August 16, 2013

Economics & Finance

Maduro names third Central Bank president this year

President Nicolas Maduro appointed the third central bank president this year as his regime seeks to rein in the fastest inflation among the world’s major economies. Eudomar Tovar, a former central bank vice president and head of state currency board, was nominated by Maduro and approved by the National Assembly yesterday, the Information Ministry said in an e-mailed statement. “Tovar will give more coherence to economic decision-making because his vision is very close to that of Finance Minister Nelson Merentes,” Alejandro Grisanti, economist at Barclays Plc, said by phone from New York. (Bloomberg, 08-14-2013; http://www.bloomberg.com/news/2013-08-13/venezuela-names-third-central-bank-president-this-year.html)

BBVA believes Venezuela's economic outlook is the worst in the region

Studies by the BBVA Spanish banking group on the "Venezuela situation" and the "Latin America situation" show this nation has the worst economic outlook in the region. The banking group is projecting that Venezuela's economy will drop by 0.4% this year, and prices will rise by 43.9%, which will lead the nation into a cycle of stagflation which will be hard to overcome. "This poor economic situation is a huge challenge to authorities, and could even become an economic trap". BBVA holds shares in banks throughout the region, and is deeply familiar with it. More in Spanish: (El Universal, http://www.eluniversal.com/economia/130816/para-bbva-venezuela-tiene-las-peores-perspectivas-de-la-region)

Survey shows stagnating industrial activity

According to a survey by the National Council of Industries (CONINDUSTRIA) Industrial production dropped to slightly over 54% in the 2Q 2013. According to their poll, only non-metallic minerals activity grew. The seven remaining areas, including textiles, chemicals and foodstuffs plunged. Political uncertainty, foreign currency in short supply and scarcity of raw materials are the main hurdles for industrialists. "Stocks diminished in all sectors," says CONINDUSTRIA President Eduardo Garmendia. (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/survey-shows-stagnated-industrial-activity-in-venezuela)

Bank of America recommends investment in Caracas stock exchange

In his latest report on Venezuela's economy, Francisco Rodríguez, a Bank of America analyst, says foreign companies should consider investing a portion of the dividends they cannot repatriate in listed shares at Caracas stock exchange. "We think that the Venezuelan exchange system is unsustainable and we believe than sooner or later the government will have to accept a viable mechanism to repatriate dividends." (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/bank-of-america-recommends-investment-in-caracas-stock-exchange)

Commodities

PDVSA has had 15 events at refineries over the last 105 days

A minor fire that hit last Tuesday night a unit of Cardón refinery, located in Paraguaná, is the third major event in the refining circuit within three days and underlines deteriorated maintenance in plants at state-run oil holding Petróleos de Venezuela (PDVSA). The flames at Cardón struck the High Vacuum Unit 3 (AV-3) and caused "slight injuries" to two workers. Refinery workers said the event took place once the AV-3 tower had been fed. The flames appeared on top in the tower. The fire was easily put up by closing the "large residue" input. (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/pdvsa-has-experienced-15-events-in-refineries-in-the-past-105-days; Reuters, http://www.reuters.com/article/2013/08/14/venezuela-refinery-idUSL2N0GF0CA20130814)

Electricity emergency extended for 90 days

The state of emergency within Venezuela's electrical grid was extended by decree for 90 days starting July 21, 2013. The official statement says ""while an outstanding effort has been made by several parties within the national electrical grid to enlarge generation and diminish blackouts, some more work is needed to overcome the state of emergency, taking steps to improve the system reliability." (El Universal, 08-15-2013; http://www.eluniversal.com/economia/130815/electricity-emergency-in-venezuela-extended-for-90-days)

Over a million tons of food distributed over four months

Manuel Barroso, President of the Corporation for Supplies and Agricultural Services (CASA) says they have sent over a million tons of food to distribution networks and stores over the past four months. He also said two processing plants are currently packaging milk to supply state-run institutions and private companies nationwide. (AVN, 08-14-2013; http://www.avn.info.ve/contenido/one-million-tons-food-distributed-four-months)

Politics

Maduro says he will overhaul government, requests special powers

President Nicolás Maduro has said he will organize a team to overhaul all of the ministries. "We are going to completely overhaul the national government's organization", and asked Cabinet members to point out inefficiencies and corruption. He also insisted on the need to seek special powers from the National Assembly in order to fight corruption. His aim is to reform laws so that "maximum penalties" are applied in such cases. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Maduro will travel to China

President Nicolás Maduro announced he will soon travel to China to meet with Chinese President Xi Jinping and "ratify our complete alliance on all areas of economic, social, cultural, political, technological and diplomatic cooperation". (AVN, 08-16-2013; http://www.avn.info.ve/contenido/maduro-planea-viajar-china-para-ratificar-alianza-estrat%C3%A9gica-e-hist%C3%B3rica)

Colombia-Venezuela Border Commission has been re-launched and will meet in Bogotá next September 2nd for the first time since 2009. The meeting will allow members to become acquainted with each other and evaluate the possibility of renewing talks on fixing maritime and submarine boundaries and other matters. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/130816/reactivan-la-comision-de-limites-colombo-venezolana)

