Identifier
Created
Classification
Origin
06CARACAS704
2006-03-16 12:03:00
UNCLASSIFIED
Embassy Caracas
Cable title:
VENEZUELA MACROECONOMIC UPDATE
how-toVZCZCXYZ0000 RR RUEHWEB DE RUEHCV #0704/01 0751203 ZNR UUUUU ZZH R 161203Z MAR 06 FM AMEMBASSY CARACAS TO RUEHC/SECSTATE WASHDC 3575 INFO RUEHBO/AMEMBASSY BOGOTA 6141 RUEHBU/AMEMBASSY BUENOS AIRES 1068 RUEHLP/AMEMBASSY LA PAZ MAR LIMA 9977 RUEHQT/AMEMBASSY QUITO 1843 RUEHSG/AMEMBASSY SANTIAGO 3331 RUEHGL/AMCONSUL GUAYAQUIL 0354 RUCPDOC/DEPT OF COMMERCE RUEHC/DEPT OF LABOR RUEATRS/DEPT OF TREASURY RHEHNSC/NSC WASHDC RUMIAAA/HQ USSOUTHCOM MIAMI FL
UNCLAS CARACAS 000704
SIPDIS
SIPDIS
STATE FOR WHA/AND, WHA/EPSC, EB
TREASURY FOR OASIA - GIANLUCA SIGNORELLI
USCINCSO FOR POLAD
BUENOS AIRES FOR TREASURY - MHAARSAGER
E.O. 12958: N/A
TAGS: ECON EFIN PGOV VE
SUBJECT: VENEZUELA MACROECONOMIC UPDATE
REF: A. CARACAS 00485
B. CARACAS 00512
C. CARACAS 03601
D. CARACAS 03782
E. CARACAS 00632
F. CARACAS 00208
SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET DISTRIBUTION.
--------
OVERVIEW
--------
UNCLAS CARACAS 000704
SIPDIS
SIPDIS
STATE FOR WHA/AND, WHA/EPSC, EB
TREASURY FOR OASIA - GIANLUCA SIGNORELLI
USCINCSO FOR POLAD
BUENOS AIRES FOR TREASURY - MHAARSAGER
E.O. 12958: N/A
TAGS: ECON EFIN PGOV VE
SUBJECT: VENEZUELA MACROECONOMIC UPDATE
REF: A. CARACAS 00485
B. CARACAS 00512
C. CARACAS 03601
D. CARACAS 03782
E. CARACAS 00632
F. CARACAS 00208
SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET DISTRIBUTION.
--------------
OVERVIEW
--------------
1. (SBU) Venezuela,s strong economic growth performance
will most certainly continue through 2006 given the continued
high oil price scenario and profligate BRV spending this
election year, which is fueling a consumption boom. We
also expect the state to continue to consolidate its role in
the nation,s economic life. The quality of economic growth
remains poor with low net new job creation, private sector
direct investment remains anemic given the uncertain
political environment, and the high levels of monetary
liquidity are creating their own set of difficulties for the
Central Bank. For now, the high levels of BRV spending,
which could reach 40 percent of GDP this year, will continue
to mask a multitude of economic distortions and structural
weaknesses that have been created through Bolivarian economic
mismanagement.
--------------
ECONOMIC GROWTH
--------------
2. (U) Real GDP grew by 9.3 percent in 2005. The 2004
economic recovery continued in 2005, driven largely by a huge
increase in government expenditures as a result of the
continued oil bonanza (see table). Importantly, the non-oil
sector has led the economic growth in 2005: mining (1.7
percent),manufacturing (8.7 percent),electricity and water
(8 percent),commerce and repair services (19.9 percent),
construction (20.1 percent),transportation and storage (13.9
percent),communications (15.9 percent),and finance and
insurance (27.2 percent). The oil sector has only
registered 1.7 percent growth due to low PDVSA investment to
support increased production. The increase in economic
growth in the oil sector is mainly due to the high oil
prices. In 2006, we expect the economy to grow around 6 to 7
percent, assuming continued high oil prices and anticipated
aggressive BRV election year spending (at least 30.5 percent
of GDP, with potential off-budget spending of up to 10
percent of GDP).
REAL GDP GROWTH RATE
(PERCENTAGE)
--------------
OIL NON-OIL TOTAL
1999 -3.8 -6.9 -6.0
2000 2.3 4.2 3.7
2001 -0.9 4.0 3.4
2002 -14.2 -6.0 -8.9
2003 -1.9 -7.5 -7.7
2004 11.6 17.8 17.9
2005 (1) 1.7 10.3 9.3
2006 (2) 3.0 7.4 6.7
(1) Preliminary figures.
(2) Projections.
