July 26, 2013

Economics & Finance

BOFA projects 48.4% inflation for Venezuela this year, a 3.6% drop in GDP. Bank of America Merrill Lynch projects Venezuela's economy will drop by 3.6% this year, inflation will go up to around 48.4% and exports will go down to around U$D 89.9 billion, a 7.6% reduction from 2012. The figures would be the result of a 8.1% drop in domestic demand, down 20.4 points from 2012. Private consumption will decrease by 6%, and public spending by 8.1%, to levels not experienced since the oil strike of 2002-2003. The report also estimates imports will fall by 14.9% to around U$D 51.2 billion, in contrast to last year's increase of 24%. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Next auction sale of US dollars scheduled for July 29. Central Bank President Edmee Betancourt announced that they will hold another auction sale of US dollars next July 29-30 through the Ancillary Foreign Currency Administration System (SICAD). Authorities have said auctions will be held approximately every 15 days, and that CADIVI continues to be the normal way to obtain FOREX. More in Spanish: (AVN; http://www.avn.info.ve/contenido/subasta-del-sicad-ser%C3%A1-pr%C3%B3xima-semana; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/bcv-convocara-hoy-nueva-subasta-del-sicad.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/bcv-convocara-este-viernes-a-una-nueva-subasta-del.aspx; El Universal, http://www.eluniversal.com/economia/130726/en-proxima-subasta-del-sicad-se-ofertaran-mas-de-200-millones)

International reserves down U$D 3.24 billion in 100 days

Venezuela's economic outlook is terrible in the opinion of experts. In a forum on the first 100 years of government of President Nicolás Maduro, they remarked that existing problems are growing more and more serious. Luis Oliveros, a professor with Metropolitan University, says "only inept and incapable people can produce scarcity with oil prices at USD 100 for three years in a row". At the same time, José Guerra, a professor at Venezuela's Central University says "this is not the failure of a single man, but the failure of a model marked by state control and corruption." (El Universal, 07-24-2013; http://www.eluniversal.com/economia/130724/international-reserves-down-usd-324-billion-in-100-days)

Venezuela projected to have the lowest economic growth in Latin America

The UN Economic Commission for Latin America and the Caribbean (ECLAC) has cut its economic growth forecast for the region in 2013 to 3%, down from 3.5% in April. ECLAC said the reduced growth estimate "was partly due to slow growth in Brazil and Mexico. In addition, several countries that were growing quickly, such as Chile, Panama and Peru, experienced a slowdown in economic activity in recent months." Venezuela is the country with the lowest GDP growth forecast for Latin America for 2013. ECLAC estimated that Venezuelan economic growth would hit only 1% this year, below El Salvador, with 2%. (El Universal, 07-25-2013; http://www.eluniversal.com/economia/130725/venezuela-to-experience-the-lowest-economic-growth-in-latin-america)

A "central committee" will control sales by basic industries

Ricardo Menéndez, Minister of Industries announced a central committee will be set up to control the sale of products from government owned basic industries. He says they will carry out a first sale of briquettes, with a price established by the government. The product of those sales will be transferred to the Central Bank. (Veneconomy, 07-23-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=35615&idc=3)

Commodities

FERROMINERA grinds to a halt, under military control

A group of workers from the CVG FERROMINERA state-owned iron company have blocked both the main gate and railways leading into the plant, as they reject the firm's militarization which started Wednesday evening.
Demonstrators said the company's board suspended transport service and troops blocked the gates as part of a contingency plan to restart the plant with National Guard troops.  One worker told media that they "seized the railways to prevent trains coming from Ciudad Piar from getting to FERROMINERA or steelmaker SIDOR." The company has responded by making military control more stringent and did not allowed workers on the night shift to enter the plant. Roger Salazar, of the Workers Union (SINTRAFERROMINERA) says the company tried to maintain rail operations with new personnel and even unemployed individuals, and adds: "this regime is killing the first step in the national iron and steel production system, and does not understand that there can be no company without workers." (El Universal, 07-25-2013; http://www.eluniversal.com/economia/130725/venezuelas-ferrominera-comes-to-a-halt-amid-militarization; and more in Spanish: El Universal, http://www.eluniversal.com/economia/130726/para-contrarrestar-paros-activan-contingencia-en-ferrominera)

REPSOL to invest U$D 1.58 billion in Venezuela in 2012-2016

Spanish oil giant REPSOL announced a U$D 25.13 billion investment plan of for 2012-2013, 6.3% of which is earmarked for Venezuela. According to the plan, around U$D 2.6 billion will be invested in Brazil, U$D 3.04 billion in the US, U$D 1.58 billion in Venezuela, U$D 529.21 million in Russia, and U$D 26.46 million in Spain, AFP reported. (El Universal, 07-25-2013; http://www.eluniversal.com/economia/130725/repsol-to-invest-usd-158-billion-in-venezuela-in-2012-2016)

Expropriated steel-company SIDETUR defaults says Fitch

Fitch Ratings has taken the following ratings actions on Sidururgica del Turbio S.A. (SIDETUR) and Sidetur Finance B.V.: Sidetur S.A.

