood of negative government intervention under a sovereign distress scenario," said Standard & Poor's credit analyst Fabiola Ortiz. (Latin American Herald Tribune, 06-25-2013; http://www.laht.com/article.asp?ArticleId=820587&CategoryId=10717)

Processing at Amuay back at 77% of installed capacity

Amuay, Venezuela's largest refinery with a processing capacity of 645,000 barrels daily, has finally recovered its usual operational levels after an explosion 10 months ago that claimed 40 lives and caused severe physical damages. Facilities are operating at 77% capacity, which is within average for the past few years, according to a report from the Paraguaná Refining Center (CRP). (El Universal, 06-27-2013;

http://www.eluniversal.com/economia/130627/processing-in-amuay-up-to-77-of-the-installed-capacity)

Gas stations on Venezuela-Colombia border remain out of service

Gas stations within the Special Border Fuel Supply System (Safec) in Táchira state remain closed after fuel sales were suspended almost a month ago. Normal gas stations in the state are crowded with drivers trying to fill tanks, but additional fuel is not provided. (El Universal, 06-26-2013; http://www.eluniversal.com/economia/130626/gas-stations-on-venezuela-colombia-border-still-out-of-service)

International Trade

Venezuela surpasses Brazil in 2012 weapons purchases

An IHS Jane's study called "The Balance of Trade" reports weapons imports soared 16% in South America in 2008-2012, climbing from U$D 3.42 billion to U$D 3.96 billion annually.
The report says Venezuela bought some U$D 1.2 billion in 2012, surpassing Brazil, the country with the largest defense budget in the region. The study indicates the trend may continue even after the death of President Hugo Chávez. (El Universal, 06-26-2013; http://www.eluniversal.com/nacional-y-politica/130626/venezuela-surpasses-brazil-in-purchases-of-weapons-in-2012)

Politics

Elections Board bars opposition presence at downloading of data from polling machines

There has been a new clash between Venezuela's opposition and the Election Board because the institution has refused to let opposition technicians in during the downloading of data stored in voting machines used during the April 14th Presidential election. Data stored in voting machines and their memory sticks is being transferred to a closed server within the Board, and opposition technicians do not know who has access to this data. More in Spanish: (El Universal, 06-28-2013; http://www.eluniversal.com/nacional-y-politica/130628/cne-se-niega-a-aceptar-observaciones-de-la-mesa)

Capriles says taping Machado's conversation was a crime

Opposition leader Henrique Capriles Radonski says it is "incredible" that Information Minister Ernesto Villegas and Caracas Mayor Jorge Rodríguez have presented a tape recording as "proof of a conspiracy". He says the only crime is that a conversation between two people at the home of historian German Carrera Damas was taped by the government. Capriles says the audio shows "Maria Corina Machado speaking of her vision on the ongoing process". Government supporters presented a tape of Assemblywoman Machado telling the historian that Democratic Unity Conference Executive Secretary Ramón Guillermo Aveledo had told the US State Department that the only way out of the current political impasse in Venezuela was a crisis, "a coup d'etat or a self coup (by the government)". Capriles says "Ramón Guillermo Aveledo would never propose a way out that is not established within the Constitution, which is absolutely democratic"; and called "a violent way out" the "worst scenario" for Venezuela. More in Spanish: (Infolatam)

Venezuela, U.S. begin talks on restoring relations

As a first step to rebuild bilateral relations, Venezuelan Charge d'Affaires Calixto Ortega has met with US Assistant Secretary of State for Latin America Roberta Jacobson. The meeting took place three weeks after Foreign Minister Elias Jaua met with U.S. Secretary of State, John Kerry, in Guatemala. State Department spokesman William Ostick confirmed that Washington has a strong interest in continuing high level contacts to bring bilateral relations back to normal.  (AVN, 06-26-2013; http://www.avn.info.ve/contenido/venezuela-us-initiated-dialog-restore-relations; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=821415&CategoryId=10717; and more in Spanish: El Nacional; http://www.el-nacional.com/)

Maduro reasserts Venezuela's commitment to Latin America

During a visit to Haiti, President Nicolás Maduro said Venezuela will continue "playing its role as liberating and uniting engine of a continent which will be great and will have people living in prosperity. "Our people, all of them, shall start counterbalancing each other to overcome living conditions, education, health, culture. They have to be prosperous nations which live in real, participatory, leading and people's democracy," said Maduro at the end of a meeting with his Haitian counterpart Michel Martelly. (AVN, 06-26-2013; http://www.avn.info.ve/contenido/maduro-reaffirms-venezuela039s-commitment-latin-america)

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.