Venezuela politics soiled by sordid claims, gay slurs

From allegations of gay and transvestite prostitution rings to homophobic slurs flying in the National Assembly, Venezuela's polarized politics has taken a distasteful turn. With tempers fraying as President Nicolas Maduro vows to crack down on corruption, pro-government lawmakers demanded this week that their opposition rivals be investigated for, among other things, money laundering and cocaine trafficking. (Reuters, 08-15-2013; http://www.reuters.com/article/2013/08/15/us-venezuela-sleaze-idUSBRE97E13O20130815; The Washington Post, http://www.washingtonpost.com/world/the_americas/governing-party-legislator-hurls-homophobia-laced-attack-against-venezuelas-opposition/2013/08/14/235a9948-0548-11e3-bfc5-406b928603b2_story.html)

Spanish gov't amenable to dialogue with Venezuela

The Spanish government is insisting on clearing the way for an agreement with the Venezuelan government and says it respects State's right to nationalize businesses, provided that international law is observed and the appropriate fair price is paid. (El Universal, 08-14-2013; http://www.eluniversal.com/nacional-y-politica/130814/spanish-govt-amenable-to-dialogue-with-venezuela)


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.

August 13, 2013

Economics & Finance

Government ogles Chavez’s hidden billions as reserves sink

Venezuela’s dollar-denominated bonds are trouncing the returns of the riskiest emerging-market borrowers as the government moves to gain greater control of U$D 25 billion held at state-run companies. Government notes have returned 1.63% since the government published rules July 29 that require state oil company Petroleos de Venezuela, S.A. and other public institutions to report dollar holdings to the central bank and obtain authorization to keep them. That compares with a 0.36% average gain for speculative-grade notes from 37 developing nations tracked by JPMorgan Chase & Co. (Bloomberg, 08-09-2013; http://www.bloomberg.com/news/2013-08-09/venezuela-ogles-chavez-s-hidden-billions-as-reserves-sink.html)

Central Bank gains drop more than 50% in the first semester
According to its balance, Central Bank gains during the first semester dropped by more than 50% to VEB 7.85 billion, far less than 2012 results which were VEB 17.18 billion. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ganancias-del-bcv-cayeron-con-fuerza-en-el-primer-.aspx#ixzz2bqVXLe7I)

Stock market Up 172%

Venezuela’s stock market rose 1% for the week ending August 9, with the Caracas Stock Index closing at 1,281,608, a new all-time high. Volume picked up as banking stocks continue to attract buyers. Paper and real estate company MANPA gained 5.9% at Bs. 9, Banco de Venezuela rose 4% at Bs. 26, Fondo de Valores Inmobiliarios (FVI) gained 2.1% at Bs. 12, and Mercantil Servicios Financieros B rose 1.46% at Bs. 146, with the class A shares closing at the same price for a gain of 0.25%. Banco Provincial rose 1.1% at B.s 26. Steel company SIVENSA was the lone stock to go down, closing at Bs. 25, for a loss of 7.4%. (Latin American Herald Tribune, 08-11-2013; http://www.laht.com/article.asp?ArticleId=935555&CategoryId=10717; El Universal, http://www.eluniversal.com/economia/130812/caracas-stock-exchange-accrues-197-hike-in-2013)

Up to 75% of business profits taken by taxes and special contributions

FEDECAMARAS Vice President Carlos Larrazábal says private companies are burdened by 22 different taxes, which include ordinary taxes plus contributions to special Government funds aimed at promoting  among others - sports, tourism, science and technology, the Telecommunications Commission, the Law on Drugs, and - most recently - culture. He said this tax burden, which takes an average 60-75% of profits, makes it more expensive to produce in Venezuela and harms competitiveness, More in Spanish: (El Nacional, 08-13-2013; http://www.el-nacional.com/)

Commodities

PDVSA refinery operations not affected after blaze

A fire set by a lightening bolt on a reservoir at Puerto La Cruz oil refinery on Sunday was extinguished in a record time and operations in the facility were not affected at any moment, says PDVSA's vice president for refining Asdrubal Chavez. He denied there would be any negative effect on oil supply or any oil derivative because of the accident. "All plants are working as usual," he stressed. The fire was set about 14:30 hours on Sunday after a reservoir within the refinery was struck by lightning, though was not reported any injured nor damaged to the industry or nearby communities. (AVN, 08-12-2013; http://www.avn.info.ve/contenido/pdvsa-refinery-operations-not-affected-after-blaze; http://www.avn.info.ve/contenido/experts-attend-fire-refinery-president-maduro-alert; El Universal, http://www.eluniversal.com/economia/130812/fire-in-puerto-la-cruz-refinery-under-control; Reuters, http://www.reuters.com/article/2013/08/12/us-venezuela-refinery-idUSBRE97A0E220130812; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=35844&idc=4; Fox News Latino, http://latino.foxnews.com/latino/news/2013/08/12/refinery-fire-leads-to-evacuations-in-eastern-venezuela/)

And a power failure at El Palito Refinery

PDVSA informed that a power failure as a result of the rains had caused a shut-down of operation in the processing units of the refinery. PDVSA assured fuel inventories are at optimal levels which guarantees gas and by-products supplies to the 10 states in the mid-western region of the country it covers. (Veneconomy, 08-12-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=35843&idc=4)