• Foreign currency long-term Issuer Default Rating (IDR) downgraded to ‘D’ from ‘C’;
• Local currency long-term IDR downgraded to ‘D’ from ‘C’;
• National scale rating downgraded to ‘D (ven) from ‘C (ven)’;
• National short-term rating downgraded to ‘D (ven)’ from ‘C (ven)’.

In case of default, investors who acquired U$D 100 million in company bonds in 2006 can’t demand that the entire balance must be paid to them - this is U$D 75 million, which normally should be amortized every 3 months through 2016. (Latin American Herald Tribune, 07-23-2013; http://www.laht.com/article.asp?ArticleId=885187&CategoryId=10717, and more in Spanish: El Universal, http://www.eluniversal.com/economia/130726/tras-default-de-sidetur-el-pais-podria-ser-demandado-indicadores)

Politics

Opposition charges Maduro is bringing the country down

The United Democratic Conference, Venezuela's opposition umbrella group, says Nicolás Maduro's first 100 days leading the nation have resulted only in demagoguery and destruction of the country. It charges that "false promises" about security "have not prevented over 4,200 individuals from being murdered; the drama inside Venezuelan prisons from worsening; or insecurity from being Venezuelans' main fear. Maduro has proved to have neither the political will nor the capacity to solve insecurity in Venezuela," the MUD stressed. (El Universal, 07-24-2013; http://www.eluniversal.com/nacional-y-politica/130724/venezuelan-opposition-claims-maduro-is-bringing-the-country-down)

US leaves "door open" to Venezuela

US State Department spokesperson Jen Psaki says the US has left the door open to improve relations with Venezuela, but avoided any sort of rectification as demanded by President Nicolás Maduro, who announced the end of discussions to restore relations after recent statements by Samantha Power, who has been nominated as US ambassador to the United Nations. "We are open to having a positive relationship with Venezuela moving forward. That's what our focus is on, and we still are leaving the door open for that," the spokesperson remarked. Calixto Ortega, Venezuela's charge d'affairs in the US says contacts between both nations are currently "interrupted", but that Maduro's regime is willing to have a "friendly" bilateral relationship. (El Universal, 07-24-2013; http://www.eluniversal.com/nacional-y-politica/130724/us-leaves-door-open-to-venezuela; More in Spanish: Fox News, http://latino.foxnews.com/latino/espanol/2013/07/24/eeuu-evita-disculparse-con-venezuela-pero-sigue-abierto-al-dialogo/, El Universal, http://www.eluniversal.com/nacional-y-politica/130726/ortega-dice-que-hay-voluntad-para-nexo-amistoso-con-eeuu)


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.

July 09, 2013

Economics & Finance

Private banks now authorized to trade FOREX through SICAD, currency limits for travel eliminated

The Central Bank has authorized the private banking system to trade FOREX or denominated dollar denominated securities through the Ancillary FOREX Administration System (SICAD). It also changed standing regulations by eliminating the amount of FOREX individuals can request for travel, studies abroad, health, scientific investigation, sports, culture, special cases, and payment for goods needed for professional services. The Central Bank will have the power to call each tender and set minimum and maximum amount each person can request, and can use this power to limit demand on FOREX. More in Spanish: (El Universal; http://www.eluniversal.com/economia/130709/bcv-elimina-limite-a-la-compra-de-divisas-para-viajes-en-el-sicad; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/sin-topes-solicitud-de-divisas-de-personas-natural.aspx; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/bcv-autoriz%C3%B3-entidades-bancarias-tramitar-operaciones-del-sicad; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/sicad-autoriza-a-bancos-compra-y-venta-de-divisas.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/se-amplia-el-numero-de-operadores-para-transar-div.aspx)

