May 19, 2015

Oil & Energy

 

Venezuela oil price up for 8th straight week
Venezuela's weekly oil basket price continued to rise for the eighth straight week -- but only a few cents as oil prices began to moderate in some well-supplied 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 May 15 was US$ 57.00, up just 26 cents from the previous week's US$ 56.74. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2387900&CategoryId=10717)
 

PDVSA to pay interest on bonds maturing in 2021, 2024, and 2035

State-run oil company Petróleos de Venezuela (PDVSA) will pay the corresponding interests of the six-month period ending in May 2015 to all holders of bonds maturing in 2021, 2024, and 2035.
The operation will be made pursuant to the terms and conditions of those papers, which were issued in November 2011, May 2012, and May 2014, respectively, PDVSA said in a press release. (El Universal, http://www.eluniversal.com/economia/150518/pdvsa-to-pay-interests-of-bonds-maturing-in-2021-2024-and-2035
 

Falling oil prices try exporters

The drop of international oil prices will have a significant fiscal effect on the economies of Latin American countries and the Caribbean and will put them to the test with regard to their ability to make adjustments.

In the case of Venezuela, its reluctance to up-regulate gasoline prices could translate in pressure on the countries which import Venezuelan oil through PETROCARIBE. This is according to information posted on the website of the International Monetary Fund (IMF). It is also noted that in many of these countries, the decreasing value of oil imports exceeds the projected financing from PETROCARIBE. (El Universal, http://www.eluniversal.com/economia/150518/falling-oil-prices-try-exporters)

 

 

Commodities

 

FORD, government to set out rules for car sales in dollars

Representatives of FORD Motors de Venezuela and Venezuelan officials are meeting to plan for automotive assembling in July-August this year, and later, as well as car sales in dollars, says Gilberto Troya, the Secretary General of Ford trade union. He adds that customers will be invoiced in dollars at the FOREX rate traded at the Foreign Exchange Marginal System (SIMADI) (VEB 197.89 per USD), while production costs will be set according to the Ancillary Foreign Currency Administration System (SICAD) rate (currently VEB 12 per USD). Previously Industries Minister Ricardo Menéndez had said that the only legal currency in Venezuela is the bolívar, in response to announcements that the company would begin selling vehicles in dollars after reaching an agreement with the national (El Universal, http://www.eluniversal.com/economia/150518/ford-venezuela-govt-to-set-out-rules-for-car-sales-in-dollars; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43916&idc=2)
 

FEDECÁMARAS asks government not to take over distribution centers

FEDECÁMARAS President Jorge Roig warns that taking over private product distribution centers "would be the worst mistake" the government could make.  He added that it obstacles to acquiring FOREX continue the private sector could "collapse", bringing down domestic production and imports. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/fedecamaras-insta-al-gobierno-a-no-tomar-centros-d.aspx#ixzz3aTqopbbn; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/fedecamaras-insta-al-gobierno-a-no-tomar-centros-d.aspx)

 The worst is yet to come

Economist Ángel García Banchs says the Venezuelan economy is weeks away from totally depleting its product inventories, a traumatic event that could be sudden and could lead to a stage of great changes since the regime would have to decide either to abandon the FOREX and price control systems or begin the path towards a much more restrictive and repressive totalitarian regime. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43913&idc=3)

 POLAR complains of constant inspections

Alimentos POLAR, Venezuela's main food industry, says its facilities have been inspected over 165 times this year and has responded to over 1,500 requests for information. The company's Director General, Manuel Felipe Larrazábal, says "in just the last 3 weeks, 6 different government offices have carried out 27 visits at 13 plants, with a total 80 officials, which amounts to 150 working hours interrupting our daily work." More in Spanish: (Últimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/polar-se-queja-de-continuas-inspecciones.aspx#ixzz3aZPQOrLA; El Nacional, http://www.el-nacional.com/economia/Alimentos-Polar-recibido-inspecciones-ano_0_630536995.html)

 

 

Economy & Finance

 

Key government legislator admits FOREX scarcity

The pro government Chairman of the National Assembly’s Finance and Economic Development Committee Ricardo Sanguino says “there is not enough availability of foreign currency to continue satisfying the country’s needs.” He explained priorities had to be set to boost productive and economic activities. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43917&idc=2)

 