PDVSA seeks ways to raise oil output

Having the largest certified reserves of oil in the world has been of little use to Venezuela in significantly raising oil production after years of procrastination. Now, authorities at state-run oil holding Petróleos de Venezuela (PDVSA) are seeking ways to increase production through new schemes to secure funds and partnerships with private parties. It offers a "new contracting scheme, backed by a secured trust" in order to upgrade more than 1,000 wells in Lake Maracaibo where oil production has plummeted. Private companies will be entrusted with laying pipeline, changing pumps and repairing drilling rigs. They will have available technical information on the wells. (El Universal, 08-12-2013; http://www.eluniversal.com/economia/130812/pdvsa-goes-in-quest-of-mechanisms-to-lift-oil-output)

Venezuela oil slips slightly to U$D 104.80

Venezuela's weekly oil basket fell 10 cents to U$D 104.80 as oil prices traded listlessly in international markets. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending August 9 was down from the previous week's U$D 104.90. (Latin American Herald Tribune, 08-10-2013; http://www.laht.com/article.asp?ArticleId=932340&CategoryId=10717)

Electricity emergency extended for 90 days in Venezuela

Communications and Information Minister Delcy Rodríguez has reported the approval of a decree extending the state of emergency in the national electrical grid for additional 90 days. The new term started July 23rd. (El Universal, 08-12-2013; http://www.eluniversal.com/economia/130812/electricity-emergency-extended-for-90-days-in-venezuela)

Govt. creates commission for marketing products of state-owned companies

Industries Minister Ricardo Menendez, has announced the creation of a Commission for marketing products of state-owned companies in order to provide greater transparency when selling products extracted by companies of the Guayana Venezuelan Corporation (CVG). "This Commission complies with the steps by President Nicolas Maduro in the relentless campaign against corruption. This is about bringing order to the marketing system of our companies," he said after meeting with the president of the CVG, Carlos Osorio, and the senior management of the aluminum and steel companies. (AVN, 08-12-2013; http://www.avn.info.ve/contenido/govt-creates-sovereign-commission-marketing-state-owned-companies)

International Trade

Venezuela, Colombia set up bilateral committee on infrastructure

According to Foreign Minister Elias Jaua: "Everything we agreed upon at the Venezuela-Colombia binational committee has been started up positively and with much impetus," who met with his Colombian counterpart María Ángela Holguín, in Guasdualito, Apure state, in southwest Venezuela, where the two diplomats opened the El Amparo customs office. Jaua also announced a joint committee on infrastructure would be established during the meeting in order to improve roadways uniting the two nations and combat smuggling on the border. (El Universal, 08-09-2013; http://www.eluniversal.com/nacional-y-politica/130809/venezuela-colombia-set-up-bilateral-committee-on-infrastructure)

PDVSA to supply additional 15 million liters of gasoline to Colombia

Pro-government legislator Nellyver Lugo, chairperson of the National Assembly's Committee on Politics, Security, Human Rights, and Borders, says Colombia and Venezuela will reestablish the Ecopetrol-Pdvsa Agreement on exports of Venezuelan fuel to the Colombian Department Norte de Santander. "More than 15 million liters of fuel will be sent to the neighbor country, in addition to nearly 25 million liters the international gas stations supply", she noted. (El Universal, 08-09-2013; http://www.eluniversal.com/economia/130809/pdvsa-to-supply-additional-15-million-liters-of-gasoline-to-colombia)

Politics

Maduro to declare national emergency, seeks special powers to fight corruption

President Nicolás Maduro has just announced he will ask the National Assembly to grant him special powers to modify laws in order fight corruption and expects to declare a state of national emergency. "As President and head of state I am going to call for a national emergency in the fight against corruption and am going to seek special powers to reform laws and change institutions in order to have an in depth combat". More in Spanish: (El Universal, 08-13-2013; http://www.eluniversal.com/nacional-y-politica/130813/maduro-pedira-poderes-especiales-contra-corrupcion)

THE ECONOMIST: Corruption in Venezuela - The billion dollar fraud

When it comes to corruption, Venezuela has long languished near the bottom of the international league table. According to the latest index of perceptions of corruption compiled each year by Transparency International, a Berlin-based watchdog, only eight out of the list of 176 countries were seen as more graft-ridden. President Nicolás Maduro says fighting corruption is a priority for his government.