Government likely to increase debt to supply SICAD with US dollars

Further indebtedness will probably be used to procure US dollars for the Ancillary Foreign Currency Administration System (SICAD). The central government and decentralized institutions may issue US dollar denominated bonds for purchase by companies or individuals in bolivars and then traded abroad to obtain FOREX. SICAD is also expected to be fed with US dollars from the National Development Fund, the Central Bank of Venezuela (BVV); and interested private companies. (El Universal, 07-08-2013; http://www.eluniversal.com/economia/130708/venezuelan-govt-likely-get-into-debt-to-supply-sicad-with-us-dollars)

Barclay's estimates the Government will receive an additional 43 billion VEB through SICAD

Barclay's Capital estimates SICAD can sell around U$D 4.8 billion this year and projects an average parity of VEB 15. Based on these figures, they believe FOREX sales by government agencies can generate an additional 2% of GDP, which would be around VEB 43 billion. More in Spanish: (El Universal, 07-09-2013; http://www.eluniversal.com/economia/130709/calculan-que-el-fisco-tendra-bs-43-millardos-adicionales)

International reserves are down U$D 4.139 billion in the first half of 2013

Central Bank data reveals a drop in international reserves between January and June this year. Venezuela's international reserves were U$D 29.890 billion at the close of 2012 and were U$D 25.751 billion at the end of last month. More in Spanish: (El Mundo, 07-09-2013; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/reservas-internacionales-cayeron--4-139-millones-e.aspx#ixzz2YXrZO05e)

Companies banned from settling pending debts with SICAD FOREX

Based on a BCV's resolution, private companies will be barred from using US dollars to meet liabilities arising from prior imports. Aura Palermo, director of the AP Consulting Group, says this means companies with foreign debts to suppliers undertaken after the Transaction System for Foreign Currency Denominated Securities (SITME) was shut down, will have no legal framework for meeting these liabilities. (El Universal, 07-05-2013; http://www.eluniversal.com/economia/130705/companies-in-venezuela-banned-from-settling-debts-with-sicads-us-dolla)

BCV activates its website link for SICAD applicants

The Central Bank of Venezuela (BCV) has activated its website link for enrolling individual bidders within the so-called Register of the Ancillary Foreign Currency Administration System (RUSICAD). The link rusicad.extra.bcv.org.ve/RUSICAD/se provides registration in order to bid for FOREX. Online procedures can be undertaken on weekdays from 8:00 a.m. to 3:00 p.m., according to the Central Bank. (El Universal, 07-06-2013; http://www.eluniversal.com/economia/130706/bcv-activates-link-on-its-website-for-sicad-applicants)

Commodities

Gulf gasoline reached 3-week high on PDVSA plant outage

U.S. Gulf Coast gasoline strengthened to the smallest discount to futures in almost three weeks on speculation that a power failure at a Petroleos de Venezuela, S.A. refinery may boost exports. The discount for conventional, 85-octane gasoline, or CBOB, on the Gulf Coast tightened 0.75 cent to 19.75 cents a gallon versus New York Mercantile Exchange futures at 1:58 p.m., the lowest level since June 18, according to data compiled by Bloomberg. The conventional 87-octane grade gained 1 cent to a discount of 13.75 cents. The differentials shrank after PDVSA’s 355,000-barrel-a-day Curacao plant was hit by the outage yesterday. (Reuters, 07-08-2013; http://www.bloomberg.com/news/2013-07-08/gulf-gasoline-reaches-3-week-high-on-pdvsa-plant-outage.html)

Blackout halted Isla oil refinery in Curacao

A blackout on the Caribbean island of Curacao temporarily halted operations at its 335,000 barrel per day (bpd) Isla oil refinery, workers at the facility said on Sunday. The refinery, which is crucial to the Dutch island nation's economy, is run by Venezuelan state oil company PDVSA. The power cut hit the whole of Curacao, the workers said, including the plant that provides Isla with electricity, water and steam. That plant is operated by the Curacao government. Workers at Isla said power began to return across the island within minutes of the blackout. PDVSA officials were not immediately available to comment on the stoppage. (Reuters, 07-07-2013; http://www.reuters.com/article/2013/07/07/curacao-refinery-idUSL1N0FD06J20130707)

Chemical industry: Production lines are paralyzed by lack of supplies

Juan Pablo Olalquiaga, President of the Chemical and Petrochemical Industry Association says delays up to 180 days in acquiring FOREX have made it impossible to import supplies. "We cannot say companies have stopped, but the situation has caused production lines to stop for lack of supplies", he said - and added that FOREX deliveries have been insufficient to keep operations going in his industry. More in Spanish: (El Nacional; 07-09-2013; http://www.el-nacional.com/)