Russia OK's extending Venezuela credit through 2016

Russia and Venezuela signed the agreement for a US$ 4 billion credit in December 2011, in order to finance the delivery of Russian industrial products. More in Spanish: Últimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/rusia-aprueba-la-ampliacion-del-prestamo-a-venezue.aspx#ixzz3aZQI8582)

 

 

Politics and International Affairs

 

The Wall Street Journal reports Venezuelan officials suspected of turning country into cocaine hub

The Wall Street Journal reports U.S. prosecutors are investigating several high-ranking Venezuelan officials, including the president of the country’s congress, on suspicion that they have turned the country into a global hub for cocaine trafficking and money laundering, according to more than a dozen people familiar with the probes. An elite unit of the Drug Enforcement Administration in Washington and federal prosecutors in New York and Miami are building cases using evidence provided by former cocaine traffickers, informants who were once close to top Venezuelan officials and defectors from the Venezuelan military, these people say. A leading target, according to a Justice Department official and other American authorities, is National Assembly President Diosdado Cabello, a former army lieutenant, considered the country’s second most-powerful man. “There is extensive evidence to justify that he is one of the heads, if not the head, of the cartel,” said the Justice Department official, speaking of a group of military officers and top officials suspected of being involved in the drug trade. “He certainly is a main target.” Investigations are being run by federal prosecutors who have wide leeway to target criminal suspects. U.S. authorities say they are far along in their investigations. But they say any indictments that may result might be sealed, making them secret until authorities can make arrests—something that would be difficult if not impossible unless the suspects travel abroad. U.S. law-enforcement officials say many Colombian traffickers moved operations to neighboring Venezuela, where they found a government and military eager to permit and ultimately control cocaine smuggling through the country. “It is a criminal organization,” said the Justice Department official, referring to certain members of the upper echelons of the Venezuelan government and military.  At the same time, a group of 16 Democrats in the US House of Representatives are asking President Barack Obama to lift sanctions on Venezuelan officials implicated in human rights violations and drug trafficking. (The Wall Street Journal; http://www.wsj.com/articles/venezuelan-officials-suspected-of-turning-country-into-global-cocaine-hub-1431977784?tesla=y)
 

Venezuela opposition held primaries for high-stakes parliament vote, PRIMERO JUSTICIA leads vote

Venezuela's opposition coalition held primaries on Sunday for this year's high-stakes parliamentary election, its best shot in over a decade at recouping the National Assembly at one of the ruling Socialist Party's lowest ebbs. The MUD umbrella coalition has struggled to articulate policy proposals and shake an elitist aura, so Sunday's low-profile primaries were largely a show of mobilization against President Nicolas Maduro. José Luis Cartaya, head of the MUD's electoral committee, says 543,793 voted, which is 7.4% of registered voters. PRIMERO JUSTICIA, which is led by Miranda Governor and former Presidential candidate Henrique Capriles Radonski, won 13 nominations; VOLUNTAD POPULAR, headed by imprisoned leader Leopoldo López, gained 8 positions; the old ACCIÓN DEMOCRÁTICA party secured 7 nominations; UN NUEVO TIEMPO racked up 5; CUENTAS CLARAS, 2; while the traditional COPEI Social Christian party and imprisoned Mayor Antonio Ledezma's AVANZADA PROGRESISTA, won one nomination, each. (Reuters, http://www.reuters.com/article/2015/05/18/us-venezuela-politics-idUSKBN0O20IV20150518; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43918&idc=1; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2388009&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/150518/turnout-in-primary-vote-of-opposition-coalition-mud-hits-640000; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/150518/pj-obtuvo-13-candidaturas-en-primarias-de-la-unidad)
 

US repeats its concern over freedom of speech in Venezuela

United States has again voiced concern about freedom of expression in Venezuela, and insists that "the only way" to solve the troubles in Venezuela is "through a true dialogue instead of trying to silence critics." "We share the concern expressed by the Inter-American Press Association (IAPA). We have urged many times the Venezuelan government to improve the environment of respect for human beings and fundamental liberties, such as freedom of expression and peaceful association," said a spokesperson for the US Department of State. (El Universal, http://www.eluniversal.com/nacional-y-politica/150518/us-reiterates-its-concern-about-freedom-of-speech-in-venezuela)
 

Palestinian FM "proud" of bilateral relation with Venezuela

Riad al Malki, Palestinian Minister of Foreign Affairs says that his visit here country is an opportunity to boost the bilateral relation. In reference to sanctions imposed by the United States on seven Venezuelan government officials, the Palestinian Minister said that his country rejected all sort of aggressions against Venezuela and added that the people of Palestine supported Venezuela unconditionally. (El Universal, http://www.eluniversal.com/nacional-y-politica/150518/palestinian-fm-proud-of-bilateral-relation-with-venezuela)
 