• One of the biggest cases concerns FERROMINERA, a state-owned iron-ore miner and processor in the south-eastern state of Bolívar. Documents from a military-intelligence investigation revealed scams worth an astonishing U$D 1.2 billion, including sales of ore to intermediaries at a fraction of its real value in exchange for huge kickbacks.
• With the black-market rate for the dollar currently more than five times the official rate of 6.3 Bolívars, the amount of money that can be made from fraudulent import schemes is colossal. Last year CADIVI handed over U$D 59 billion in all. But Jorge Giordani, the planning minister, and Edmée Betancourt, the Central Bank governor, say up to a third of that could have been funneled to fake companies. Ms Betancourt put “artificial demand” at U$D 15 billion-20 billion.
• In a leaked audio tape, Mario Silva, a presenter on state television and a Cuban agent, enumerated the sources of illicit finance he said were available to Diosdado Cabello, speaker of parliament and leader of the ruling socialist party. They included the tax authority, headed by Cabello’s brother, and CADIVI. Cabello dismissed the audio tape as a fake, the public prosecutor has yet to investigate and Silva lost his job. Cabello has refused to allow any parliamentary debate on several recent multi-million-dollar corruption scandals.
• Otto Reich, a former State-Department official, last month sued DERWICK ASSOCIATES, a firm whose partners are Venezuelans, for defamation. Reich also claims that the company paid large bribes to Venezuelan officials to obtain contracts to build power stations.

“There are no untouchables,” declares President Maduro. So far few have been touched. (The Economist: From the print edition: The Americas: http://www.economist.com/news/americas/21583252-evidence-huge-rip-offs-heart-bolivarian-revolution-has-unleashed-political)


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 21, 2013

Economics & Finance

Central Bank plans expanded dollar auctions

Venezuela will boost supplies of dollars to importers as it seeks to alleviate a shortage of goods that is fueling the fastest inflation in the region, central bank director Armando Leon said. “In the next two months, the supply of goods and services should normalize,” Leon said. Inflation will slow from May, when consumer prices climbed a record 6.1% in the month, he said. The U.S. currency will be offered through auctions that will begin early in the second half of the year, Leon said. Unlike an earlier system, which was abandoned after one sale in March, small and medium-sized companies as well as individuals will be allowed to enter bids, he said. (Bloomberg, 06-19-2013; http://www.bloomberg.com/news/2013-06-18/venezuela-to-boost-dollar-sales-to-aid-imports-leon-says.html)

Obtaining US dollars can take up to 208 days in Venezuela

Despite official announcements and promises the FOREX market still faces a bleak outlook. Obstacles in the sale of US dollars have limited business performance. According to a survey conducted by the Venezuelan Confederation of Industries (CONINDUSTRIA) it can take up to 208 days to acquire US dollars. A poll of 400 industrialists shows some "13% said delays in CADIVI (the Foreign Exchange Administration Commission) in providing US dollars amounted to 61-120 days, 40% said it takes around 121-200 days, and 47% said delays were over 200 days." (El Universal, 06-20-2013; http://www.eluniversal.com/economia/130620/sales-of-us-dollars-said-to-take-nearly-208-days-in-venezuela)

Inventories down 23% in Q1 2013

Difficulties in acquiring FOREX have forced business to lower inventories during the first quarter this year, leading to a 23% reduction, according to ECOANALITICA, which says that this translates into a 20% scarcity level according to official data from the Central Bank. More in Spanish: (El Universal, http://www.eluniversal.com/economia/130621/23-bajaron-los-inventarios-en-el-primer-trimestre-del-ano; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/exportaciones-caen-28--en-el-primer-trimestre-del-.aspx)

BARCLAY's expects a U$D 6 billion bond issue by September
BARCLAY's Capital is projecting that a bond issue for U$D 6 billion will be tendered by September. Their report says: "Based on adjusted cash flow projections, we expect a new U$D 6 billion bond issue in September or the last quarter this year". It goes on to say that cash flows may become normal in 2014, on the basis of high oil prices and an increase in flows coming from China. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/preven-emision-de-bonos-por--6-000-millones-para-s.aspx#ixzz2WqaVkeRP)

Chances for “a social crisis” increase as decisions on FOREX policy are deferred, warns DATANALISIS Director Luis Vicente León. He also says that the lack of timely action has diluted initial optimism over the appointment of Nelson Merentes and meetings between the government and the private sector. (Veneconomy, 06-20-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=35192&idc=2)

Top tax collection official detained in alleged corruption case

A top official at Venezuela’s tax collection agency has been arrested on suspicion of corruption and cash worth hundreds of thousands of dollars was seized from an apartment, President Nicolas Maduro said Thursday. Maduro said in televised comments that the National Tax Administration official was detained Wednesday evening. (The Washington Post, 06-20-2013; http://www.washingtonpost.com/world/the_americas/top-tax-collection-official-detained-in-venezuela-in-alleged-corruption-case/2013/06/20/c22c86c2-d9f5-11e2-b418-9dfa095e125d_story.html; Fox News, http://www.foxnews.com/world/2013/06/20/top-tax-collection-official-detained-in-venezuela-in-alleged-corruption-case/)

Commodities

Energy minister claims power failures are down by 50% in Venezuela

Electric Power Minister Jesse Chacón says energy consumption has been brought down to "levels reported a year earlier." He announced that 600 megawatts (MW) have been added to the grid. The target is to add 1,000 MW in 100 days. The Minister claims power failures have been reduced by 50%. (El Universal, 06-19-2013; http://www.eluniversal.com/nacional-y-politica/130619/energy-minister-claims-power-failures-are-down-by-50-in-venezuela)