International Trade

Panama's Martinelli in talks here with Maduro over Venezuelan debts: Venezuela is one of the key importers from Panama's Free Zone and Panamanian President Ricardo Martinelli is currently in Caracas to talk to his Venezuelan counterpart about the heavy debt Venezuelan companies owe the Free Zone. According to Panamanian Foreign Minister Nuñez Fábrega there are "very substantial figures, adding up to hundreds of millions of dollars", and Martinelli will try to "reach some sort of agreement to speed up payments".  More in Spanish: (INFOLATAM: http://www.infolatam.com/2013/07/08/martinelli-discute-con-maduro-deuda-de-empresas-venezolanas/)

116 thousand tons of food await offloading

Port activity during the second week in June show there are 116 thousand tons of primary food at bay on 5 vessels at Puerto Cabello. This includes 81 thousand tons of yellow corn and 25 thousand tons of crude sugar, as well as 1700 tons of toilet paper and 444 tons of base paper. Most of the pending imports have arrived from the United States. More in Spanish: (El Carabobeño; 07-09-2013; http://www.el-carabobeno.com/impreso/articulo/67124/116-mil-toneladas-de-alimentos-esperan-para-ser-desembarcadas)

Politics

Snowden has formally requested asylum in Venezuela: President Nicolás Maduro says he received a formal petition for asylum from Edward Snowden, currently in the transit area of Moscow's Sheremetevo Airport. "We received a letter requesting asylum", said Maduro, and added that Snowden "will have to decide when he flies here." Snowden has also asked Nicaragua for asylum. When asked about possible US reprisals if Snowden is granted refuge, Maduro answers: "The US does not rule the world. We are a free and sovereign nation". The White House has warned that Snowden must not be allowed to any country but the US. More in Spanish: (INFOLATAM)

THE ECONOMIST: A circus without a ringmaster. During the presidency of Hugo Chávez the domineering personality of the "Comandante" left no doubt as to who was in charge of Venezuela. By contrast Chávez’s successor, Nicolás Maduro has yet to convince people that he is the one running the show. His disputed, razor-thin election victory on April 14th undermined his legitimacy (indeed, the Supreme Court has yet to resolve the opposition’s claim of fraud). Now the president faces problems within the ranks of the ruling coalition, and in particular his United Socialist Party of Venezuela (PSUV). In the absence of Chávez, there are worries that the PSUV will turn out to be held together, as the colorful Venezuelan metaphor has it, “with parrot spit”. Managing rival factions has forced the PSUV to suspend internal party democracy and cancel all the primaries that were to have been held ahead of local elections, which have been postponed until December 8th. (The Economist, http://www.economist.com/news/americas/21580477-radicals-former-soldiers-and-cuban-spies-jostle-control-venezuelan-ring-circus)

Maduro replaces entire military high command

Admiral Carmen Melendez has been named Admiral-in-Chief and Minister of Defense, making her the first female to head the country’s Armed Forces, as President Nicolas Maduro replaced the entire military high command. Melendez has several decades of experience, serving as Internal Management Director of the Office of the Presidency. Though she maintained close relations with Chavez, who promoted her to Admiral, Melendez has been described as a military "institutionalist". In 1992, she fought against Chavez’s unsuccessful military coup of President Carlos Andrés Pérez from the San Bernardino Naval Command in Caracas; and in 2002, during a brief coup against Chavez, she remained in the Miraflores presidential palace. She showed discomfort in an interview earlier upon being asked whether she belonged to the United Socialist Party of Venezuela (PSUV), the country’s largest left-wing party founded by Chavez in 2008. “I am an active member of the military,” she responded, explaining that those matters should be left to experts. Maduro later announced the appointment of Admiral Diego Molero Bellavia as ambassador of Venezuela to Brazil. He also announced the appointment of Major general Wilmer Barrientos as minister of the Office of the President and Major general Carlos Alcalá Cordones as head of the Central Region government. (VENEZUELANALYSIS: http://venezuelanalysis.com/news/9816; and El Universal, 07-07-2013; http://www.eluniversal.com/nacional-y-politica/130707/maduro-designates-ex-defense-minister-as-ambassador-to-brazil)