SOURCE: Central Bank of Venezuela and Metroeconomica
--------------
UNEMPLOYMENT
--------------
3. (U) Second semester 2005 figures from the National
Institute of Statistics (INE) show an average unemployment
rate of 11.4 percent, the lowest in seven years. However,
workforce shifts from unemployed to inactive, rather than
substantial new job creation, have helped to lower the
unemployment rates. The inactive category includes all
persons 15 years or older who are not seeking employment.
This includes students, homemakers, retirees, those
physically unable to work, and those that work for less than
15 hours a week without pay for other family members. The
informal sector of the economy accounted for 48 percent of
the occupied working labor force.
4. (U) Despite 2005,s impressive economic growth rate of 9.3
percent, the number of private sector jobs decreased by
230,890 (2.5 percent) and public sector jobs increased by
47,914 (2.8 percent),from December 2004 to September 2005.
Some analysts suggest that private firms are producing more
with the same number of employees because of the high costs
to hire an additional employee. Under current Venezuelan
labor laws, large companies in the formal economy pay on
average the equivalent of 24 months of salary per employee
per year. The increase in unemployment to 12.9 percent for
January 2006 is normal for the first month of the year, after
an adjustment for seasonal increases in employment for the
Christmas holidays.
UNEMPLOYMENT (percentage in second semester)
--------------
1999 14.5
2000 13.2
2001 12.8
2002 16.2
2003 16.8
2004 13.9
2005 11.4
2006
JAN 12.9
SOURCE: BRV National Institute of Statistics (INE).
--------------
INTERNATIONAL RESERVES
--------------
5. (U) The Central Bank (BCV)-held international reserves
increased to USD 30.4 billion at the end of 2005 because of
higher than expected oil export revenue (approximately USD
48.1 billion). This level of reserves covers approximately
15 months of imports. The reserves would have been higher,
but the BCV transferred USD 6 billion to the National
Development Fund (FONDEN) during the last quarter 2005, as
required by the Central Bank Law (passed in July 2005). The
level of international reserves is expected to decrease
during 2006 because the Central Bank Law established that
PDVSA will only transfer foreign exchange earnings needed for
its domestic expenses, taxes, royalties, and dividends to the
BCV, and the rest to FONDEN. (Note: Currently, FONDEN has
USD 8.425 billion, including direct transfers from PDVSA. End
Note.) In February 2006, Chavez called for the transfer of
USD 4.0 billion from the BCV to FONDEN. The Central Bank Law
also directed the BCV to determine the adequate level of
reserves, which we anticipate will be USD 25 billion, based
on prior Chavez, statements (reftel A).
6. (U) The results below include the Macroeconomic
Stabilization Fund (FEM),which was originally established in
1998 as a savings fund to reduce the impact of oil income
fluctuations on the fiscal, foreign exchange and monetary
balances (a rainy day fund). The maximum level reached by
this Fund was USD 7,116 million on December 12, 2001. In
2002 and 2003, the Venezuelan government used the funds to
cover the fiscal deficit and in a widely publicized scandal
suspended transfers of USD 3.2 billion to the FEM. The
balance was USD 737 million on March 1, 2006.
INTERNATIONAL RESERVES (USD MILLIONS)
--------------
BCV FEM TOTAL
1999 DEC 15,164 215 15,379
2000 DEC 15,883 4,588 20,471
2001 DEC 12,296 6,227 18,523
2002 DEC 12,003 2,857 14,860
2003 DEC 20,666 700 21,366
2004 DEC 23,498 710 24,208
2005 DEC 29,636 732 30,368
2006
JAN 27,888 734 28,622
FEB 28,603 736 29,339
SOURCE: Central Bank of Venezuela.
--------------
MONEY SUPPLY/M2
--------------
7. (U) Monetary liquidity or money supply grew 52.7 percent
during 2005, largely as a result of foreign exchange controls
and increased government expenditures (reftel B). This is
the third annual consecutive huge increase, which implies
potential higher inflation rates in the medium-term. Most of
the excess liquidity accumulated in the economy during these
months has been withdrawn by the Central Bank (BCV) issuing
short-term certificates of deposits, mostly to domestic
banks. The net balance in circulation of certificates of
deposit was 30.10 trillion Bolivars (approximately USD 14.0
billion) at the end of January 2006, or 42.7 percent of the
total money supply.
8. (U) The Finance Ministry also issued USD 3.0 billion in
dollar-denominated bonds, purchasable in local currency
(reftel C). This alleviated some of the excess liquidity,
which if left unchecked, would cause inflationary pressures.
The BRV also purchased USD 2.8 billion and resold
approximately USD 1.1 billion in dollar-denominated Argentine
bonds to local investors(reftel D). In both cases, local
investors could sell the bonds overseas, obtaining dollars,
and reducing the supply of Bolivars. We anticipate that the
BRV will complete similar issuances in 2006.