June 25, 2013

Economics & Finance

Venezuela to ease foreign exchange regime. Venezuela will make its foreign currency system more flexible by reviving a stalled dollar auction scheme in July and after that allowing a revival of a free-floating secondary currency mechanism, a source in the government's economic team said on Sunday. Venezuela has operated currency controls for a decade, and restricted access to dollars at the official rate of 6.3 bolivars are a major gripe for local businesses and a cause of the OPEC member's slowing growth rate. The Finance Ministry source said the government of newly-elected President Nicolas Maduro will in July allow a renewal of the so-called SICAD system. In a first round in March of this year, dollars were sold to businesses for reportedly as much as 14 bolivars apiece. After another SICAD auction, authorities will then allow a revival of a system prohibited since 2010, under which dollars are sold by private brokers at a floating rate determined by a complicated formula linked to bond prices, the source added. That system is known locally as a "swap" mechanism. Both those methods would run alongside the fixed exchange rate system, under which businesses are allowed to access dollars at 6.3 bolivars for some priority goods, such as medicines and essential foods. "The idea is to go with SICAD in July," said the official, who asked not to be named. "Then what we want is to move to a secondary market, a 'swap' market, with the private players." Next month's revival of SICAD is unlikely to bring quick relief. Only U$D 200 million was sold at the auction in March, while economists estimate that the Venezuelan economy needs around U$D 100 million per day to cover the imports it needs. (Reuters, 06-23-2013; http://www.reuters.com/article/2013/06/23/venezuela-economy-idUSL2N0EZ07D20130623)

Imports down 11.3% in January-April

Venezuelan imports slumped 11.3% in January-April, according to a report compiled by Bank of America. More in Spanish: (El Universal, 06-24-2013; http://www.eluniversal.com/economia/130624/importaciones-cayeron-113-en-el-primer-cuatrimestre)

70% of Venezuelans support entreunership, private enterprise and aspire to have their own business,” says NEGOCIOS PYME Director Alfredo Sánchez. He said this tendency remains the same in all socio-economic strata and in people of all political tendencies because it “is a Venezuelan vocation very much associated with the desiral component and the wish to live better.” (Veneconomy, 06-21-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=35200&idc=3)

Official proposes "cutting supplies" to street vendors to fight "speculation"
The newly appointed head of the Consumer Protection Agency, Eduardo Samán, has said "we are going to cut supplies to street vendors because they buy from wholesalers at an inflated price. We will cut the supply so that those goods and services are sold at controlled prices". Venezuela has thousands of street vendors who work unhampered within the informal economy. Mr. Samán says these people "can make a living without having to speculate". More in Spanish: (Ultimas Noticias, 06-25-2013; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/cortaran-suministro--a-buhoneros-para-combatir-la-.aspx#ixzz2XDpdMme1)

Commodities

PDVSA’s first offshore gas output to assist heavy oil production

Initial natural gas volumes from offshore Venezuela will likely assist in the production of heavy crude oil rather than be used for exports. Output from the offshore La Perla field is expected to reach 300 million cubic feet a day by the end of 2013 when it begins production, according to the website of Venezuela’s state oil company Petroleos de Venezuela, or PDVSA. The nation plans to invest U$D 22 billion from 2013 to 2019 to develop gas projects. “Initial gas production offshore Venezuela will likely be used to increase the production of heavy crudes,” Rebecca Fitz, an analyst with Washington-based PFC Energy, said in a phone interview Friday. (Bloomberg, 06-24-213; http://www.bloomberg.com/news/2013-06-24/pdvsa-s-first-offshore-gas-output-to-assist-heavy-oil-production.html)

