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COUNTRY INSIGHTS

Government Crackdown
VENEZUELA · Report · 28 Feb 2015

Executive Summary Although the launch of the new Marginal Currency System (Simadi) dominated economic headlines in February, it proved to be much ado about nothing. Despite the economic crisis and approval ratings at a paltry 20 percent, Maduro and his allies have consolidated themselves as chavi...

More of the same
VENEZUELA · In Brief · 10 Feb 2015

In a rather disorganized press conference, Finance minister Rodolfo Marco Torres and Central Bank president Nelson Merentes announced the new forex system. They added little to what President Maduro said on January 21. As expected, the 6.30 bolivars per dollar rate applies to food and medicines. ...

Will China Save the Day?
VENEZUELA · Report · 30 Jan 2015

Executive Summary President Maduro signaled policy continuity in his annual address to the legislature last January 21. We see no signs that severe shortages and spiraling inflation will be tamed and remain as uncertain as we were last month regarding the probability of default. We project net ou...

2014 Inflation: Puzzling Data
VENEZUELA · Report · 28 Jan 2015

In the absence of BCV inflation data, we continue analyzing inflation using the household food basket data published by the Center for Documentation and Social Analysis of the Venezuelan Federation of Teachers (Cendas). This data has shown significant correlation with the NCPI food subindex. Acco...

Devaluation 2015: Act Two
VENEZUELA · In Brief · 23 Jan 2015

Maduro’s announcements on 21 January 2015 devalue the bolivar by morphing the exchange rate regime, keeping multiple exchange rates, forex controls and rationing. Arbitrage and corruption will continue marring the system. President Maduro said this regime is "temporary”. The price of the dollar r...

Devaluation 2015: Act One
VENEZUELA · In Brief · 05 Jan 2015 · 2 responses

After the long suspense caused by President Maduro’s announcements of "a new exchange system", made on December 30, Exchange Agreement 32 circulated on January 5. The delay, added to recent changes in the boards of Pdvsa and Cencoex, suggest that the government’s team disagreed on the foreign exc...

Deep Recession and Large Risks in 2015
VENEZUELA · Forecast · 22 Dec 2014

Executive Summary This report updates our macroeconomic outlook for 2015. In our central scenario, the economy sinks deeper into recession (–6.4 percent) and suffers triple-digit inflation (124.9 percent). Personal consumption slips by 4.2 percent. The current account balance turns negative (–$6....

Election Year Is Coming Up
VENEZUELA · Report · 18 Dec 2014

We’re coming up on an election year. National Assembly elections are due in September 2015 but may be brought forward or pushed back by a few months. With oil revenue and public support plunging, the government will have a hard time maintaining its majority. On the other hand, it’s poised to stre...

The U.S. – Cuba Agreement
VENEZUELA · Report · 18 Dec 2014

The U.S.-Cuba agreement reconfigures hemispheric relations. It integrates Cuba to world markets and rebuilds the relationship between the U.S. and the rest of Latin America. Hemispheric relationships move closer to a relationship between peers and weaken the image of the U.S. as a colonial threat...

Inflation Accelerates To 6.5% In November
VENEZUELA · Report · 17 Dec 2014

In the absence of BCV inflation data, we continue analyzing inflation using the food basket data published by the Center for Documentation and Social Analysis of the Venezuelan Federation of Teachers (Cendas).We estimate that the month-on-month National CPI inflation rate accelerated to 6.5 perce...

A Word Worth $20 Billion
VENEZUELA · Report · 11 Dec 2014

The recent reform of the BCV Law allows the Board of the Bank to include about $20 billion in assets booked as Various Foreign Exchange Assets since July 2014. The Bank has not disclosed details on these assets. Our sources report that this account contains two structured notes written by foreign...

Central Bank Law Reform
VENEZUELA · Report · 09 Dec 2014

The BCV Law reform decreed by President Maduro under the aegis of the Enabling Law (Official Gazette No. 6156 Extraordinary, 19 November 2014) is a step back in terms of foreign reserve management and transparency.Article 31 hints that the flow of macroeconomic and financial data published by the...

Pdvsa Bond
VENEZUELA · In Brief · 03 Dec 2014

Last week, the National Superintendency of Securities (SNV) posted on its website that on October 22 Pdvsa was authorized to issue $3 billion in foreign currency bonds by way of a private placement. No further details were disclosed. This approval occurred six days ahead of the Pdvsa 2014 $3 bill...

The new FX law
VENEZUELA · In Brief · 01 Dec 2014

The new FX Law was approved by President Maduro on November 13, published in the Official Gazette No. 6150 Extraordinary on November 18, and known to the public on November 28. It repeals the law passed last February (Official Gazette No. 6.126 Extraordinary, 19 February 2014). In our view, the l...

Will Venezuela Honor Its Debt?
VENEZUELA · Report · 28 Nov 2014

Executive Summary As oil prices continue to slip and an election year approaches, two questions are on everyone’s mind. First, will the government shift its adjustment strategy from one of attrition (import cuts; price, production, and trade controls; harsh punishments; and loose fiscal and monet...

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