MONEY SUPPLY/M2 (3) MONETARY BASE
-------------- --------------
End of: (million Bs.) Pct.Chg. (million Bs.) Pct.Chg.
1999 12,740,836 20.0 4,909,822 32.1
2000 16,284,578 27.8 5,790,841 17.9
2001 16,976,364 4.2 6,478,295 11.9
2002 19,573,369 15.3 7,701,120 18.9
2003 30,835,975 57.5 11,274,439 46.4
2004 46,363,672 50.4 16,524,461 46.6
2005 70,794,342 52.7 23,086,512 39.7
2006 (4)
JAN 70,434,577 (0.5) 22,042,400 (4.5)
(3) M2 includes currency, demand deposits, savings,
and certificates of deposit.
(4) Preliminary figures.
SOURCE: Central Bank of Venezuela (BCV).
--------------
EXCHANGE RATES AND BCV LIQUIDATIONS
--------------
9. (U) The National Exchange Control Administration
(CADIVI),created in February 2003, oversees authorized
foreign exchange transactions. Currently, approximately 95
percent of the private foreign exchange is processed through
CADIVI and approximately 5 percent is processed by the
parallel market. Public sector entities can acquire foreign
currency directly from the Central Bank for public sector
imports, debt payments, and other expenses abroad. In 2005,
CADIVI authorized on average USD 83.2 million a day, and the
BCV liquidated on average USD 78.6 million a day in exchange
transactions. The parallel market exchange rate was 2,616
Bolivars per dollar as of March 1, 2006. BRV officials have
promised no devaluation for this year. At 2,150 Bolivars per
dollar, we estimate that the Bolivar is approximately 20
percent overvalued. Economic sources anticipate a devaluation
in early 2007.
END OF PERIOD EXCHANGE RATES (Bs./USD)
AND BCV LIQUIDATIONS
-------------- --------------
OFFICIAL FOREX
OFFICIAL MARKET PARALLEL MARKET LIQUIDATIONS
(MILLIONS USD)
-------------- --------------
1999 648.25
2000 699.75
2001 763.00
2002 1,401.25
2003 1,600.00 2,875.00 4,594.52
2004 1,920.00 2,673.41 14,780.80
2005 2,150.00 2,586.08 19,430.50
2006
JAN 2,150.00 2,643.80 1,867.20
SOURCE: Central Bank of Venezuela, and Metroeconomica.
--------------
CONSUMER PRICE INDEX
--------------
10. (U) The BCV reported that consumer prices for the
Caracas metropolitan area rose 12.5 percent from February
2005 to February 2006. This is the lowest annual inflation
rate of the last 50 months. However, around 50 percent of
all consumable goods have been under a price control regime
since February 11, 2003. Core inflation removes the most
volatile categories from the CPI. Both indicators increased
at similar rates during the last two years. Effective
February 1, 2006, the government increased the minimum wage
by 15 percent to 465,750 Bolivars (USD 216.6) per month. This
is expected to have a limited effect on 2006 inflation, which
could be higher than 2005. For 2006, the BRV has an inflation
target of 10 percent (Dec-Dec).
CONSUMER PRICE INDEX (1997 AVG = 100) and CORE INFLATION
-------------- --------------
CPI CPI CORE INFLATION
END OF PERIOD (% change) (% change)
1999 181.6 20.0 N/A
2000 206.0 13.4 12.8
2001 231.3 12.3 11.3
2002 303.5 31.2 31.2
2003 385.7 27.1 37.9
2004 459.7 19.2 21.1
2005 525.7 14.4 14.6
SOURCE: Central Bank of Venezuela.
--------------
BALANCE OF PAYMENTS
--------------
11. (U) The overall balance of payments may show a deficit
during 2006 for the first time in the last four years because
of the expected continued capital flight, including PDVSA,s
depositing funds abroad. This deficit is the equivalent to a
decrease in the international reserves. During the period
2003-2005, with exchange controls in force, private sector
capital flight increased by around USD 15.7 billion.
Additionally, public sector assets abroad also increased
during those years by USD 18.9 billion. One of the main
reasons for the large public sector deposits abroad for 2005
is the reform of the Central Bank Law in July 2005 by which
the BCV transferred USD 6 billion to the National Development
Fund (FONDEN). Currently, FONDEN holds an estimated USD 8.425
billion, including transfers from PDVSA. With additional
transfers from PDVSA and an additional USD 4 billion transfer
from the international reserves, FONDEN could have USD 18
billion by year,s end.