Petrol smugglers outwit existing controls

Years of frozen petrol and diesel prices have distorted the local liquid-fuel market to the extent that, in the border region with Colombia, fuel transactions in Special Border Fuel Supply (SBFS) stations have been suspended. Sales were brought to a standstill three weeks ago amid official references to possible controls on fuel smuggling, which has been fueled by a profit of VEB 23 per liter vs. prices across the border. Rafael Ramírez, Minister of Petroleum and Mining, said "we are assessing and enhancing our supply in the border zone because we have to prevent the domestic market from growing at its current rate." Ramírez defended the Automated Fuel Supply Plan and called it a success. The core of the plan is its tag or electronic label, which controls fuel volumes sold to each driver. (El Universal, 06-22-2013; http://www.eluniversal.com/economia/130622/petrol-smugglers-outwit-existing-controls)

International Trade

Venezuela-Colombia tension hits companies

Tensions between the governments of Venezuela and Colombia have raised concerns among businessmen in both countries. The latest poll conducted by the National Association of Colombian Entrepreneurs found that tensions between Venezuela and Colombia are among the 12 major obstacles to do business. Other obstacles are low demand, high competition, cost and supply of raw material, foreign exchange rate, and smuggling. (El Universal, 06-24-2013; http://www.eluniversal.com/economia/130624/venezuela-colombia-tension-lashes-companies)

Logistics & Transport

Drug cartel infiltrates Maiquetía Airport

The Sinaloa Cartel, Mexico's biggest drug cartel has been using the Simón Bolívar International Airport at Maiquetía, for landings and takes offs with no problem: they even had set up an aerial bridge on flight ramp 7 of the auxiliary terminal for their activities. (El Universal, 06-22-2013; http://www.eluniversal.com/nacional-y-politica/130622/drug-cartel-infiltrates-maiquetia-airport)


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 16, 2013

Economics & Finance

Perception of weak mandate adds to pressure on economy

President-elect Nicolas Maduro faces a difficult economic panorama of rising inflation and slowing growth, further complicated by his slim election victory that is being challenged by the opposition. A perception that Maduro has a weak mandate could prompt challenges from within the disparate ruling coalition that formed around Chavez, just as overstretched state finances force him to slow the very oil-funded largesse he staked his reputation on maintaining.

But with the opposition questioning his legitimacy, Maduro may have little room for pragmatic measures such as unwinding the Byzantine system of price and currency controls that have created economic distortions. His narrow win may also dampen speculation that he is seeking a market-friendly replacement for Finance Minister Jorge Giordani, who led the Chavez-era expansion of state control. (Reuters, 04-15-2013; http://www.reuters.com/article/2013/04/15/us-venezuela-election-economy-idUSBRE93E16D20130415)

Venezuelan bonds slump upon post-election outlook

Venezuelan bonds plummeted Monday and debt insurance costs jumped following the tight victory of ruling party presidential candidate Nicolás Maduro in the election held on Sunday. The election results have been rejected by opposition leader Henrique Capriles. The country's dollar bond due 2027 fell 1.6 points whereas as the 2022 bond slipped 1.2 points, according to information compiled by Reuters. Venezuela's credit defaults swaps climbed 32 base points to 731 bps, according to data provider Market. (El Universal, 04-15-2013; http://www.eluniversal.com/economia/130415/venezuelan-bonds-slump-upon-venezuelas-post-election-outlook; Bloomberg, http://www.bloomberg.com/news/2013-04-15/venezuela-bonds-drop-after-maduro-elected-president-by-one-point.html)

Commodities

Oil minister: Government plans recovery in oil revenues

Rafael Ramírez, Oil and Mining Minister and president of state-run PDVSA, says Venezuela has been able to recover some U$D 427 billion in oil revenues thanks to government plans. "One of Chávez's most significant legacies is our oil policy. In a country like Venezuela, having gained back control of the oil industry, which used to be in the hands of transnational companies, has been essential to allocate resources for the development of our people," Ramírez remarked. (El Universal, 04-15-2013; http://www.eluniversal.com/economia/130415/venezuelan-oil-minister-government-plans-recovery-in-oil-revenues)