Felipe González visit to Venezuela postponed until new López's hearing

Former president of Spain Felipe González will travel to Venezuela when a new date for the next trial hearing of dissenter Leopoldo López is scheduled. González called off his visit to Caracas, which was expected this Monday, when López's hearing was adjourned, AP reported. (El Universal, http://www.eluniversal.com/nacional-y-politica/150518/felipe-gonzalezs-visit-to-venezuela-suspended-until-new-lopezs-hearing)

Venezuela has deported 7,021 Colombians in 3 years

The Foreign Office of Colombia reported that from 2012 to date 7,021 Colombians have been deported from Venezuela due to their irregular status. The numbers arrived after the Foreign Office of Venezuela said last Thursday that as many as 494,597 Colombians had entered Venezuela illegally. Based on Venezuelan data, in 2012-2014, the number of illegal Colombian residents was "160,984 in 2012; 189.001 in 2013, and 144,612 in 2014". (El Universal, http://www.eluniversal.com/nacional-y-politica/150518/colombia-in-three-years-venezuela-deported-7021-colombians)

 

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.

May 15, 2015

International Trade

 

Cargo that has arrived at Puerto Cabello:

• Over 1,810 tons of resins for manufacturing plastic containers in 80 containers from Charleston USA, for Pepsi Cola Venezuela.
• Over 1,398 tons of corn seeds in 61 containers from Mexico for state agency CORPOVEX
• Over 681 tons of herbicides and growth inhibitors in 24 containers from New York USA for state agency CORPOVEX.
  Over 657 tons of paper waste in 24 containers shipped by Simco Recycling Corp. and Kimberly Clark in the USA for Manufactura de Papel C.A. y Kimberly Clark Venezuela C.A.
• Over 304 tons of PET resin for manufacturing plastic containers, in 15 containers, from Charleston USA for Consorcio Oleaginosa Portuguesa. 
• Over 100 tons of milk serum from Poland for Nestlé Venezuela.

Eight ships are currently offloading, two bulk cargo and another containers. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-mil-398-toneladas-de-semillas-de-maiz-llegaron-al-puerto-local-2415149/2015/05/13/512273/; http://www.notitarde.com/La-Costa/Llegaron-mas-de-100-toneladas-de-suero-de-leche-2414141/2015/05/12/511074/)

 

 

Commodities

 

Ford Venezuela to sell pickups, SUVs in dollars, workers demand dollar pay

The Venezuela division of Ford Motor Co will sell pickups and sport utility vehicles in dollars, part of a deal with the government to restart operations stalled for lack of hard currency to import parts, according to a union leader in the company. The country's auto assembly has tumbled as companies struggle to obtain greenbacks through the 12-year-old currency controls, which have also left companies unable to repatriate revenue from their Venezuela operations. "We're doing this to avoid closing the plant," said Gilberto Troya, president of the United Socialist Victorious Union of Ford workers, at a press conference. Troya says FORD workers should be also paid in US dollars. "We want our US$ 8 a day", he said in reference to the official exchange rate upon which current collective bargaining is based. (Reuters, http://www.reuters.com/article/2015/05/13/venezuela-autos-idUSL1N0Y41R920150513; El Universal, http://www.eluniversal.com/economia/150514/ford-vehicles-to-be-sold-at-simadi-rate-from-july-in-venezuela; and more in Spanish: Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/trabajadores-de-ford-en-venezuela-exigen-sueldo-en.aspx#ixzz3a6iWQNoi; El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/trabajadores-de-ford-en-venezuela-exigen-sueldo-en.aspx)

 

Venezuelan authorities ponder auto parts sales in dollars

Venezuelan authorities are considering the possibility of allowing the use of US dollars in retail sales of auto parts and other raw materials used for the assembly of cars usually purchased by the local middle class. The move seeks to give some oxygen to the Venezuelan automotive sector, hit by serious shortages of spare parts and declining production, according to the head of the Confederation of Industries (CONINDUSTRIA) Eduardo Garmendia, who says authorities are considering the possibility to allow private customers to import auto parts through car dealers. "(Such imports) would be paid in dollars and used for car assembly by local companies," he says. (El Universal, http://www.eluniversal.com/economia/150513/venezuelan-authorities-ponder-auto-parts-sales-in-dollars)