RUSORO seeks accommodation with the Government

RUSORO Mining has invited the government to sit down to reach a negotiated agreement over their mining operations in Venezuela, and say they are willing to drop the suit they have brought at ICSID calling for a U$D 3.033 billion indemnity for damages. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/mineria/rusoro-extiende--la-mano-al-gobierno-para-negociar.aspx#ixzz2WqaABlaj)

Upset about the price of gasoline? Get some perspective here

Think gasoline is expensive? It’s all relative. The cost of filling up the 39-gallon tank of a Chevrolet Suburban in Turkey is U$D 389.22, while in the U.S. it’s U$D 137. In Venezuela, it’s just U$D 1.56. The price of gas is one of the most universal complaints -- whether it’s teeth gnashing at the water cooler or deadly protests on the streets. This week, we’ve launched new data visualization about the price of gas around the world that shows which countries are most justified in their laments. Hint to my fellow Americans: We’re not even close. (Bloomberg, 06-21-2013; http://www.bloomberg.com/news/2013-06-21/upset-about-the-price-of-gasoline-get-some-perspective-here.html)

International Trade

Non-oil exports hit lowest level since 2009

Non-oil exports fell in March to their lowest level since early 2009 in another sign of the economic problems accruing for President Nicolas Maduro's fledgling government. For decades, successive governments have decried the OPEC nation's over-dependence on oil - but done little to put into practice the grandiose words about diversifying the economy. The latest official data shows non-oil exports fell to U$D145 million in March of this year, 37% lower than during the same month in 2012. The only time monthly exports have been lower since 1997 when statistics started being kept, was U$D 144 million in 2009. (Reuters, 06-20-2013; http://www.reuters.com/article/2013/06/20/venezuela-economy-idUSL2N0EW1XO20130620)

Logistics & Transport

Discounted rates for importers apply only to port charges

Confusion set in within the maritime community four days after a resolution went into effect offering a 30% discount to all shippers arriving into Venezuelan ports. The mix up is because the announcement posted on the Bolivarian Port Authority's web page on the reduction of tariffs and rates does not make it clear that the change does not apply to payment for services. It is reported that "for the use of surface, grain carriers are paying U$D 6.30, with no discount. Many calculate costs based on the offer by the Port Authority, but when actual port operators are asked they verbally tell you it is a mistake." More in Spanish: (El Carabobeño, 06-21-2013; http://www.el-carabobeno.com/impreso/articulo/64912/descuento-a-importadores-solo-se-aplicar-al-pago-de-tasas-portuarias)

Politics

Diosdado Cabello: Any move against Maduro will be considered a declaration of war

National Assembly Speaker Diosdado Cabello, who is also first vice-president of PSUV ruling party, says there is still a long way ahead for "Chavismo" under the leadership of President Nicolás Maduro, and threatened that "any move" against the president by dissenters "shall be considered a declaration of war."
"There is a long way ahead for "Chavismo". If the right wing attempts any move against Maduro, it will be a declaration of war; we will take over the streets and take any actions we deem necessary," says Cabello. He went on to say the ruling party has identified each person who did not vote for Maduro in the past election and told government supporters to go out and knock on their doors. (El Universal, 06-20-2013; http://www.eluniversal.com/nacional-y-politica/130620/congress-speaker-any-move-against-maduro-will-be-a-declaration-of-war)

Analysis: Rough honeymoon for Chavez's successor in Venezuela

Wearing sports gear in the national colors and sitting on a sofa in a modest family home, President Nicolas Maduro holds a microphone, chats with locals and expounds on the benefits of socialism. Variations of the scene - on a factory floor, playing soccer in the presidential palace or walking the plains with farmers - play daily on national TV as Hugo Chavez's successor makes "Gobierno en la Calle," or "Street Government," the chosen slogan of his rule. Almost constantly on the road since being elected in April, Maduro has launched a plethora of new schemes, from raising the minimum wage to sending soldiers into city slums to fight crime. (Reuters, 06-20-2013; http://www.reuters.com/article/2013/06/20/us-venezuela-maduro-analysis-idUSBRE95J0KQ20130620)

Opposition alliance hopes US-Venezuela ties benefit  Venezuelans

After a meeting with US Assistant Secretary for Western Hemisphere Affairs Roberta Jacobson, Ramón Guillermo Aveledo, Executive Secretary of the opposition Democratic Unity Conference said the coalition was pleased to see Venezuela-US relations going back to normal, calling it a positive step. At the same time he emphasized that this move does not mean Venezuela's internal affairs are also back to normal. He pointed to several issues the country is facing: human rights violations, economic crisis, shortage, lack of response to challenges at the Supreme Court over April 14 election, and the whole entire crisis. (El Universal, 06-20-2013; http://www.eluniversal.com/nacional-y-politica/130620/opposition-alliance-hopes-us-venezuela-ties-are-useful-for-venezuelans)

Maduro claims European tour yielded excellent results for the country

President Nicolas Maduro says his tour of European nations has provided excellent results for the nation.

