US dollars

Mar. 25, 2013 (TSR) –  On March 19, the Venezuelan government created the Complementary Currency Administration System, CADIVI (in Spanish), which will allow greater transparency in the distribution of dollars throughout the country and guarantee that they are directed toward productive activities, thus strengthening the economy and to improve the process of foreign currency assignations.

The news was announced by interim president Nicolás Maduro, who said that as Monday, March 25, pending currency assignations will be carried out using the new method.

“Venezuelans that need access to currencies with special conditions are going to have system that is complementary to CADIVI [the Foreign Exchange Administration Commission] as of this week,” he said.

“We have a system that is transparent and rapid that will allow us to organize and prioritize the distribution of currencies to those economic sectors that guarantee growth and the correct functioning of the economy,” said Planning Finance Minister Jorge Giordani.

Maduro also announced that preferential exchange rate of 4 points less than the general rate for credits will be available to the manufacturing sector in order to continue promoting national production.

“Venezuela has enough dollars coming in for its economy to function year by year. At the end of this year there will be a surplus because of the new currency system.”

Central Bank President Nelson Merentes explained the characteristics of the new system in detail.

“It is well defined,” he said. “The dollars have to go toward productive activity.”

He said that the new mechanism should influence economic growth and help lower prices.

The new system is based on a public auction with the participation of  businesses that are registered with the CADIVI. This public auction will be scheduled by the Superior Body for the Optimization of the Exchange System, which was founded last February and comprised of the Ministry of Planning and Finance, the Central Bank of Venezuela, and the Ministry of Oil and Mining.

The auction is a variation of the ideas of William Vickrey, a Canadian economist and winner of the Nobel Prize of Economics in 1996, according to Giordani.  His work focused on the consequences of asymmetry of information and the use of incentives.

In 1961, Vickrey published an article which explains a type of auction with just a single round of negotiation and private bids among companies or businesses. The goods are assigned – in this case, dollars – to the agent that offers the highest bid, but at the rate of the second highest bid. This reduces the possibility for any one party to have sway over the goods that are being auctioned.

The president of the Central Bank, Nelson Marentes, said last Tuesday that this method, which will be applied with some modifications, eliminates the component of speculation in the market. He called the system agile and trustworthy.

Last year CADIVI assigned more than $33 billion dollars for different items in 2012, an increase of 5% compared to the previous year. About $25 billion of the total amount was directed to productive imports like machinery and inputs which generated wealth and well-being through job creation according to CADIVI president Manuel Barroso.

In an interview on Venezolana de Televisión, Barroso said the currency system has worked perfectly normally to grant dollars, adding that Venezuela has been taking steps since then to make the process easier.

He reiterated that the authorization of electronic currency is automatically renewed each year “to simplify, facilitate and reduce paperwork for natural persons and exchange operators.”

By early January of 2013, CADIVI wactivated a quota for online shopping.

With the changes last year, currency allotments for travel during holiday seasons are guaranteed, and improvements have been made to that system.

Meanwhile, pensions for senior citizens living abroad have been also guaranteed. Pensioners can request U.S. Dollars or Euros every six months in an amount equivalent to the local currency they would receive.

Since 2003, Venezuela has used exchange controls to avoid excess capital flow, boost development, and strengthen national sovereignty. CADIVI is the state agency responsible for administering and coordinating national currency exchange policies. This agency grants the currencies needed for imports, exports, family remittances, and other types of transactions.

Central Bank Reform Also Allows Venezuelans to Have Bank Accounts in Foreign Currencies

As of mid-February last month, Venezuelan citizens are able to hold bank accounts in foreign currencies, according to resolution 13-02-01 by the Central Bank of Venezuela.

This was made possible by a reform to Exchange Agreement 20, which now establishes that citizens may make cash deposits of up to US $2,000 per month or its equivalent in other currencies into accounts that are similar to checking accounts, but that will not issue checks.

Citizens may also keep currency in these accounts originating from transfers made abroad of funds deposited in a foreign currency in a foreign bank.

They may also hold resources coming from remittances sent by families residing abroad, including pensions and retirement money, salary paid by international organizations or by the Venezuelan government, payment for professional services abroad or money from investments in financial institutions.

Also allowed are funds from transfers of a person’s own funds deposited in a foreign currency in financial entities abroad of which they are the owners, money from the liquidation of loans, and other types of financing outside of the private sector.

Withdrawals from these accounts can be made only at ATMs abroad, for which users will be issued debit cards.

The period to mobilize funds from transactions through the Transaction System for Foreign Currency Denominated Securities (Sitme) is until February 8, as the system will be eliminated.

Agreement 20 states: “Such accounts may be kept for a period of 12 months in the case of natural persons and three months in the case of legal persons, both counted from the date of the relevant transaction settlement, for which universal bank receptors such deposits must have suitable mechanisms for relevant monitoring.”

In this case, banks should inform the Central Bank of Venezuela of the existence of assets in those accounts in within 15 business days following the expiration of the relevant period.