 

 

Economy & Finance

 

Venezuela Central Bank reserves fall below US$ 18 billion as local currency falls past 300 to the dollar

Venezuela's international reserves fell through the psychological level of US$ 18 billion -- down over US$ 6 billion since March -- marking a new low since 2003. With heavy foreign debt burdens, falling crude production, falling crude production, increased domestic usage -- gasoline sells for less than a penny a gallon at the black market dollar rate -- Venzuela's foreign reserves have fallen to US$ 17.875 billion as of May 13. That is the lowest level of foreign reserves since 2003. At the same time, the Central Bank has increased the supply of bolivars in circulation (M2) in Venezuela 69% in the last 12 months, adding to rampant inflation that local investment bank Caracas Capital Markets now clocks at 165%. Those multiplying bolivars are chasing an ever smaller amount of dollars, driving the free market rate of dollars to pass 300 to the dollar. The currency has lost 50% of its value in 6 months, going from 150 bolivars to the dollar on November 28 to 300 to the dollar on May 13. "It took it 11 months to fall from 75 to 150," says Russ Dallen of investment bank Caracas Capital Markets. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2387662&CategoryId=10717)

Central Bank has been forced to withdraw US$ 383 million from its special drawing rights with the IMF.  In March there were US$ 2.25 billion in Venezuela's special drawing rights account, and by April this amount was down to US$ 1.98 billion. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/BCV-retiro-parte-recursos-FMI_0_628137337.html )

Central Bank has not released any statistics for four months. These include inflation numbers (National Consumer Price Index), gross domestic product (GDP), and the indexes for the first quarter of 2015.

Nor has the BCV published total inflation for 2014, due by December 2014 or January 2015. Additionally, numbers on scarcity of staples have not been released for over two years. (El Universal, http://www.eluniversal.com/economia/150513/for-four-months-the-central-bank-of-venezuela-has-not-released-any-num)

Analysts believe Venezuela's economy is being unofficially "dollarized" by allowing certain goods and services to be traded at SIMADI rates. After authorizing the sale of airline tickets in dollars, the government is considering authorizing the automotive industry to do the same - and this opens the door to applying the same system to other areas with a high percentage of imported components. Real estate and private vehicles are often traded in FOREX, particularly by those who migrate. Appliances and cell phones are priced using the unofficial market, all of which distorts domestic prices and feeds a high rate of inflation. More in Spanish: (Últimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/infografia-venezuela-dolarizacion-informal.aspx#ixzz3aC4JZKV6 )

Venezuela intends to ban outsourcing entirely. Labor Minister Jesús Martínez says Venezuela is trying to eliminate outsourcing in labor, and that outsourced workers cannot be fired. More in Spanish: (AVN; http://www.avn.info.ve/node/301395)

 

U.S. companies rush to insulate themselves against Venezuela's currency, economic woes

A growing number of U.S. companies say they can't cope with Venezuela's sinking currency, prompting some of them to remove their operations here from their consolidated financial reports. In other cases, they have exited the country altogether through a sale or by simply shuttering their businesses there. Many of those recently taking such action are medium-sized or small companies, which means that the tumbling currency and a deeply troubled Venezuelan economy have tended to have a disproportionately greater impact on their results than suffered by bigger entities with business in the country. (Reuters, http://www.reuters.com/article/2015/05/14/venezuela-usa-companies-idUSL1N0Y51US20150514)

 

 

Politics and International Affairs

 

Venezuela parliament leader squeezes media bosses over drugs story

Venezuela's powerful parliament head Diosdado Cabello has sought a travel ban on some media bosses he is suing for slander over reproducing a story from a Spanish newspaper accusing him of running a drug ring. Local media said the court hearing the case had granted the request against 22 media figures. Cabello sued opposition-leaning newspapers El Nacional and Tal Cual and website La Patilla for picking up an article by Spanish newspaper ABC alleging his former security chief had fled to the United Sates with evidence the Socialist Party's No. 2 controlled a military-run drug cartel. A local court had issued a ban on foreign travel by the 22 journalists sued by Cabello. (Reuters, http://www.reuters.com/article/2015/05/14/venezuela-media-idUSL1N0Y52HX20150514; and more in Spanish: (Diario 2001, http://www.2001.com.ve/en-la-agenda/97153/prohiben-salir-del-pais-a-22-directores-de-medios.html; El Nacional; http://www.el-nacional.com/)

 

Top US diplomat visits Caracas to smooth tense relations, further meetings expected.