• In Italy, Maduro called on Pope Francis I and visited with Italian President Georgio Napolitano. He promised Italians "Venezuelan energy" for the next 50 to 100 years, after reviewing joint ventures with Italy's ENI, which call for producing up to 240,000 barrels of oil, and investments over U$D 15 billion to produce another 340,000 barrels in Northern Anzoátegui state. He said they would work with Italian companies to produce food in Venezuela.
• In France, he met with President François Hollande and proclaimed their determination to forge a “strategic alliance” between the two countries. Maduro described his meeting with Hollande as “very productive,’ and said that a follow-up on the results achieved by the two presidents on bilateral subjects is scheduled for July in Caracas.  Negotiations with RENAULT were also reported.
• During a meeting with Portugal's Prime Minister Pedro Passos Coelho he signed 14 bilateral cooperation agreements on food, health, culture, tourism and solid waste collection. The pacts include consolidating a financial partnership with Banco Internacional do Funchal, SA and Banco Espirito Santo, for expansion of their services in Venezuela; as well as the Portuguese cooperation in building a new Caracas-La Guaira freeway connecting Maiquetía airport to the Cota Mil highway that borders the north of Caracas. Also, a deal was made to buy 100,000 tons of frozen food in order to meet shortages.

(Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=813697&CategoryId=10717; El Universal, 06-19-2013; http://www.eluniversal.com/nacional-y-politica/130618/venezuela-portugal-agree-on-construction-of-caracas-la-guaira-freeway; AVN, 06-20-2013; http://www.avn.info.ve/contenido/european-tour-yielded-excellent-results-country-maduro-says; and more in Spanish: El Universal; http://www.eluniversal.com/economia/130621/maduro-garantiza-energia-a-italia-por-los-proximos-100-anos; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/italia-producira-alimentos-para-venezuela-a-cambio.aspx#ixzz2WqZWaDLN; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/italia-producira-alimentos-en-venezuela-a-cambio-d.aspx)


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 26, 2013

Economics & Finance

Treasury needs an additional U$D 53 billion, says ECOANALITICA

A recent report by the ECOANALITICA research firm shows that the government needs U$D 53 billion, in addition to oil and tax income, in order to meet its current obligations. The firm estimates the gap can be covered through further indebtedness and by using money available in parallel funds, such as the National Development Fund, which is managed by the national treasury, but it warns that buffer funds that are outside the formal budget dropped by 35.3% last year. More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/economia/130426/calculan-que-el-fisco-necesita-53-millardos-adicionales)

Only U$D 638 million available for imports so far this year, 50% drop in imports estimated

Companies in Venezuela are being hit by a severe scarcity of FOREX badly needed for importing raw materials, spare parts, and finished products essential to the domestic supply chain. So far this year only U$D 638 million have been provided to the private sector through the Foreign Currency Administration Commission (CADIVI), as well as the former Transaction System for Foreign Currency Denominated Securities (SITME), and its substitute Ancillary Foreign Currency Administration System (SICAD). The meager supply of FOREX has meant lower stocks and more shortages nationwide. The National Trade and Services Council (CONSECOMERCIO) estimates there has been a 50% drop in imports during Q1 2013, based on data from national ports. There are only 10,000 companies registered within the exchange control system, this is 1.2% of all companies operating nationwide. (El Universal, 04-25-2013; http://www.eluniversal.com/economia/130425/only-usd-638-million-sold-under-alternative-mechanisms-this-year; and more in Spanish: http://www.eluniversal.com/economia/130426/consecomercio-estima-caida-de-50-en-las-importaciones; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/consecomercio-falta-de-divisas-tiene-paralizado-al.aspx)

New central bank's head to face inflation and nose-diving reserves

Former Trade Minister Edmée Betancourt is slated to become the next president of the Central Bank of Venezuela (BCV) upon being nominated to the National Assembly by President Nicolás Maduro. The Bank has become an appendage of the President's Office which prints bills to finance state-owned companies, fosters the unlimited growth of currency to provide the sense of a booming economy, and transfers the nation's international reserves to the National Development Fund (FONDEN) -which is managed by the president.
Under these conditions, Betancourt's doesn't seem likely to encourage a reform aimed at reversing practices. As a result investment banks such as Barclays Capital have reported to their clients that Betancourt's nomination is not a good signal for the economy. (El Universal, 04-24-2013; http://www.eluniversal.com/economia/130424/new-central-banks-head-to-face-inflation-and-nose-diving-reserves)

S&P revises outlook on Venezuela’s PDVSA to negative

Standard & Poor’s Ratings Services revised its outlook on Petroleos de Venezuela S.A. (PDVSA) to negative from stable. At the same time, the agency affirmed its ‘B+’ foreign and local currency ratings on PDVSA.
In accordance with the agency’s criteria on government-related entities and assuming no changes in the current likelihood of extraordinary support from the government, the outlook revision on PDVSA reflects the fact that a potential downgrade of Venezuela would lead to a similar rating action on the company. This is due to the agency’s assessment that there is an almost certain likelihood that the government would provide timely and extraordinary support to PDVSA, in case of financial distress. (Latin American Herald Tribune, 04-23-2013; http://www.laht.com/article.asp?ArticleId=756553&CategoryId=10717)

... as well as on CORPOELEC

Standard & Poor’s Ratings Services revised its outlook on Corporacion Electrica Nacional S.A. (CORPOELEC) to negative from stable. At the same time, the agency affirmed its ‘B’ corporate credit rating on the company. The outlook revision follows the April 19 outlook revision on Venezuela (B+/Negative/B). (Latin American Herald Tribune, 04-23-2013; http://www.laht.com/article.asp?ArticleId=757627&CategoryId=10717)