Venezuela Has Sufficient Oil Reserves to Satisfy Global Demand for a Century

The vice president for exploration and production of Venezuela’s state oil company, Petróleos de Venezuela (Pdvsa), Eulogio del Pino, said Thursday that Venezuela has 297.57 billon barrels of certified oil reserves, enough to satisfy global demand for 100 years.

“There are no larger reserves in the world than ours,” he said. “The Orinoco Oil Belt had been underestimated and was used according to the convenience of a few [individuals]. But Commander Chávez established a geopolitical arrangement in which more than 14 world leaders participated in a joint project that allowed us to certify the reserves.”

Del Pino spoke during an event called a “Bolivarian Dialogue” alongside acting President Nicolás Maduro at the Orinoco Oil Belt in the northeastern state of Monagas.

Venezuela’s state-owned oil company, Petróleos de Venezuela (PDVSA), published its fiscal report for 2012 in January, indicating increased investments in production.

During 2012, PDVSA invested over $22 billion to guarantee in an efficient manner the development of new projects, particularly in natural gas, oil exploration, production, and refining. The figure for the previous year was $16 billion, which means that investments have grown by 42.87%.

PDVSA incorporated $6.89 billion in new financing, comprised of $3 billion in bonds expiring in 2035 and the rest through lending by financial institutions including China Development Bank Corporation, Credit Suisse AG, Japan Bank for International Cooperation, Deutsche Bank, Banco de Venezuela, Banco del Tesoro. These funds will go primarily to PDVSA’s investment plans.

With this new borrowing, the company reaffirms its policy of sovereignty as reflected in investments in growth and shoring up strategic sectors, particularly the development of the Orinoco Oil Belt through capital contributions to the new joint companies.

During 2012, PDVSA’s direct social investment reached $40.35 billion, and its fiscal contribution to the Venezuelan state was $85.98 billion, 5% more than in 2011.

As of December 31, 2012, PDVSA had certified oil reserves of more than 297 billion barrels, more than anywhere else in the world, which is irrefutable proof of the strength of the principal industry of all Venezuelan men and women.

Thanks to a tested financial strategy, the leadership of President Hugo Chávez, and the policies of Venezuela’s Bolivarian government, PDVSA is ever more united with its people and in a privileged position to achieve its 2013 investment plan under the framework of the 2013-2019 Plan of the Nation, which for its great magnitude will require significant financial resources from oil income and other sources.

For his part, Acting President Nicolas Maduro said this week some new strategic associations will be established with other countries to safeguard the national economy, and he reiterated that the country has sufficient oil reserves to comply with the Plan of the Nation for 2013-2019.

“Our country is ever stronger economically,” he said.

PDVSA to Invest $25 billion in Oil Projects This Year

The state oil company Petróleos de Venezuela (PDVSA) will invest more than $960 million to improve the facilities of the José Antonio Anzoátegui Industrial Complex in Barcelona, Venezuela, this year, according to an announcement earlier this month by Oil and Mining Minister Rafael Ramírez.

Operating at the complex are the joint venture companies Petropiar, Petroanzoátegui, Petrocedeño and Petromonagas, which process crude oil from the Orinoco Oil Belt in the southern part of the country, the site of the world’s largest oil deposits.

Some 90 projects are expected to be carried out this year, including 23 days of major maintenance, to guarantee the effectiveness of operations in accordance with quality and safety standards.

The information was offered in a PDVSA press release, which also stated that a new refinery will be built for processing crude from the joint companies of the Junín Division at Petroanzoátegui.

Ramírez indicated that the Antonio Anzoátegui Industrial Complex currently has a capacity to process 600,000 barrels of per day of heavy and extra heavy oil from the Orinoco Oil Belt.

He said that by next year, PDVSA hopes to reach production levels of 4 million barrels per day, and by 2019, the goal is to reach 6 million barrels per day.

Regarding the company’s investment plan for this year, Ramírez said that it includes a total of $25 billion, $3 million more than in the previous year.

Central Bank of Venezuela Expects $41.4 Billion from Oil in 2013

Venezuela’s oil minister and president of the state oil company Petróleos de Venezuela (PDVSA), Rafael Ramírez, said on March 19 that it estimates it will sell the $41.479 billion in foreign currency to the country’s central bank this year, an amount similar to that which it provided when oil prices were sky-high in 2008.

“We have available to the country, according to economic projections, all the foreign currency needed for its functioning,” he said.

Ramírez explained that ensuring the flow of currencies is the purpose of the Superior Organ for the Optimization of the Exchange System, an institution created in February that includes the Central Bank, the Ministry of Planning and Finance, and the Ministry of Oil and Mining. It aims to achieve maximum transparency and efficiency in foreign currency assignations.

The currencies that enter the Central Bank “will be available for distribution in the country in accordance with the criteria that the Superior Organ will continue establishing,” Ramírez said.

PDVSA also estimates that it will send $9.6 billion to the National Development Fund this year.