A senior U.S. State Department official has made a second visit to Caracas for talks aimed at easing tensions between the U.S. and this country. According to the State Department, Thomas Shannon left Caracas last Tuesday after a two-day visit. Details of the visit were not disclosed. Shannon previously visited Caracas in April to meet with President Nicolas Maduro. A source within the Venezuelan government has revealed that additional meetings are expected and are reportedly scheduled for the upcoming weeks, both in Venezuela and "elsewhere," the source added without providing further details. (El Universal, http://www.eluniversal.com/nacional-y-politica/150514/venezuelan-govt-to-hold-more-meetings-with-us-counselor-shannon; http://www.eluniversal.com/nacional-y-politica/150513/us-counselor-shannon-meets-with-venezuelan-govt-for-the-second-time; Yahoo News: http://news.yahoo.com/top-us-diplomat-visits-caracas-smooth-tense-relations-143255479.html)

 

US Senators Rubio and Menendez meet with wives of Venezuela political prisoners Lopez and Ledezma

U.S. Senators Robert Menendez (D-NJ) and Marco Rubio (R-FL) today met with Lilian Tintori, wife of imprisoned opposition leader Leopoldo López; Mitzy Capriles, wife of imprisoned Caracas mayor Antonio Ledezma, and Tamara Suju, International Director of leading Venezuelan human rights organizations Foro Penal. “My support for political prisoners held unjustly by President Maduro and sympathy for the spouses and supporters of these innocent leaders is boundless,” said Senator Menendez. “The struggles Leopoldo Lopez and Mayor Antonio Ledezma are enduring is a fight embraced by all who value democracy and human rights, and reject the suppression of universal freedoms. President Maduro’s repressive government and ruinous policies are failing the Venezuelan people and unjustly silencing opposing voices. With a growing number of legislators and former heads of state from throughout the hemisphere increasingly speaking out against the many failings of the Maduro government, it is imperative that current Presidents of Latin America join the chorus of growing voices that support freedom in Venezuela." (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2387661&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/150514/us-senators-meet-with-wives-of-venezuelan-dissenters-voice-support)

 

Venezuela rejects alleged Human Rights violations of Colombian immigrants

In a communique issued by the Foreign Ministry, the government here rejected maneuvers to manipulate public opinion with alleged Human Rights violations of Colombian immigrants, by enemy sectors of peace and good relations between Colombia and Venezuela. The document released by the Foreign Ministry stressed that the country is home to over 5.6 million Colombians, who have access, without any discrimination or distinction based on nationality or migration status to all programs and social missions carried out by the Venezuelan government in areas such as health, food, education and housing. (AVN, http://www.avn.info.ve/contenido/venezuela-rejects-alleged-human-rights-violations-colombian-immigrants; El Universal, http://www.eluniversal.com/nacional-y-politica/150514/venezuelan-fm-denies-human-rights-abuses-against-deported-colombians)

 

Gaviria: Situation in Venezuela jeopardizes press freedom and human rights

The former President of Colombia and former Secretary General of the Organization of American States (OAS), César Gaviria, is asking the international community to strive to promote dialogue between the Venezuelan government and its opposition. According to Gaviria, the involvement of the international community is necessary, because the current situation in Venezuela "seriously endangers freedom of the press and speech and respect for human rights." (El Universal, http://www.eluniversal.com/nacional-y-politica/150514/gaviria-situation-in-venezuela-jeopardizes-press-freedom-and-human-rig)

 

 

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.

May 12, 2015

International Trade

 

Cargo that has arrived at Puerto Cabello:

• Over 3,000 tons of milk and beef from Centrolac S.A., Productos Lácteos La Perfecta, Industria Comercial San Martín, Eskimo S.A. and Nova Terra for state agency Corporación de Abastecimiento y Servicios Agrícolas (CASA)
• Over 1,500 tons of personal care items such as diapers, sanitary towels and shampoo from Procter & Gamble for its subsidiary in Venezuela
• 73 tons of auto parts from Ford Motor for its subsidiary in Venezuela

There are 8 vessels offloading at port, one carrying 30,000 tons of yellow corn for CASA. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-3-mil-toneladas-de-leche-y-carne-llegaron-para-la-estatal-Casa-2412480/2015/05/10/510686/)

 

