Last week Diezani Alison-Madueke, Nigeria’s oil minister and the president of Opec, called for an extraordinary meeting of the oil exporters’ cartel in the face of falling prices. Rafael Correa, president of Ecuador, Opec’s smallest member, rallied behind her saying prices were “unnecessarily low”.
They may not achieve much – Saudi Arabia and other Gulf exporters are against production cuts – but the calls will nevertheless be welcome in Venezuela, where the sudden collapse of oil prices has been especially bad news. Read more
As Venezuelans queued to buy dollars last week to protect their savings from the world’s fastest inflation, intelligence agents arrested Antonio Ledezma, the opposition mayor of Caracas, on suspicion of being part of a coup plot backed by the US.
The news at least provided some distraction for a country mired in economic crisis, where GDP is expected to shrink 7 per cent this year and where citizens are reeling from effects of the latest back-door devaluation. Read more
“You want milk? Low fat? Skimmed?” asked a man who identified himself only as Juan. “I can get you milk, but it is going to cost you!”
My arrival for a three month reporting stint in Caracas has schooled me in some simple rules of life in the Venezuelan capital. One is that supermarkets almost never have milk, so if people want something to add to their coffee they need to find the telephone number of someone like Juan, a fixer.
The next rule is that once they’ve heard the price, they’ll prefer black coffee. Juan was charging 150 bolivares a litre ($24 at the official rate of 6.3 per US dollar). That is roughly ten times the cost of pasteurised milk at the regulated price in state-run supermarkets. Read more
Instead of clarity, still more confusion out of Venezuela on Tuesday as officials made yet another announcement on a long-awaited reform of the country’s dysfunctional foreign exchange system.
The government said dollars to cover 70 per cent “of the economy’s needs” would be supplied at the official rate of 6.3 bolívares, with the remaining 30 per cent offered at a variable rate starting at 12 bolívares to the dollar. That still left room for a third channel, to be known as Simadi, supposedly left to float freely according to supply and demand. Read more
Evo Morales was sworn in for his third consecutive term as president of Bolivia on Thursday. Before that, on Wednesday, he turned up for an indigenous ceremonial inauguration at the pre-Inca ruins of Tiwanaku wearing an outfit engraved with the sun god, worthy of an emperor. The symbolism was fitting: Bolivia’s longest-serving leader has not only championed indigenous rights but also managed to enrich one of Latin America’s poorest countries.
But the man who is arguably the world’s most successful socialist will face a tough time in his third term, as plunging global oil prices slash the country’s key earnings from natural gas. Read more
The late Hugo Chávez once rubbished Citgo as a “bad business”. But the US refining unit of PDVSA, Venezuela’s state oil group, may now be coming to the rescue of its socialist owners in Caracas, and in a thoroughly capitalist way.
Venezuela is in deep recession, its citizens are struggling to buy food and the government is struggling to meet debt commitments of at least $10bn this year. Step forward Citgo, which is reportedly preparing to issue $2.5bn in loans and bonds to raise some much-needed cash for its embattled parent company, and hence its embattled sovereign. Read more
While crude prices extended losses, Venezuela’s President Nicolás Maduro extended his trip abroad, seeking support to stop the collapse in the price of oil, which accounts for some 96 per cent of his country’s foreign earnings.
Meanwhile, back home, something else also extended: queues and discontent. Read more
Venezuela’s President Nicolás Maduro had many words of praise for his Chinese counterpart, Xi Jinping, after their meeting in Beijing this week.
However, as fastFT reports, the announcement that he had taken more than $20bn in investment from China for various types of projects left many wondering if the president of the oil-dependent Caribbean nation had really got what he wanted. Read more
Colombia’s second-largest rebel group, the National Liberation Army (ELN), said on Wednesday that it is willing to hold peace talks with the government of President Juan Manuel Santos, fuelling hopes the country is poised to turn the page on five decades of bloodshed.
If the talks go ahead, the ELN would consider quitting the use of force, according to remarks on video by the group’s aged leader Nicolás Rodríguez Bautista. That could result in an end to rebel attacks on pipelines that caused oil output losses officially put at around $500m last year. Read more
The decrease in mineral exports that has been hurting growth and investment in Peru, the world’s third largest copper producer, appears to have taken a heavy toll on economic growth, with President Ollanta Humala saying in a radio interview this week that 2014 growth eased to somewhere between 2.6 and 2.7 per cent.
This prediction, if confirmed by official statistics, would mark the Andean country’s slowest GDP growth rate in over five years. It would also represent a sharp slowdown from 2013, when the economy expanded at 5.8 per cent. Read more
Another year, another announced change to one of the world’s tightest and most complex foreign exchange regimes. Unsurprisingly, however, the long-awaited change has fallen short of the full scale reform of currency controls promised last week by Nicolás Maduro, Venezuela’s increasingly isolated president. Read more
Among the many woes afflicting Venezuela, one of the most pressing is the rapid decline in its reserves of hard currency. These fell from some $29bn at the start of 2013 to a low of about $19bn last week. But Beijing’s generous hand has since boosted them to $23.5bn, according to the central bank.