Devaluation hits multinational companies quarterly profits, as at least seven major firms in different areas have listed Venezuela and its weakened currency as the cause for losses or reduced earnings. More in Spanish: (El Mundo, 04-26-2013; http://www.elmundo.com.ve/Noticias/Economia/Empresas/Devaluacion-afecta-ganancias-trimestrales-de-empre.aspx)

Maduro announces Special ALBA-MERCOSUR productive investment economic areas

At a meeting yesterday, President Nicolás Maduro announced the government would establish special economic areas in several parts of the country in order to foster domestic production and exports. More in Spanish: (VTV, 04-26-2013; http://www.vtv.gob.ve/articulos/2013/04/25/presidente-maduro-anuncia-zonas-especiales-de-inversion-productiva-alba-mercosur-472.html; AVN; http://www.avn.info.ve/contenido/maduro-debemos-avanzar-hacia-expansi%C3%B3n-fuerzas-productivas-del-pa%C3%ADs)

Government will create a national fund for FOREX savings

President Maduro also announced his government is moving toward creating a national fund for savings in foreign currency, under special conditions to attract investment and seek capital repatriation. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/ejecutivo-crear%C3%A1-fondo-nacional-ahorros-divisas; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maduro-plan-de-inyeccion-de-divisas-comenzara-el-2.aspx)

Commodities

Govt plans to bolster energy industrialization

Newly appointed Electricity Minister Jesse Chacon says the Government will bolster industrialization within the nation's electric sector aiming to manufacture tools and supplies to meet the domestic demand and even export to foreign markets. He added that the midterm goal is to "manufacture in Venezuela the supplies which will be used in the electrical sector and, beyond that, export them to ALBA (Bolivarian Alliance for the Peoples of Our America) and Mercosur (Common Market of the South)." (AVN, 04-25-2013; http://www.avn.info.ve/contenido/bolivarian-govt-bolster-energy-industrialization; El Universal, http://www.eluniversal.com/economia/130425/venezuelan-government-orders-intervention-of-electricity-utility)

... minister pledges to stabilize electric sector within 100 days, or resign

Chacón also undertook a plan to stabilize the national electric system within 100 days, and said he will resign if he cannot meet the goal.  The plan includes maintenance and strategies to lower demand for electricity. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/ministro-chac%C3%B3n-se-compromete-estabilizar-sector-el%C3%A9ctrico-100-d%C3%ADas; El Universal, http://www.eluniversal.com/economia/130426/deciden-intervenir-y-determinar-responsabilidades-en-corpoelec)

Logistics & Transport

Former workers threaten to paralyze port operations

Former workers at the now defunct National Ports Institute have threatened to block entrances to the nation's main port - Puerto Cabello - if they are not paid at least 20% of what they are currently owed, after they congregated at the entrance of the administration building for Bolivarian Ports (BOLIPUERTOS), unsuccessfully expecting to receive their checks. More in Spanish: (Notitarde, 04-26-2013; http://www.notitarde.com/La-Costa/Ex-trabajadores-del-extinto-INP-amenazan-con-parar-el-puerto/2013/04/25/181651; El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/57713/ex-trabajadores-del-inp-amenazaron--con-paralizar-el-puerto-si-no-les-pagan)

Politics

Elections Board steadfastly refuses to allow access to voting registers in audit

To this date the National Elections Board - with the sole exception of independent member Vicente Díaz - has refused requests by opposition election experts to review voting registers and check for duplicate fingerprints, a key part of the audit on 46% unaudited polling centers, as demanded by presidential candidate Henrique Capriles Radonski and the opposition Democratic Unity Conference. The pro-government majority within the Board insists that the system's reliability can be proven by simply matching numbers in poll minutes, voting tickets and the number of voters who signed the registers - but not review each voter. More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/nacional-y-politica/130426/cne-mantiene-decision-de-verificacion-sin-acceso-a-cuadernos)

Opposition says it will formally contest the election, seek new vote

Opposition leader Henrique Capriles Radonski has announced that he and the National Democratic Conference (MUD) will contest presidential elections held on April 14th. He says: "We will contest the elections and comply with all legal steps, because in the end this will be known worldwide and what would come out of all this is a new election". He also said they would not take part in a fake audit: "We will not take part if there is no checking of voting registers in order to verify fingerprints and signatures, because that would be taking part in a sham and we will not accept it." Capriles said they will take the case to the Supreme Court as part of the required procedures, and that "if Venezuelan justice does not provide an answer we will take this internationally. What has happened here will go all around the world". More in Spanish: (El Nacional, 04-26-2013; http://www.el-nacional.com/)

Maduro declares there was no fraud, claiming "this is the same system used to elect members of the National Assembly and Governors." More in Spanish: (El Nacional, 04-26-2013; http://www.el-nacional.com/)

Machado says "Some in UNASUR feel cheated by the Elections Board"