Bilateral Venezuela-Colombia trade is reported down 36% in Q1 2015

Trade between Venezuela and Colombia shrank 36% during the first quarter of 2015, compared to the same period in 2014. According to the Venezuelan-Colombian Economic Integration Chamber (CAVECOL) binational trade was US$ 343 million, compared to US$ 538 million in 2014, a 36%-decline. The report is based on figures provided by Colombia's Administrative Department of Statistics (Dane) and Venezuela's National Statistics Institute (INE). (El Universal, http://www.eluniversal.com/economia/150511/venezuela-colombia-trade-down-in-the-first-quarter)

 

Trade with the US also down 36% in Q1 2015

The US Department of Commerce also reports a 36% drop in bilateral trade with Venezuela during the first quarter of 2015. Imports and exports were US$ 6.259 billion as compared to US$ 9.893 billion the year before. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/intercambio-comercial-con-eeuu-cae-36-en-el-primer.aspx#ixzz3Zp86GLcC; El Mundo; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/intercambio-comercial-con-eeuu-cae-36--en-el-prime.aspx)

 

 

Oil & Energy

 

Venezuela oil price rises for 7th straight week

Venezuela's weekly oil basket price continued to rise for a seventh week in a row as oil prices around the world went up as Saudi Arabia continued fighting against Iranian-backed rebels in neighboring Yemen at the mouth of the Persian Gulf, problems in Libya continued disrupting supply from that country, and U.S. stocks were unexpectedly drawn down.

According to figures released by the Venezuela Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending May 8 was US$ 56.74, up US$ 2.53 from the previous week's US$ 54.21. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2386899&CategoryId=10717)

 

 

Commodities

 

Ford to sell Venezuelan cars in greenbacks in dollarization

Ford Motor Co. will sell some of its cars in Venezuela in dollars to alleviate a shortage of greenbacks that has slashed its imports and paralyzed its plant, according to a labor union official. “Car sales will be in dollars,” Gilberto Troya, head of the Ford Motors de Venezuela union, said by telephone from Valencia, Venezuela. He said the company informed the union of the deal with the government April 28. “This could lead to a complete dollarization of the sector.” Under the deal, customers will give dealerships dollars, which will be used to import car parts to be assembled at the Valencia plant, Troya said. Customers could still buy some of the cheaper models such as the Fiesta in bolivars, he said. Dearborn, Michigan-based Ford spokeswoman Susan Krusel confirmed a deal has been reached with the Venezuelan government to restart production in an e-mailed response to questions, without providing further details. (Bloomberg: http://www.bloomberg.com/news/articles/2015-05-08/ford-to-sell-venezuelan-cars-in-greenbacks-in-slow-dollarization)

 

Health Minister confirms state control over medicines

Health Minister Henry Ventura has confirmed government control over the sale of medicines and refuted a report by the President of Venezuela's Medical Federation of 13,000 medical doctors migrating. He claims added state controls will make it possible to compare FOREX provided to importers and the quantity of medicine sold at each pharmacy. The system encourages patients to enroll at pharmacies in order to guarantee access to medicines. He said "anything Douglas Leon Natera (President of the Federation) lacks credibility because he does not go to hospitals", and claimed only 320 doctors have left in six years. (More in Spanish: Infolatam, http://www.infolatam.com/2015/05/11/venezuela-confirma-control-estatal-en-medicinas-y-niega-fuga-13-000-medicos/)

 

 

Economy & Finance

 

Already at a 12 Year Low, Venezuela Central Bank reserves fall another half-a-billion in one day

Venezuela's international reserves fell US$ 507 million dollars on Thursday, pushing toward crashing through the US$ 18 billion level and marking a new low since 2003. With heavy foreign debt burdens, falling crude production, falling crude production, increased domestic usage -- gasoline sells for less than a penny a gallon at the black market dollar rate -- Venezuela's foreign reserves have fallen to US$ 18.211 billion as of May 7. That is the lowest level since 2003. Reserves have now fallen US$ 4.101 billion since the beginning of the year. Not adding confidence to the accuracy of its numbers, on May 4, the Central Bank reported that reserves were US$ 19.799 billion but then erased that number and changed it to a full US$ 1 billion lower at US$ 18.799 a day later with no explanation. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2386906&CategoryId=10717)

 

Venezuela: A worthy investment for China?