PDVSA to keep funding socialist programs under Maduro

Nicolas Maduro's apparent win in Venezuela's presidential election means state oil company PDVSA will continue funding the government's socialist policies while increasingly relying on deals with China and Russia. That put Venezuela's crude reserves; the world’s biggest, at the service of Chavez's power base among the poor majority. Maduro, who narrowly won the presidential election on Sunday with 50.7% of votes, now takes office on a pledge to push forward his late boss's plan. Maduro can be expected to increase oil sales to political allies, especially China, at the expense of the United States, the traditional top buyer of Venezuelan crude, while taking on more debt from those partners. Chavez turned PDVSA into the financial motor of his self-styled revolution, funding everything from sports and cultural events to free health clinics and home-building programs. (Reuters, 04-15-2013; http://www.reuters.com/article/2013/04/15/venezuela-election-oil-idUSL2N0CO1RZ20130415)

Politics

Protests erupt in Venezuela as opposition disputes Nicolás Maduro's victory

Security forces quelled protests as Nicolás Maduro -the handpicked heir of Hugo Chávez- was proclaimed president after a wafer-thin and fiercely disputed vote. El Universal newspaper reported protests in six cities. In Caracas, troops dispersed a crowd of thousands. Twelve student protestors were reportedly injured in Barquisimeto a city in the middle of the country. Images spread by Twitter showed apparently injured protestors being carried away. The scale of the unrest is, as yet, hard to verify. (The Guardian, 04-16-2013; http://www.guardian.co.uk/world/2013/apr/16/protests-venezuela-capriles-nicolas-maduro)

An election that reeks of fraud

Fraud is a strong word but, yes, it's the clearest conclusion from Venezuela's election Sunday to pick a successor to the late socialist dictator Hugo Chavez. Chavez's hand-picked successor "won" Venezuela's election Sunday, with what Chavez's anything-but impartial CNE electoral body declaring he'd gotten 50.6% of the vote, while his challenger, Miranda state governor Henrique Capriles Radonski garnered 49.07% — a gap of just 235,000 votes. That's suspicious right there, given the structural advantages and Chavez "sympathy votes" Maduro had yet couldn't turn into a victory. Polls — every one of them — showed that Capriles had crossed over to a tie or lead in the last week of the campaign, while the size of his spirited million-strong rallies — the largest since 2002 — told the same story. Capriles says he had enough evidence amid a stream of down-ballot irregularities — from motorcycle goons intimidating voters to ballot boxes strewn across the Barinas state — to believe he had won. Maduro's angry victory speech threatening voters was an odd thing, given his razor-thin margin of victory and presumed need to unify the country to govern. Obviously, he was trying to hold together his base, which in fact is crumbling as his Chavista political rivals now call for "self criticism." What's more he wasn't able to buy votes this time. Banker Russ Dallen of BBO Financial Services in Caracas points out that amid the shambles of Venezuela's public finances, Maduro didn't even have cash to dole out goodies to buy votes. (Investor's Business Daily, 04-15-2013; http://news.investors.com/ibd-editorials/041513-651977-maduro-victory-in-venezuela-stinks-of-fraud.htm#ixzz2QddWYeO5)

Tight win for Chavez's heir spells uncertainty for Venezuela

Late socialist leader Hugo Chavez's chosen successor Nicolas Maduro won Venezuela's presidential election by a whisker but now faces opposition protests plus a host of economic and political challenges in the OPEC nation. The 50-year-old former bus driver, whom Chavez named as his preferred heir before dying from cancer, edged out opposition challenger Henrique Capriles with 50.7 percent of the votes in Sunday's election, according to election board returns. Capriles took 49.1 percent, just 235,000 fewer ballots. Capriles, whose strong showing confounded most forecasts, refused to recognize the result and said his team had a list of more than 3,000 irregularities ranging from gunshots to the illegal reopening of polling centers. (Reuters, 04-15-2013; http://www.reuters.com/article/2013/04/15/us-venezuela-election-idUSBRE93C0B120130415; http://www.reuters.com/article/2013/04/15/venezuela-election-idUSL2N0D107420130415; El Universal, http://www.eluniversal.com/nacional-y-politica/130414/maduro-is-the-new-venezuelan-president-with-5066-of-votes; Bloomberg, http://www.bloomberg.com/news/2013-04-15/chavez-heir-maduro-wins-venezuela-presidency-to-continue-legacy.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=746418&CategoryId=10717; The New York Times, http://www.nytimes.com/2013/04/15/world/americas/venezuelans-vote-for-successor-to-chavez.html?_r=0; The Washington Post, http://www.washingtonpost.com/world/hugo-chavez-heir-nicolas-maduro-leads-in-polls-ahead-of-vote/2013/04/14/334cd2ba-a54b-11e2-9e1c-bb0fb0c2edd9_story.html)

