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COUNTRY INSIGHTS

Stagflation Postponed to 2014
VENEZUELA · Report · 20 Dec 2013

Executive Summary Venezuela will begin 2014 with growth slowing sharply and inflation remaining sky high. In other words, the country will suffer stagflation. We estimate that GDP will grow by only 1.6 percent this year and shrink by 2.5 percent in 2014. We see inflation rates persisting in the 5...

The Price of Gasoline
VENEZUELA · In Brief · 15 Dec 2013

Shortly after the December 8 elections, the government started hinting at a gasoline price increase coupled with new subsidies to public transport. Jorge Arreaza, Executive Vicepresident, and Haiman El Troudi, Minister of Land Transportation, placed the topic on the public agenda. Rafael Ramirez,...

Our take on the December 8 Elections
VENEZUELA · Report · 10 Dec 2013

Winners and losers Nicolas Maduro and PSUV are clear winners in the December 8 municipal elections. They have good reasons to celebrate even if the joy was not complete. According to the National Electoral Council, PSUV led the national vote count by a 6.5 percent margin over the opposition coali...

Guide for December 8
VENEZUELA · Report · 04 Dec 2013

What’s at stake? Chavismo currently controls 85 % of the municipalities in the country (284 out of 335). In all likelihood, it will continue controlling a significant majority of municipalities after December 8. In our view, three indicators will be used to measure success in the upcoming electio...

Little Reason to Cheer
VENEZUELA · Forecast · 15 Nov 2013

Executive SummaryWe extend our forecast horizon to 2015 and see little reason to cheer. The shift toward deeper state intervention that began last October endures. Monetary, exchange rate, fiscal, and price control policy frameworks are kept in place, worsening distortions and sharpening imbalanc...

Why is the Venezuela Oil Basket Price Falling?
VENEZUELA · Report · 05 Nov 2013

The Venezuela oil basket price[1] has been falling and losing ground relative to WTI and Brent since September 2013. For the first time in two years, the Venezuela basket is lower than WTI.As shown on graph 2, Venezuelan oil prices closely follow Mexican heavy oil Maya. This reflects Pdvsa’s pric...

2014 Fiscal Budget
VENEZUELA · Report · 04 Nov 2013

The government is budgeting a 3.7 percent of GDP deficit for the national government in 2014, according to the draft budget submitted to the National Assembly on October 15. We forecast a substantially lower deficit at 0.7 percent of GDP. As usual, both revenues and expenditures are underestimate...

On Rafael Ramirez's Appointment
VENEZUELA · In Brief · 08 Oct 2013 · 2 responses

Rafael Ramírez replaces Nelson Merentes as Vicepresident for the Economic Area (Decree No. 457, Official Gazette No. 40,266 , 7 October 2013). Merentes will probably soon leave the Ministry of Finance and take an official position abroad. His departure materializes his failure to liberalize the e...

Lots of Talk, Little Action
VENEZUELA · Report · 20 Sep 2013

Executive Summary The government sorely needs to adopt credible and sustainable policies to stabilize exchange rates, prices, and expectations. An immediate priority is to patch up the exchange rate regime. The administration is planning to set up a new foreign exchange mechanism to run alongside...

Heads Up
VENEZUELA · In Brief · 14 Sep 2013 · 2 responses

Rumors about conversations between the IMF and the Venezuelan government are emerging. We don’t know if there's any basis for these rumors. However, thinking out of the box, we see both parties having incentives to engage in conversations.  For the IMF, this would be an opportunity to reestablish...

Petronas' Departure from Venezuela
VENEZUELA · In Brief · 09 Sep 2013 · 2 responses

According to Reuters, Malaysian state oil company Petronas announced it quit its participation in Petrocarabobo, a 400,000 b/d Orinoco Oil Belt project in which Petronas held 11%. The other partners are PDVSA (60%), Repsol (11%), ONGC Videsh (11%), Oil India (3.5%) and Indian Oil Corp (3.5%).  Pe...

Draft Reform of FX Law
VENEZUELA · In Brief · 09 Sep 2013 · 2 responses

The available draft of the new Forex Law (Ley Contra los Ilícitos Cambiarios, LCIC) is a move towards a more flexible and open foreign exchange regime.The project brings few substantive changes to the definition of offenses and significantly increases penalties. The fundamental change, in our vie...

One Step Closer to Compensation
VENEZUELA · Report · 06 Sep 2013

After almost six years, the International Centre for Settlement of Investment Disputes (ICSID) issued a ruling in the case ConocoPhillips vs. the Bolivarian Republic of Venezuela (ICSID Case No. ARB/07/30) on the expropriation of ConocoPhillips’ stake in Petrozuata, Hamaca and Corocoro. The rulin...

Investment Opportunities in Venezuela in Oil and Gas
VENEZUELA · Report · 05 Sep 2013

The Key Energy Opportunities in Venezuela versus other Emerging Market Countries The Venezuelan government has realized the need to increase oil and gas output as oil markets have moved to a not-so-rosy outlook and prices are stable, with a downside risk. Geopolitical risks only provide brief res...

Taking stock of last week's Sicad auction
VENEZUELA · In Brief · 26 Aug 2013

By announcing it would award 2035 Pdvsa bonds in the Sicad auction, BCV created the expectation of actual delivery of the bond to companies. In reality, BCV sold the bonds in the market and is awarding dollars. Reference to the market value of the bonds ($239.8 million, 79.9%) in BCV’s notice on ...

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