National Assembly member María Corina Machado says the opposition has been in touch "with all legislatures in Latin America, Europe, and the World Inter Parliamentary Union, and all have roundly condemned what is happening at the National Assembly and the betrayal of a commitment by Tibisay Lucena and the National Elections Board to fully audit April 14th presidential elections". She added that some UNASUR representatives "believe they were cheated" by the Board, and that what is at stake is whether the regional organization "will be an organization known to defend democracy, or a club of nations meant to cover up each other's serious violations of democracy". More in Spanish: (Tal Cual, 04-26-2013; http://www.talcualdigital.com/index.html)

Fernández and Rousseff meet, discuss Venezuela

Argentine President Cristina Kirchner and Brazilian President Dilma Rousseff met yesterday in Buenos Aires and among other issues discussed the UNASUR declaration on the situation in Venezuela, which the termed "democratic". The UNASUR statement supported the decision to expand the election audit to the total number of voting centers. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/presidentas-fern%C3%A1ndez-y-rousseff-destacan-calidad-declaraci%C3%B3n-unasur-sobre-venezuela)

Around 93% of Venezuelans abroad voted for Capriles, further closing vote gap

A preliminary count of the votes cast abroad in the Venezuelan presidential election of April 14 show that opposition candidate Henrique Capriles Radonski won 93% of the ballots. However, these are unofficial results from a manual count conducted by the opposition campaign team, based on the manual tally sheets from the polling stations located in consulates and embassies. These preliminary results are available for consultation on the website comandoexteriorvenezuela.com. (El Universal, 04-24-2013; http://www.eluniversal.com/nacional-y-politica/130424/some-93-of-venezuelans-abroad-vote-capriles)

Opposition, government wrestle on web, airwaves over clinic firebombing claims

Hours after barely winning Venezuela’s presidential election, the ruling party started to flood state media with accusations that opposition provocateurs were firebombing Cuban-run neighborhood health clinics across the country in revenge. More than a week later, a national dispute is raging as the opposition wages a remarkably successful media counteroffensive showing the claims to be seriously exaggerated and in some cases entirely false. With meticulously dated amateur photos of undamaged clinics, opposition supporters have vividly illustrated how cellphone cameras, Twitter and Facebook can help even the playing field against a government that came to dominate broadcast media during the late Hugo Chavez’s 14-year presidency. (The Washington Post, 04-24-2013; http://www.washingtonpost.com/world/the_americas/opposition-government-wrestle-on-internet-airwaves-over-clinic-firebombing-claims/2013/04/24/51ef7e34-ad11-11e2-a8e6-b6e4cc7c49d1_story.html; Fox News, http://www.foxnews.com/world/2013/04/24/opposition-government-wrestle-on-internet-airwaves-over-clinic-firebombing/)

Cabello now says he will not pay National Assembly legislators who do not recognize Maduro

National Assembly President Diosdado Cabello, who has refused opposition members the right to speak at the National Assembly unless they first recognize Nicolás Maduro as President, now says he will not pay dissident Assembly members: "This is logical and coherent. How am I to pay a ghost? If they do not work they will not be paid, and they are not working because they do not recognize Maduro". More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/nacional-y-politica/130426/cabello-no-cobraran-diputados-que-no-reconozcan-a-maduro)

Parliament launches probe into Capriles

The government-controlled parliament set up an inquiry into violence over the disputed election that authorities blame on opposition leader Henrique Capriles. Nine people died and dozens were injured after opposition protests against Nicolas Maduro's narrow April 14 presidential poll win turned violent around the nation. The government said the unrest was evidence the opposition was planning a coup. Capriles' camp rejects that, saying officials exaggerated the violence and included deaths from common crimes to bolster the toll and discredit the opposition. (Reuters, 04-25-2013; http://www.reuters.com/article/2013/04/25/us-venezuela-opposition-idUSBRE93N0Z320130425)

Deputy Calixto Ortega, appointed chargé d’affaires to the United States, says he will do everything possible to keep improving relations “with the precise instructions our President and the Venezuelan Foreign Affairs Ministry". (Veneconomy, 04-24-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34434&idc=1; El Universal, 04-24-2013; http://www.eluniversal.com/nacional-y-politica/130424/venezuela-appoints-calixto-ortega-as-charge-daffaires-to-the-us)

American filmmaker detained in Venezuela post-vote crackdown

A 35-year-old filmmaker from California has been arrested by authorities who are accusing him of fomenting postelection violence on behalf of the U.S. government. President Nicolas Maduro says he personally ordered Timothy Tracy's arrest on suspicion of "creating violence in the cities of this country." The interior minister said Tracy was working for U.S. intelligence, paying right-wing youth groups to hold violent demonstrations in order to destabilize the country after Maduro's narrow election win last week. Friends and family of Tracy say he has been in Venezuela since last year making a documentary about. The Georgetown University English graduate produced the recent Discovery Channel program "Under Siege," about terrorism and smuggling across the U.S./Canada border. He is the first American in recent memory to be detained in Venezuela on politically related charges. (Fox News, 04-25-2013; http://www.foxnews.com/world/2013/04/25/us-man-detained-in-venezuela-post-vote-crackdown-family-says-innocent-filmmaker/#ixzz2Ra0WOOjX) 

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.