Five arrested for corruption in China Fund: President Nicolas Maduro has announced the arrest of 5 officials presumably responsible for embezzling U$D 84 million from the China-Venezuela Fund and the state owned Economic and Social Development Bank (BANDES). He said the arrests were made during raids after an "investigation which took several weeks". More in Spanish: (INFOLATAM)

Cabello in China: National Assembly President Diosdado Cabello has begun an official visit to China saying "more cooperation among political forces is needed". He met first with his Chinese counterpart, Zhang Dejiang, President of China's Popular National Assembly, and with Wang Jiarui, Director of the International Department of China's Communist Party. Cabello also said China "can count on us as an important supplier of energy", but added: "where we are weakest is in the relationship between political parties, and part of my visit is to strengthen that area". Vice President Jorge Arreaza is expected to visit China within a few days, and President Maduro is scheduled for a visit in September. More in Spanish: (INFOLATAM)

Paraguay will not rejoin MERCOSUR if Venezuela presides

Paraguay's Foreign Minister José Félix Fernández says his country will not rejoin MERCOSUR if Venezuela becomes the groups pro tem chair on July 12. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/paraguay-no-volvera-a-mercosur-si-venezuela-asume-.aspx#ixzz2YXrHjSea)

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

February 22, 2013

Economics & Finance

Recession feared as Giordani blocks easing exchange controls

Experts at the Central Bank fear a recession starting in this quarter, due to the absence of alternate access to foreign exchange. Around 12% of all imports were processed through SITME, now abolished, and are not being met by the Currency Administration Commission, which is now empowered to approve all FOREX requests. They also say that that even if all requests were approved, the Central Bank does not have sufficient international reserves to meet dollar demand. In the meantime, Finance and Planning Minister Jorge Giordani has not yet approved alternate means for allocating FOREX legally, along with the Foreign Exchange Commission (CADIVI), arguing this would mean further devaluation of the Bolivar. Two options remain under study: dollar auctions through the financial system or through the Public Stock Exchange. More in Spanish: (El Nacional, 02-22-2013; http://www.el-nacional.com/)

Reserves down U$D 2.36 billion to date this year

Venezuela's international reserves plunged 8% (U$D 2.36 billion) during the first seven weeks this year, to U$D 27.37 billion on February 19. Reserves are mainly gold, so there is far less cash available for companies to obtain U$ dollars for imports. SINTESIS FINANCIERA reports that Venezuela's liquid or cash reserves are U$D 4.30 billion. Even if authorities thoroughly review FOREX authorizations in an attempt to avoid over-invoicing, available reserves are not enough for an adequate flow of imports or for curbing basic food shortages. (El Universal, 02-21-2013; http://www.eluniversal.com/economia/130221/venezuelas-reserves-down-usd-236-billion-so-far-this-year)

Venezuela among nations holding greatest gold reserves in the world, according to data from the World Gold Council, which indicates it is among the 13 countries with the greatest gold inventories in the world. More in Spanish: (El Mundo, 02-22-2013; http://www.elmundo.com.ve/Noticias/Economia/Industrias/Venezuela-entre-los-paises-con-mas-reservas-de-oro.aspx)

Central Bank sends financial aid to state enterprises... which operate at 50% capacity

The Central Bank is not just aiding PDVSA, it is also funding state enterprises to the tune of VEB 16.9 billion through the end of January, and this financial support rises 9% each month. The bank is printing currency to support the enterprises and cover public sector deficits. In the meantime, according to Roberto León Parilli, President of the National Consumers Alliance, state companies processing precooked corn and rice are either paralyzed or at 50% capacity due to lack of raw material and labor difficulties derived from the new Labor Law. More in Spanish: (El Nacional, 02-22-2013; http://www.el-nacional.com/ and El Universal, http://www.eluniversal.com/economia/130222/crece-la-asistencia-financiera-del-bcv-a-las-empresas-estatales)

Minimum wage purchasing power down 10% due to inflation

According to a report by ECONOMETRICA, prices have risen swiftly since October last year and are eating up the base salary's purchasing power. The report shows an 11.2% jump in inflation from October to January, which means purchasing power at minimum wage levels is down 10%, and says the decrease will rise to 16% by April. More in Spanish: (El Universal, 02-22-2013; http://www.eluniversal.com/economia/130222/inflacion-redujo-10-capacidad-de-compra-del-salario-minimo)

Key legislator denies plans to raise VAT tax, or tax bank withdrawals

National Assembly’s Finance and Economic Development Committee Chairman Ricardo Sanguino discards the possibility of raising the Value Added Tax (IVA, in Spanish) or a tax on bank withdrawals. (Veneconomy, 02-20-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33804&idc=2)

