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COUNTRY INSIGHTS

Looking beyond December
VENEZUELA · Report · 02 Oct 2015

With the support of over 50 percent of likely voters, the opposition is on its way to winning a National Assembly majority on December 6. Some even think that the opposition could win a two-thirds majority. We’re more cautious. The heavily tilted playing field will play a larger role as elections...

Inflection points
VENEZUELA · Forecast · 11 Sep 2015

We extend our forecast horizon to 2017. We envision a short-term policy path that’s unsustainable. Hence dramatic forks (“inflection points”) lie somewhere in the road ahead, at which regime change, major policy reform, and default on the sovereign debt become real possibilities. When Venezuela w...

Hyperinflation knocks at the door
VENEZUELA · Report · 02 Sep 2015

We forecast the NCPI September MOM inflation rate at 17.7 percent. The YOY rate rises to 243.8 percent in September from 206.0 percent in August. Our September forecast exceeds our August estimate, which we revised down to 15.8 percent (from 18.3 percent in our previous report.) Inflation is affe...

Opposition still ahead in the polls
VENEZUELA · Report · 31 Aug 2015

Parliamentary election campaigns have begun as the economic crisis rages on. Surveys show the opposition solidly ahead among likely voters with 45 percent of the vote, versus 20 percent for the government. However, we cannot yet confidently forecast the composition of the National Assembly. Natio...

​Del Pino receives Maduro’s backing
VENEZUELA · In Brief · 19 Aug 2015

Eulogio Del Pino, president of PDVSA, was appointed minister of Petroleum and Mining replacing Asdrúbal Chávez who is running for deputy to the National Assembly in Barinas state. The two highest-ranking positions in oil are back on the shoulders of one person. As president of PDVSA, Del Pino gai...

Two Milestones Reached
VENEZUELA · In Brief · 03 Aug 2015

Last week Venezuela cashed-in $6.5 billion: $1.5 billion from the sale of accounts receivable from Jamaica and $5.0 billion from China. The sale of accounts receivable from Jamaica ($3.2 billion face value) took place last Tuesday 08/28 and brought in $1.5 billion (54% discount). Pdvsa sold $1.2 ...

Perpetual Election Mode
VENEZUELA · Report · 31 Jul 2015

Executive Summary We’re all focused on the December 6 National Assembly elections, but voters will also choose governors in 2016, mayors in 2017, and a president in 2018. And there just might be a presidential recall referendum after April of next year. This means that the government will rema...

En route to hyperinflation
VENEZUELA · Report · 31 Jul 2015

We forecast the NCPI August MOM inflation rate at 18.3 percent. The YOY rate rises to 208.5 percent in August from 171.0 percent in July. Inflation accelerates reflecting the rapid rise of the price of the dollar in the parallel market in July (41.8 percent), steady monetary expansion, supply cha...

Maduro's endorsement of the Greek referendum
VENEZUELA · In Brief · 06 Jul 2015 · 2 responses

Maduro’s rhetoric yesterday was more heated than necessary in favor of Tsipras’s referendum, in our view. It’s too early to judge whether Maduro simply took the opportunity to reinforce his nationalistic message, or whether he started building a narrative aimed at sustaining a decision to default...

Deconstructing polls and cash flows
VENEZUELA · Report · 06 Jul 2015

Executive Summary Surveys have shown the opposition leading by 15–20 points for the past three months. The most likely scenario for December’s parliamentary elections is for the opposition to win the popular vote and a majority of seats in the National Assembly. Owing to the country’s voting syst...

The China Loan
VENEZUELA · In Brief · 02 Jul 2015

The 5th Amendment to the Agreement Between The Governments of China and Venezuela on the Joint Sino-Venezuela Financing Fund was signed on 26 June 2015 and published in Official Gazette No. 40.692 dated 30 June 2015. Doubts about China’s willingness to increase the outstanding amount of loans to ...

Inflation Accelerates
VENEZUELA · Report · 30 Jun 2015

Inflation continues accelerating. We forecast the July monthly CPI inflation rate at 13.0 percent, close to our revised June estimate (13.3 percent). The second minimum wage increase of 10 percent decreed by president Maduro in May 2015 enters into effect in July. We forecast that the shortage in...

Liquid reserves boosted by SDRs
VENEZUELA · In Brief · 10 Jun 2015 · 2 responses

Blanca Vera reported today in El Nacional Web that BCV drew $1.5 billion from the IMF in recent days. This news would confirm our hypothesis that BCV sought funds to shore up foreign reserves ahead of the $798 million decline on June 3. Otherwise, liquid reserves would have fallen to $10 million....

What happened on June 3?
VENEZUELA · In Brief · 07 Jun 2015

BCV's international reserves fell by $798 million on Wednesday, June 3. This sizeable decline left the markets at a loss. We were puzzled because, according to our daily calculations, the Bank’s cash holdings in FX would have dropped to a $10 million record low that day. On June 4, reserves rose ...

No Clear Way Out
VENEZUELA · Report · 02 Jun 2015

Executive SummaryNicolás Maduro faces a severe political crisis that, if unaddressed, could further destabilize the country and drag down the economy. Pressures on his government include a wave of organized criminal violence, proliferating black markets for basic goods, terrible poll numbers, U.S...

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