Capriles rejects results until all votes are counted

"I do not make deals with lies and corruption. My pact is with God and with Venezuelans," said opposition United Democratic Conference presidential candidate Henrique Capriles referring to his conversation with President Nicolás Maduro, after the National Electoral Council (CNE) announced results of Sundays presidential election.

"I just heard a speech about an alleged pact. I do not make deals with illegitimacy, with those I deem illegitimate. We recorded 3,200 irregularities (in April 14 vote)," he said. Capriles added that he would not recognize the outcome of the election and asked the electoral power "to open all the ballot boxes and count every vote." (El Universal, 04-15-2013; http://www.eluniversal.com/nacional-y-politica/130415/capriles-rejects-results-as-long-as-all-votes-are-not-counted; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=747285&CategoryId=10718; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuela-opposition-candidate-says-he-wont-accept-election-result-without-recount/2013/04/15/968fbaa8-a588-11e2-9e1c-bb0fb0c2edd9_story.html)

Vicente Díaz calls for audit of 100% of balloting stations

National Electoral Council director Vicente Díaz on Sunday asked for citizen-initiated audits in order to recount 100% of the paper ballots cast in April 14 presidential vote, given the narrow vote where Nicolás Maduro won by a slim margin of some 200,000 ballots. "Since this result is so tight, I would like an audit to be conducted by the CNE. Given the close electoral result and the fact that we live in a polarized country, I would like to request that 100% of the ballot boxes are audited," said Díaz. (El Universal, 04-14-2013; http://www.eluniversal.com/nacional-y-politica/130414/vicente-diaz-calls-for-audit-of-100-of-balloting-stations)

Maduro joins call for recount, backs away the next day

Maduro initially stated that he was willing to accept a recount. On Monday, however, the council - which is skewed towards the ruling camp - said the result was irreversible and proclaimed Maduro acting president later the same day. An inauguration is set for 19 April. With no sign of a recount taking place, the decision has sparked outrage among opposition supporters. Claiming 3,000 election irregularities, Capriles said he would consider the government illegitimate without a recount and called on his supporters to show their unhappiness with "cacerolazo"- a popular form of protest where people bang on pots and pans. "If both parties said that they agreed to count all votes, why the rush? What are they hiding?", Capriles said. Ruling camp officials say the allegations of electoral impropriety are part of a US-sponsored plot to destabilize the country and undermine the legitimacy of its elected leader. (The Guardian, 04-16-2013; http://www.guardian.co.uk/world/2013/apr/16/protests-venezuela-capriles-nicolas-maduro)

Maduro’s pyrrhic victory, Capriles tells Maduro: "You're the one who was defeated today".