Venezuela has the worst business climate in the region

Venezuela's business climate is the worst in Latin America, according to a joint report produced by Brazilian Getulio Vargas Foundation and the University of Munich. In an Economic Climate Indicator for Latin America dated January, Venezuela made only 1.5 points, below the region's average (5.5 points) and way below ratings for Paraguay and Peru, 7 points. Venezuela's indicator is less than it was at third quarter 2012, when it rated 3.4 points. (El Universal, 02-21-2013; http://www.eluniversal.com/economia/130221/venezuela-with-the-worst-business-climate-in-the-region)

Commodities

VENALUM paralyzed, declares "force majeure"

CVG VENALUM, the state owned aluminum company has been paralyzed for the past 15 days, receiving no metal, due to labor strife that has closed down the administrative area of this industry. The company has declared "force majeure", admitting their inability to meet supply contracts with their clients; and this has in turn paralyzed private sector processing industries such as PIANMECA and SURAL. Metal dispatches stopped on February 7th. More in Spanish: (El Universal, 02-22-2013; http://www.eluniversal.com/economia/130222/venalum-declara-fuerza-mayor-ante-paralizacion)

Debate starts on domestic gasoline prices

Several Cabinet members have called for a public debate on the use and price of gasoline, which remains the same since 1996 and is sold for U$D 0.01 per liter, an amount President Chavez himself termed "ridiculous". At current prices, a cup of coffee is 1,000 times more expensive and a bottled water is 700 times more than a gallon of "premium" 95 octane gasoline. Economists believe the government is preparing to raise gasoline prices in order to reduce the fiscal deficit, estimated at 14-16% of GDP. More in Spanish: (Ultimas Noticias, 02-22-2013; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/se-abre-debate-para-aumento-de-precio-de-la-gasoli.aspx; El Mundo, http://www.elmundo.com.ve/Noticias/Economia/Politicas-Publicas/Analisis---Gobierno-venezolano-rompe-tabu-y-abre-d.aspx)

PDVAL supplies 61% of national food consumption

PDVAL Vice President for Food Production and Distribution, Heber Aguilar, claims "PDVAL dispatches at least 50,000 tons of food monthly, which is 61% of the basic food basket and serves 17 million people nationwide." More in Spanish: (AVN, 02-22-2013; http://www.avn.info.ve/contenido/pdval-abastece-61-del-consumo-nacional-alimentos)

Chavez brother slams "irrational" use of energy

Argenis Chavez, president of Venezuela's National Electrical Corporation (CORPOELEC), points to "an irrational use of energy" in the country, which he attributes to increased demand that puts pressure on the National Electric System (SEN). "We waste much energy in the country. We lack an energy saving culture," Chávez said. (El Universal, 02-21-2013; http://www.eluniversal.com/economia/130221/top-official-reports-irrational-use-of-energy-in-venezuela)

International Trade

Fuel imports from the US rose in November

Data from the US Energy Information Administration reveals US crude and oil derivate exports to Venezuela rose from 2.588 million to 3.338 million barrels in November 2012. The figure does not include information for December. More in Spanish: (El Mundo, 02-22-2013; http://www.elmundo.com.ve/Noticias/Petroleo/Industria/Venezuela-elevo-compras-de-combustible-a-EEUU-en-n.aspx)

Politics

Chavez respiratory infection persists, and tendency is unfavorable

Information Minister Ernesto Villegas announced that President Chavez remains under treatment, saying "the respiratory insufficiency which arose after his operation is persisting and the tendency has not been favorable, so it continues to be treated". More in Spanish: (AVN, 02-22-2013; http://www.avn.info.ve/contenido/ministro-villegas-presidente-ch%C3%A1vez-contin%C3%BAa-tratamiento-sin-efectos-adversos; El Universal, http://www.eluniversal.com/nacional-y-politica/130222/persiste-insuficiencia-respiratoria-del-primer-mandatario)

Venezuela accuses US of meddling...