The fall in reserves had raised concerns about Venezuela’s ability to pay its debts, so the influx brought some relief to rattled markets, fuelling a small rally off recent lows in Venezuelan bonds, which remain among the highest yielding in the world.
But is the influx all it appears to be? Read more
One could talk about Venezuela’s economic policy in Shakespearean terms. To devalue or not to devalue; to converge foreign exchange rates or not to converge; to raise the price of the world’s cheapest gasoline or not to raise; to sell Citgo or not to sell; to default or not to do so – these are the questions.
The distortions created by the government’s foreign exchange and price controls – covering even Barbie dolls – keep playing a treacherous role in Venezuela’s unfolding tragedy. Why is this happening instead of not happening? To some analysts, that is the question. Read more
Ali al-Naimi, Saudi Arabia’s oil minister (pictured above on the right), and Rafael Ramírez, Venezuela’s foreign minister (on the left) met on the resort island of Isla Margarita late on Wednesday on the sidelines of a climate conference. As the continuing oil price drop keeps adding pressures to some Opec members, particularly Venezuela, there were expectations.
“We’re great friends!” Ramírez was quoted as saying as he arrived in Margarita. He later tweeted of an “excellent meeting” of “brother countries”. But the talks were mostly about climate change and there was no real word on prices, Opec’s oil policy, or the crude supply glut. Ramírez reportedly said only that the sliding oil price was a “concern for everyone.” Read more
Of the generation of radical Latin American leaders that have won office in the last decade, Ecuador’s Rafael Correa – perhaps best known internationally for sheltering WikiLeaks founder Julian Assange at his country’s London embassy – is among those with the most successful record. He has reduced poverty, promoted faster economic growth and dramatically improved the infrastructure of Opec’s smallest member. Now, a controversial proposal that would allow him to run for office indefinitely is set to come before congress.
But as the oil price falls, can the president sustain the achievements of his “citizen’s revolution” that have underpinned his popularity? Read more
Wasn’t it the case that the compensation Venezuela was ordered to pay Exxon by a World Bank arbitration tribunal was a “favourable end” to a longstanding legal battle because it was considerably lower than the figure the company had sought?
It seems not, even if those were the words Venezuela’s foreign minister, Rafael Ramírez, penned in a statement this month. Fast forward two weeks and the International Centre for Settlement of Investment Disputes, or ICSID, said it had received a request from the Venezuelan government for a revision of the award.
Venezuelans do not really dance the tango. But in the mooted sale of Citgo, the country’s US refining operation, that is what the socialist government has been doing – taking one step forward, two steps back.
In an interview published on Sunday by leading daily El Universal, Rodolfo Marco Torres, Venezuela’s finance minister, said the socialist government had scrapped any plans for a sale. “The sale of Citgo is discarded,” he told the paper. “Venezuela continues with Citgo and will continue making the investments in the refineries.” Read more
Bolivia, a key supplier of gas to the southern half of Latin America, is facing potentially harder times as falling international oil prices are piling downward pressure onto the price at which it sells its gas.
However, Carlos Villegas, the president of the state-run energy company, YPFB, is confident that if oil prices continue to hover around their current levels of $82 a barrel, Bolivia can avoid having to cut the prices of its exported natural gas. Read more
Blame the Empire.
Venezuela’s socialist President Nicolás Maduro on Wednesday accused the United States of oversupplying the market -in his words, “inundating the market”- to rattle oil prices. His government is maybe having a tough time coping with a sliding crude price as oil accounts for some 95 per cent of export revenues of the energy rich country.
The toxic combination of dropping oil prices, an economy in shambles and lower levels of foreign reserves, has been reinvigorating fears of a debt default. Alejandro Grisanti, head of Latin America economics research at Barclays, said on Wednesday in report titled “Venezuela: The perfect storm”: Read more
Bolivian minister of rural development Carlos Romero (L), Bolivian Vice-President Alvaro Garcia Linera, Bolivian President Evo Morales, and Bolivian Minister of Finance Luis Arce
Bolivia’s president, Evo Morales – along with his deputy Alvaro García Linera, a suave Marxist mathematician – seems to be sailing towards his third presidential victory in Sunday’s election, thanks to a self-styled socialist agenda, popular among impoverished Bolivians.
Despite the government’s sometimes fiery anti-capitalist rhetoric, Morales has managed to triple the size of the Andean country’s economy, which is forecast to grow at South America’s fastest clip this year.
In the country’s capital, La Paz, Warwick-educated finance minister Luis Arce explained to beyondbrics the Bolivian model behind the economy’s success: Read more