Planning Minister Jorge Giordani said that with the creation of the new Complementary Currency Administration System (SICAD), this entity will guarantee transparency in currency assignation in conjunction with the Currency Administration Commission (CADIVI)

“In the Superior Organ we are in close communication to guarantee that these currencies arrive as planned in the central bank and we are working on different systems to optimize this immense quantity of currency that we have in the country,” he said.

He added that thanks to oil revenues and the new financial architecture of the revolution, the country has achieved important support in the form of the Development Fund and agreements with China.

Ramírez noted the transparency of SICAD, which will supply currencies needed by industries registered with CADIVI.

“We believe that we have tremendous potential. It is a very transparent system that we have used and that functions perfectly,” he said.

Venezuela a Regional Leader in Human Development Index (HDI) Growth

In its latest report, the United Nations Development Programme (UNDP) notes that Venezuela posted the second highest growth in the Human Development Index (HDI) of any Latin American or Caribbean country.  Venezuela was 71st on the global list, with an HDI of 0.748.

This HDI value places Venezuela among a group of countries considered to have “high human development” and it is higher than the Latin American and Caribbean average of 0.741, as well as significantly higher than the average of medium development countries of 0.640.

The UNDP recognizes the transformation in development of a great many countries that are achieving significant progress in human development.  It highlights progress in the last 12 years in peoples’ education, health and income.

Between 2000 and 2012, the leader of the Bolivarian Revolution, Hugo Chávez, implemented a set of policies dedicated to transforming the country’s economic model, as well as to fighting poverty and inequality.

In those years, Venezuela’s HDI grew at an annual rate of 1.03 percent, only surpassed in Latin America and the Caribbean by Nicaragua’s 1.04% growth.

Social missions during the so-called “Chávez era” have had significant positive impacts on Venezuela’s HDI, and along with Nicaragua and Cuba, they are the only countries in the Americas to average over 1% growth since 2000.

The Human Development Index is a measure used by the United Nations to evaluate the success or failures of government policies related to the comprehensive development of their citizens.

The UNDP report, which is published annually, analyzes the extent to which countries have been able to improve in the areas of poverty, exclusion and inequality.

Suspension of U.S. Relations

On March 20, Venezuelan Foreign Minister Elías Jaua announced the momentary suspension of the communication channel established to improve relations with the United States.

The decision was made after Roberta Jackson, Assistant Secretary of State for Western Hemisphere Affairs, questioned the Venezuelan electoral system and democracy.

“Hopefully, we will see a rectification and end to U.S. interference,” the Venezuela Foreign Minister said, after recalling that Roy Chaderton, commissioned to maintain the communication channel with Jackson, was the Venezuelan ambassador to the Organization of American states, AVN reports.

“All diplomatic and consular relations will be maintained,” Jaua clarified, emphasizing that only the channel agreed with the official last November has been suspended.

He reiterated that the only transition in Venezuela is toward the socialism promoted by the leader of the Bolivarian Revolution, Hugo Chávez.

Jaua made this statement during the decoration ceremony of Venezuelan diplomats expelled from the U.S. in reprisal for the removal from office of two U.S. military attaches in Caracas, accused by authorities of interference in the Bolivarian nation’s internal affairs.

Maduro 17-Point Advantage in Election Polls

Venezuelan Acting President Nicolas Maduro is leading 17 points in Elections polls. (thesantosrepublic.com)
Venezuelan Acting President Nicolas Maduro is leading 17 points in Elections polls. (thesantosrepublic.com)

The coordinator of the polling firm International Consulting Services (ICS), Lorenzo Martínez, spoke with the Venezuelan news website Noticias 24 yesterday about a study it conducted ahead of the April 14 presidential election which indicates a 17.7-point lead for acting President Nicolás Maduro 17.7 over opponent Henrique Capriles.

Martínez highlighted two important factors, saying: “The first is the connection between the political project of the government candidate and Chávez, the other is that Maduro’s discourse has improved since he took over the presidency.”

He also referred to the level of rejection of the opposition candidate, which according to ICS is 63%.

“We’re talking about an aspect that was repeated also [in last year’s presidential election] on October 7 and it’s due to the fact that Capriles’ discourse is challenging his opponent, and citizens think it’s in appropriate because they’re tired of that.”

Regarding the suggestion that President Chávez was always incendiary and radical, Martínez said: “Chávez in his time knew how to position people and his harsh words were pardoned. Meanwhile, Capriles is trying to imitate it to take his opponent to the limit. But it’s not the same and people are calling for an end to it.”

Regarding perceptions of the government’s economic measures, he said: “55.6% of the population has felt the are positive, because they see the sincerity that the executive has had to inform about what is happening with the country’s financial situation. moreover, they believe that the shortages are due to hoarding and not a lack of dollars.

Finally, he said Maduro “represents the continuity of the revolutionary project, but if he fails in his management it could put in jeopardy the validity and permanence of Chavismo in terms of the leadership of the country.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here