Venezuela's government is criticizing the U.S. State Department for comments about a possible transition in the country, calling a spokeswoman's remarks an attempt by Washington to meddle in Venezuela's affairs.  U.S. State Department spokeswoman Victoria Nuland referred to the possibility of a new presidential election in Venezuela when asked on Tuesday about ailing President Hugo Chavez's return from Cuba. Nuland noted that if Chavez should "become permanently unavailable to serve, our understanding is that the Venezuelan Constitution requires that there be an election to seek a new president." Ms. Nuland has replied her statement was misinterpreted, saying she was "spelled out what we understand the Venezuelan Constitution says. That's different from whether the president can serve during his term". (Fox News, 02-20-2013; http://www.foxnews.com/world/2013/02/20/venezuela-accuses-us-meddling-with-state-department-comments-about-possible/#ixzz2LZat7ESi; AVN; http://www.avn.info.ve/contenido/venezuela-rejects-us-government-meddling; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/130222/nuland-dice-que-venezuela-interpreto-mal-sus-declaraciones)

... and yet, Ecuador's Correa says Maduro could run Venezuela if Chavez resigned

Ecuador's President Rafael Correa says Hugo Chavez is recovering from cancer surgery, but if he had to step down Vice President Nicolas Maduro would be "extremely capable" of running the nation. Correa told Reuters he thinks Maduro is the right person to take over in Venezuela if the socialist leader needs to step down. "Regardless of who may take charge, my main concern is that Chavez recovers ... but in case he cannot be in charge, Vice President Maduro is extremely capable," Correa told Reuters in an interview. (Reuters, 02-21-2013; http://www.reuters.com/article/2013/02/21/venezuela-chavez-correa-idUSL1N0BL9FQ20130221; El Universal, 02-20-2013; http://www.eluniversal.com/nacional-y-politica/130220/ecuadorian-president-rafael-correa-to-visit-chavez)


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.

December 11th, 2012

Economics & Finance

Economic adjustments on hold

President Hugo Chávez's announcement about another surgery and hint about his possible disability not only changes the political scene, but also economic prospects. Experts had considered devaluation imminent in view of the significant fiscal deficit and pressure on foreign exchange, but now the situation is again unclear. Chavez appealed to Venezuelans to elect Vice President and Foreign Minister Nicolás Maduro should he become absent, which would bring on another election and continued manipulation of the economy. Maduro, speaking at a public event, says exchange controls "can improve and will improve". (El Universal, 12-10-2012; http://www.eluniversal.com/economia/121210/economic-adjustments-on-hold-in-the-current-state-of-affairs; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/nicolas-maduro-dijo-que-se-va-a-mejorar-el-control.aspx)

Venezuelan bonds rally, CDS fall on Chavez successor news

Venezuelan dollar bonds rallied sharply on Monday and debt insurance costs tumbled after the nomination of a successor by ailing President Hugo Chavez raised the prospect of his departure from office after 14 years in power. Venezuelan yield spreads over U.S. Treasuries fell 56 basis points to 758 bps, the narrowest since August 2008, on JP Morgan's EMBI Global index. The most-traded 2027 dollar bond jumped 2.3 cents on the dollar to 101.092. Chavez stunned Venezuela at the weekend with an announcement he had suffered a setback in his long-term battle with cancer and named Vice President and Foreign Minister Nicolas Maduro to take over, should he become incapacitated.

"This is the first time Chavez has been forthcoming on any kind of succession arrangement. With that, expectations are mounting that the Chavez ... rule will be coming to an end in the foreseeable future," said Stuart Culverhouse, head of research at Exotic brokerage in London. (Reuters, 12-10-2012; http://www.reuters.com/article/2012/12/10/venezuela-bonds-idUSL5E8NA8LX20121210; Bloomberg, http://www.bloomberg.com/news/2012-12-09/venezuela-s-chavez-says-he-needs-more-cancer-surgery-in-cuba-1-.html)

Pre-cooked corn flour, sugar, chicken and oil have been missing from market shelves for almost two weeks. Supermarket a personnel explains that providers are delivering fewer quantities and those customers “must get in line and run to get the items.” Street vendors said they overcharge the staples because they must pay more for the products. (Veneconomy, 12-10-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33161&idc=3)

A drop in operative international reserves forced the government to repatriate gold –a non-operative reserve- betting on the increase in the price of the metal, in order to later sell it due to a decline of liquid reserves, says economist Francisco Ibarra, who relies on studies that show the Central Bank’s monetary funds are at minimum levels. (Veneconomy, 12-10-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33160&idc=2)

Commodities

Oil exports averaged U$D 97.72/bbl. this week, up U$F 0.62/bbl. from last week (U$D 97.10/bbl.), says the Ministry of Oil and Mining. This year’s average to-date is U$D 103.82/bbl., more than twice the U$D 50/bbl used to estimate the 2012 budget. (Veneconomy, 12-07-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33145&idc=4)