Elections don’t come much closer. After counting more than 99% of the votes Venezuela’s election authority announced late on Sunday night that the government’s presidential candidate, Nicolás Maduro, had beaten his rival, Henrique Capriles of the Democratic Unity coalition, by just 1.59%. Of almost 14.8m votes cast, fewer than 235,000 separated the two candidates. Capriles and his campaign team have announced their refusal to accept the electronic vote-tally unless the electoral authority agrees to open all the ballot boxes and count the paper ballots. Their position is supported by the only opposition-leaning member of the electoral authority’s five-person board, Vicente Díaz. According to Capriles, the opposition logged more than 3,200 irregularities—enough, he said, to render Maduro’s victory margin moot. In a tough speech, he told Maduro: “You’re the one who was defeated today—you and what you represent.” Indeed, even for those who accept the official result, the government candidate’s victory looked remarkably like a defeat. Maduro’s narrow victory, which many even on his own side will see as a defeat, makes that task all the more difficult. With the election out of the way the chavista movement may once again live up to its reputation as a “nest of scorpions”, as it was once described by a former deputy-chairman of the party. National Assembly President Diosdado Cabello, who many consider Maduro's main rival within their movement, tweeted: "The results oblige us to make a profound self-criticism." (The Economist, 04-15-2013; http://www.economist.com/blogs/americasview/2013/04/venezuela%E2%80%99s-presidential-election; Fox News, 04-15-2013; http://www.foxnews.com/world/2013/04/15/choice-for-venezuelans-hugo-chavez-heir-or-fresh-start-with-emboldened/#ixzz2QYLBJH3M)

OAS supports a full recount of votes in Venezuela

OAS Secretary General, José Miguel Insulza, on Monday endorsed the idea of ​​a full recount of the votes after the controversy over the election results in Venezuela made ​​this Sunday, in which the ruling was the winner Nicolas Maduro. More in Spanish: (CNN, 04-15-2013; http://cnnespanol.cnn.com/2013/04/15/la-oea-apoya-un-recuento-completo-de-los-votos-en-venezuela/?iref=allsearch)

Spain suggests "dialogue", a shouting Maduro threatens Spain for "interfering"

Spain's Foreign Minister José Manuel García-Margallo recommended "dialogue" in view of a "very strong polarization" here. He said the outcome "attests to a very strong polarization in the country, something that calls for agreement and honest dialogue to face upcoming challenges in a stage that will necessarily be different from the previous one." Maduro shouted during his acceptance speech that Spain must disown such "intervention" or face reprisals on all fronts. (El Universal, 04-15-2013; http://www.eluniversal.com/nacional-y-politica/130415/spain-suggests-candor-in-light-of-very-strong-polarization-in-venezuel)

“He could regret his victory”

Today, The Washington Post discusses in its editorial that acting President Nicolás Maduro could regret his victory if he won next Sunday’s presidential election as he will have to deal with Chávez’ legacy: “out-of-control inflation, serious shortages of goods and electric power outages and one of the highest crimes rates globally.” The truth is that will be the scenario to be faced by any of the two candidates that wins on Sunday. (Veneconomy, 04-15-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34350&idc=1)

Putin congratulates vote winner in oil ally Venezuela

Russian President Vladimir Putin congratulated Nicolas Maduro on winning Venezuela's presidential election, saying he expected good relations to continue with a country where Moscow has significant oil investments. Ties between Moscow and Caracas flourished under Hugo Chavez.  Russian officials were hoping for continuity to protect their energy and arms deals there. (Reuters, 04-15-2013; http://www.reuters.com/article/2013/04/15/us-venezuela-election-russia-idUSBRE93E0C920130415; El Universal, http://www.eluniversal.com/nacional-y-politica/130415/governments-close-to-chavez-jump-up-to-congratulate-maduro)

Cristina Kirchner applauds Maduro's victory in Venezuela

Argentine President Cristina Kirchner rushed to congratulate Nicolás Maduro for his tight victory: "My congratulations go to its new President, Nicolás Maduro. In memory and gratitude for ever to friend and comrade Hugo Chávez," Kirchner twitted, AFP cited. (El Universal, 04-15-2013; http://www.eluniversal.com/nacional-y-politica/130415/cristina-kirchner-applauds-maduros-victory-in-venezuela)

Cuba avoids oil cutoff for now as Chavez ally narrowly wins Venezuela presidential election

Cubans were relieved Monday by the announcement that the late leader Hugo Chavez’s hand-picked successor had been elected Venezuela’s new president, apparently allowing their country to dodge a threatened cutoff of billions of dollars in subsidized oil. Cuban President Raul Castro sent a congratulatory message to Nicolas Maduro, who is seen as an ideological ally who will want to continue the countries’ special relationship as he serves out the remainder of Chavez’s six-year term. (The Washington Post, 04-15-2013; http://www.washingtonpost.com/world/the_americas/cuba-avoids-oil-cutoff-for-now-as-chavez-ally-narrowly-wins-venezuela-presidential-election/2013/04/15/f70bfe98-a5e5-11e2-9e1c-bb0fb0c2edd9_story.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.