As the future of Venezuela's economy continues to spiral downwards into chaos, its leaders have relied heavily upon China's financial support and mercy to stave off complete collapse. Until now, China has extended over US$ 50 billion dollars in loans to Venezuela, permitting the Venezuelan government to repay the loans through guaranteed deliveries of oil. Of the 600,000 barrels of oil the Venezuelan government exports to China daily, over half are exported in order to repay loans to various Chinese banks, not to generate new revenue. However the global drop in oil prices has gravely damaged the Venezuelan economy and thereby the country's ability to repay loans; unfortunately for Venezuela, China has other partnerships to uphold as well. Despite past financial leniency with Venezuela, Beijing feels reluctant to lend large sums of money to economically weak states, especially when dealing with so many foreign projects at once. Most foreign policy experts doubt China will attempt to become economically close with - let alone continue to lend to - Venezuela in the near future. Rather than simply loaning money, Chinese banks may instead provide funds for developmental projects in hopes of generating profit. But most bankers want to increase revenue, not spread a particular ideology. Nevertheless, in the event that China's government decides to increase its support of Maduro's government, such a decision would not end Venezuela's economic troubles. If anything, increased Chinese support may come to hurt Venezuela in the long run, encouraging Maduro and future Venezuelan leaders to look abroad for help rather than implement the painful economic reforms needed to turn the country around. If Venezuela's economy is to truly recover, change must come from within its borders. (The Huffington Post, http://www.huffingtonpost.com/china-hands/venezuela-a-worthy-invest_b_7250192.html)

 

Central Bank stops issuing domestic debt bonds

The Finance Ministry has stopped issuing domestic debt bonds planned for the second quarter this year until further notice. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/bcv-suspende-emision-de-bonos-de-la-deuda-publica-.aspx#ixzz3ZusA1Y3s; El Mundo, http://www.elmundo.com.ve/noticias/economia/mercados/bcv-suspende-emision-de-bonos-de-la-deuda-publica-.aspx)

 

Venezuelan sovereign debt and PDVSA’s bonds were up on Friday, compared to their closing rates the day before. In average, the sovereign bonds posted a 1 point weekly increase. Securities such as the Venz 2018, 7% coupon and the Venz 2025 and 2027 received the most demand, with increases over 0.50 points. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43813&idc=2)

 

 

Politics and International Affairs

 

Venezuela parliamentary elections to be held in fourth quarter

Venezuela will hold parliamentary elections in the last quarter of this year and the exact date will be announced soon, according to the head of the National Electoral Council (CNE). President Nicolas Maduro is under growing pressure over the 2015 elections, especially after leftist ally and regional heavyweight Brazil on Thursday urged its neighbor to set a date. "We can say that in the last quarter of this year we'll have the elections. We're going to announce it very soon," Tibisay Lucena said in an interview with state television. Luis Emilio Rondon, a CNE official, said on Friday the elections will be held at the end of November or the beginning of December. (Reuters, http://www.reuters.com/article/2015/05/10/us-venezuela-election-idUSKBN0NV0TE20150510; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43814&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/150511/parliament-vote-to-be-held-in-the-last-quarter-in-venezuela)

 

Venezuela-US dialogue continues through embassies

The government of the United States is holding talks with the Venezuelan Ministry of Foreign Affairs to solve the impasse that started more than two months ago, on March 8, when President Nicolás Maduro ordered a cut in the US embassy staff in Caracas within 15 days. Venezuela started demanding visas for US tourists entering the country. "We are holding talks on this matter (of the US embassy staff cut) with the Venezuelan government through diplomatic means," a spokesperson of the US State Department told El Universal. (El Universal, http://www.eluniversal.com/nacional-y-politica/150511/venezuela-us-dialogue-about-embassies-continues)

 

Venezuela among the countries with the highest rate of violent deaths

Based on rates of violent murders recorded in 2012 in Honduras (90.2 violent deaths per every 100,000 inhabitants) and Venezuela (72.2), these two countries are listed behind Syria where a civil war started in 2011 among the most violent countries in the world. The rate of violent deaths in those two Latin American countries are over 10 times higher than the global average, which is 7.4 murders per every 100,000 people. The United Nations has revealed that one fourth of violent deaths in the world occur in countries that are home to only 4% of world population; among those countries, Syria, Honduras, and Venezuela, which experience the worst situation. (El Universal, http://www.eluniversal.com/nacional-y-politica/150509/venezuela-among-the-countries-with-the-highest-rates-of-violent-deaths)

 

 

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.