International Trade

Venezuela’s formal entry into MERCOSUR took place during the bloc's presidential summit in Brasilia. The protocol that was signed by President Chávez and the presidents of Argentina, Brazil, Paraguay and Uruguay in Caracas in 2006 was published in the Official Daily of the Union. Venezuela's representative at the meeting is Oil Minister Rafael Ramírez. (Veneconomy, 12-07-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33144&idc=3)

Politics

Chavez back to Cuba for cancer treatment

President Hugo Chavez left for Cuba early on Monday for another round of cancer surgery, two days after he said tests showed "malignant cells" had appeared in the same part of the body where he had earlier undergone operations. Information Minister Ernesto Villegas said Chavez's Havana-bound plane had left Caracas at about 1:30 a.m. (0600 GMT). On Saturday, Chavez said he would undergo another operation in the coming days. "Unfortunately, during these exhaustive exams they found some malignant cells in the same (pelvic) area" he said then. "It is absolutely necessary, absolutely essential, that I undergo a new surgical intervention." He enthusiastically said "always towards victory. Long live the homeland!," attempting to send a calming message to Venezuelans. As he left for Havana he made it clear he was not turning over the presidency, but simply delegating his powers. He also formally swore in (Reuters, 12-10-2012; http://www.reuters.com/article/2012/12/10/venezuela-chavez-idUSL1E8NA0Y920121210; http://www.reuters.com/article/2012/12/10/us-venezuela-chavez-idUSBRE8B90CB20121210; El Universal, http://www.eluniversal.com/nacional-y-politica/121210/president-chavez-sets-off-for-havana; AVN, 12-10-2012; http://www.avn.info.ve/contenido/chavez-always-towards-life; CNN, http://edition.cnn.com/2012/12/10/world/americas/cuba-chavez/index.html?iref=allsearch; Fox News, http://www.foxnews.com/world/2012/12/08/venezuela-chavez-says-cancer-back-plans-surgery/; The Washington Post, http://www.washingtonpost.com/world/venezuelan-president-hugo-chavez-anoints-successor-and-heads-to-cuba-for-surgery/2012/12/09/ee8f9b9a-4220-11e2-8c8f-fbebf7ccab4e_story.html; and more in Spanish: El Universal; http://www.eluniversal.com/nacional-y-politica/121211/chavez-dice-que-no-entrega-el-mando-politico-sino-lo-delega)

Maduro is acting head of State

The National Assembly has once again rejected the term "temporary absence" in reference to the absence of President Hugo Chávez, who returned to Cuba to undergo cancer treatment. However, both the manner in which the leader spoke of trip to Cuba and the fact that he appointed Vice-President Nicolás Maduro as his political successor clearly indicate he has handed over all his powers. José Peña Solís, a former member of the Venezuelan Supreme Court says" "This time it is different from what has happened before. The president considered a scenario in which he may end up being physically or mentally unable to be in office. Thus, this time there are more reasons to believe that the Presidency is vacant and, therefore, Vice-President Maduro must fill that position". (El Universal, 12-10-2012; http://www.eluniversal.com/nacional-y-politica/121210/former-justices-maduro-is-the-acting-head-of-state; Reuters, 12-09-2012; http://www.reuters.com/article/2012/12/09/us-venezuela-chavez-maduro-idUSBRE8B806V20121209; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=654971&CategoryId=10718; Bloomberg, http://www.bloomberg.com/news/2012-12-09/venezuela-s-chavez-says-he-needs-more-cancer-surgery-in-cuba-1-.html; CNN, http://edition.cnn.com/2012/12/09/world/americas/venezuela-maduro/index.html?iref=allsearch)

Chávez took the first step towards his substitution, according to DATANÁLISIS President Luis Vicente León, who says Chavez did just what he ought to do. "I believe his message was clear and accurate. That is the first step towards his substitution," León remarked and added that by doing so Chávez staves off division within the revolutionary ranks. (El Universal, 12-10-2012; http://www.eluniversal.com/nacional-y-politica/121210/analyst-chavez-took-the-first-step-towards-his-substitution)

Everything set for Sunday regional elections

Carlos Quintero, Director of information technology of the National Electoral Council, has announced that "all technical, logistic and operational elements are ready" for regional elections December 16. Audits ended last Sunday, Dec. 09, when experts tested the running of the voting system. (AVN, 12-10-2012; http://www.avn.info.ve/contenido/everything-set-sunday-regional-elections)



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.