January 25th, 2013

Economics & Finance

114% adjustment in FOREX rate needed to correct overvaluation

The combination of a fixed official FOREX rate and inflation four times that in the US and the rest of Latin America, have caused an overvaluation of Venezuela's Bolivar, leading to skyrocketing imports as imported products are cheaper than domestic products.  As it is virtually impossible to meet the demand for US dollars for imports, companies have cut down production and the Government has no other choice but to devalue the currency. As imbalances due to currency overvaluation become critical, ECOANALÍTICA's CEO Asdrúbal Oliveros believes that an 114%  adjustment in the FOREX rate is required,  going from VEB 4.30 to VEB 9.22 per U$D. (El Universal, 01-23-2013; http://www.eluniversal.com/economia/130123/experts-114-adjustment-in-forex-rate-is-vital-to-correct-overvaluation)

80% of local companies are hit by delays in obtaining US

Carlos Tejera, General Manager of the Venezuelan-American Chamber of Commerce and Industry is calling for an agreement between government and the private sector to jointly overcome difficulties in food production, distribution. He says 70-80% of VENAMCHAM affiliates are reporting delays and a reduction in the amount of US dollars they are allocated by the FOREX Administration Commission (CADIVI), and that additional delays in import permits have also hit the food trade chain. "Some firms report delays from three to six months." (El Universal, 01-24-2013; http://www.eluniversal.com/economia/130124/delays-in-sale-of-us-dollars-lash-some-80-of-venezuelan-companies)

PDVSA debt jumped 150% in five years

Venezuelan state-run oil company PDVSA is under significant pressure from its obligations with the Government and the need to invest in core activities, all of which translates into higher debt. By the end of 2012, PDVSA's debt was U$D 40 billion, which is up 150% from U$D 16 billion in 2007. Corporate debt increased 15% in 2012. (El Universal, 01-23-2013; http://www.eluniversal.com/economia/130123/pdvsas-debt-spikes-150-in-five-years)

“70% of the beef consumed in Venezuela is domestic,” claims Agriculture and Lands Minister Juan Carlos Loyo who added this figure is backed by statistics and the records of control slaughter houses in the country, even as he admitted beef is being imported in order to meet demand and population growth. (Veneconomy, 01-23-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33464&idc=3)

FONDEN has received U$D 102.2 billion since its creation in September 2005 through the close of 2012, according to a report published in El Nacional. According to the report, PDVSA has transferred U$D 56.9 billion to the National Development Fund and the Central Bank (BCV) another U$D 45.3 billion. Although the fund was established in order to carry out infrastructure projects, analysts say the government has used part of the funds to meet public sector day to day spending. (Veneconomy, 01-23-2013;

http://www.veneconomy.com/site/index.asp?ids=44&idt=33462&idc=2)

IMF forecasts drop in Venezuela's oil revenues

In its World Economic Outlook Update report for 2013, the International Monetary Fund (IMF) cut its growth projection for Latin America and the Caribbean by 0.3%, and estimated growth in the region at 3.6%.
IMF's Research Department Division Chief Thomas Helbling said that economic growth forecasts for Venezuela may be cut, yet refused to disclose the estimated adjustment before the IMF issues its Global Economic Outlook.

The multilateral body also estimated that the price of the oil basket may drop 5% in 2013 and 3% in 2014 to U$D 100 and U$D 97, respectively. (El Universal, 01-24-2013; http://www.eluniversal.com/economia/130124/imf-forecasts-drop-in-venezuelas-oil-revenues)

Commodities

Oil imports from the US soar 474.96% in 2011-2012

Venezuela's oil-related imports jumped by 474.96% in January-November 2012 over the same period in 2011, according to data revealed by the Venezuelan-American Chamber of Commerce and Industry (VENAMCHAM).
In 2012, Venezuela's imports from the US were U$D 2.79 billion, far above 2011 (U$D 486 billion), for oil and oil byproducts. Non-oil imports also soared 21.9% in January-November 2012, from U$D 10.75 billion in 2011 to U$D 13.10 billion. Venezuela's oil exports were U$D 34.49 billion in 2012, down 11.35% from 2011 (U$D 38.91 billion). (El Universal, 01-24-2013; http://www.eluniversal.com/economia/130124/venezuelan-oil-imports-from-the-us-soar-47496-in-2011-2012)

Basic products in short supply

Roberto León Parilli, President of the ANAUCO consumers union, reports that from the Central Bank's own data by December 2012 there was 78.8% scarcity in sugar, 43.3% in cornmeal; and 34.9% in ground coffee. More in Spanish: (Tal Cual, 01-25-2013; http://www.talcualdigital.com/index.html)

Politics

Officials again claim Chavez improving, active

Ernesto Villegas, Minister for Communications and Information, has again said President Chavez is evolving positively. He says the President is fully active, making decisions and issuing instructions to his government, but he said the government does not "want to create expectations over a date for his return". At the same time Foreign Minister Elias Jaua remarked that Chavez is "facing the most complex and deep battle against the disease". Jaua said that the President's brother, Adán Chávez, governor of Barinas State, Oil and Mining Minister Rafael Ramírez, Attorney General Cilia Flores and Vice President Nicolás Maduro held a meeting with the President "dealing with economic and political affairs, the workings of the pro government PSUV party, and the upcoming mayoralty elections". Still no photos or even taped messages directly from the President have been issued. More in Spanish: (AVN, 01-25-2013; http://www.avn.info.ve/contenido/villegas-evoluci%C3%B3n-del-presidente-ch%C3%A1vez-es-positiva; and El Universal; http://www.eluniversal.com/nacional-y-politica/130125/jaua-asegura-que-chavez-librara-una-batalla-mas-compleja)

Maduro charges he is target of assassination plot

Vice President Nicolas Maduro is claiming unidentified groups have entered the country in order to assassinate both him and National Assembly President Diosdado Cabello, while Hugo Chavez recovers from cancer in Cuba. He provided no proof of the claim, but he said action would be taken shortly. "For several weeks we've been following groups that have infiltrated the country with the aim of making attempts on the life of (Assembly head) Diosdado Cabello and my own," Maduro told a crowd of red-shirted "Chavista" supporters. (Reuters, 01-23-2013; http://www.reuters.com/article/2013/01/24/us-venezuela-chavez-idUSBRE90M1EM20130124; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuela-vice-president-says-plot-uncovered-announces-new-trip-to-cuba-to-see-chavez/2013/01/23/23101410-65c8-11e2-889b-f23c246aa446_story.html; CNN, http://edition.cnn.com/2013/01/23/world/americas/venezuela-maduro/index.html?iref=allsearch)

Opposition will choose presidential candidate by consensus

Ramón G. Aveledo, Executive Secretary of opposition Unified Democratic Panel (MUD) has presented a twelve point manifesto about the nation's current political uncertainty. According to the document, should a presidential vote be held any time soon, the MUD will present a candidate chosen by consensus. (El Universal, 01-23-2013; http://www.eluniversal.com/nacional-y-politica/130123/venezuelan-dissenters-to-choose-presidential-candidate-by-consensus)

Improved Venezuela-US relations possible

Senator John Kerry, President Obama's nominee for Secretary of State, told a Senate committee that "Depending on what happens in Venezuela there could be a real opportunity for a transition". At the same time, Vice President Nicolás Maduro has confirmed that Venezuela's OAS Ambassador Roy Chaderton is a "special envoy" to advance with the US. He said "we have no problem in maintaining respectful relations, in order to normalize diplomatic relations at whatever level possible". More in Spanish: (Tal Cual, 01-25-2013; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/130125/kerry-ve-posible-un-cambio-de-rumbo-con-venezuela; and  http://www.eluniversal.com/nacional-y-politica/130125/buscan-regular-relaciones-con-eeuu-al-nivel-que-sea-posible)



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.