BALANCE OF PAYMENTS SUMMARY
(USD BILLION)
-------------- -
2002 2003 2004 2005 2006
(1) (2)
CURRENT ACCOUNT (A) 7.6 11.4 13.8 25.4 13.7
EXPORTS, FOB 26.8 27.2 38.7 55.5 55.4
IMPORTS, FOB -13.4 -10.7 -17.3 -24.0 -31.8
TRADE BALANCE 13.4 16.5 21.4 31.5 23.6
NET SERVICES AND RENT -5.6 -5.0 -7.5 -6.0 -9.8
NET TRANSFERS -0.2 -0.1 -0.1 -0.1 -0.1
CAPITAL AND FINANCIAL
ACCOUNT (B) -9.2 -5.0 -9.0 -16.1 -11.9
DIRECT INVESTMENT -0.2 1.3 1.9 1.5 3.2
PORTFOLIO INVESTMENT -2.3 -1.0 -2.0 2.7 3.1
OTHER INVESTMENT -6.7 -5.3 -8.9 -20.4 -18.2
NET ERRORS AND
OMISSIONS (C) -2.8 -1.0 -2.9 -3.8 -3.4
OVERALL BALANCE
(A) (B) (C) -4.4 5.4 1.9 5.5 -1.6
(1) Preliminary figures.
(2) Projections.
SOURCE: Central Bank of Venezuela, and Metroeconomica.
--------------
OIL EXPORTS
--------------
12. (U) Total value of the oil exports reached USD 48.059
billion during 2005 with an average export price for the
Venezuelan oil basket of USD 45.4 per barrel. Venezuela,s
current OPEC production quota is 3.22 million barrels.
However, Venezuela,s oil production remains below the quota,
according to OPEC figures. According to OPEC,s Monthly Oil
Report for February 2006, Venezuela,s oil production was
2.54 million barrels per day. The average oil price per
barrel was USD 53.0 as of February 24, 2006.
OIL EXPORTS (THOUSAND B/D)
--------------
AVERAGE
EXPORTS (1) EXPORT PRICE EXPORTS
(THOUSAND B/D) (USD/B) (USD MILLION)
1999 2,785 16.0 16,735
2000 2,791 25.9 27,874
2001 2,711 20.2 21,745
2002 2,681 22.0 21,532
2003 (2) 2,339 25.8 22,029
2004 (2) 2,635 33.1 31,917
2005 (2)(3) 2,900 45.4 48,059
(1) Includes crude oil and oil products.
(2) Figures for 2003 onward appear to include orimulsion and
production from Strategic Associations.
(3) Preliminary figures.
SOURCES: Central Bank of Venezuela, Ministry of Energy and
Petroleum, OPEC, and Embassy,s estimates.
--------------
MERCHANDISE TRADE BALANCE
--------------
13. (U) Total imports increased 38.7 percent during 2005
compared to 2004, largely due to the economic recovery, and
increased approvals and liquidations of foreign exchange
requests by CADIVI. With continued exchange controls, we
believe the Bolivar, valued at 2,150 per dollar, is
overvalued by approximately 20 percent, acting as a subsidy
for imports to Venezuela. According to the National
Statistics Institute (INE),the United States was the largest
exporter to Venezuela (30.4 percent),followed by Colombia
(11.0 percent),Brazil (9.2 percent),Mexico (7.2 percent),
Japan (3.8 percent),and China (3.7 percent). For 2006, we
expect a continued high merchandise trade surplus due to a
stable oil price outlook.
MERCHANDISE TRADE BALANCE (USD BILLION)
--------------
2002 2003 2004 2005(1) 2006(2)
OIL EXPORTS (A) 21.5 22.0 31.9 48.1 47.1
NON-OIL EXPORTS (B) 5.3 5.2 6.8 7.4 8.3
TOTAL EXPORTS (C) 26.8 27.2 38.7 55.5 55.4
TOTAL IMPORTS (D) -13.4 -10.7 - 17.3 -24.0 -31.8
MERCHANDISE TRADE
BALANCE (C)-(D) 13.4 16.5 21.4 31.5 23.6
(1) Preliminary figures
(2) Projections.
SOURCE: Central Bank of Venezuela, and Metroeconomica.
--------------
FOREIGN DIRECT INVESTMENT
--------------
14. (U) Foreign direct investment showed an inflow of USD
1,497 million during 2005. Foreign oil companies operating in
Venezuela reinvested USD 1,519 million of earnings, and
non-oil companies in Venezuela made new foreign direct
investments of USD 990 million. On the other hand, the
Venezuelan oil sector increased investments abroad for an
amount of USD 1,332 million, including reinvestment of
earnings. Foreign direct investment in Venezuela has been
relatively low since 2002 because of the uncertain political
environment, increased government intervention in the
economy, and BRV support for expropriations and seizures of
land and property.
Abroad In the country Net flow
1997 -557 6,202 5,645
1998 -1,043 4,985 3,942
1999 -872 2,890 2,018
2000 -521 4,701 4,180
2001 -204 3,683 3,479
2002 -1,026 782 -244
2003 -1,318 2,643 1,325
2004 348 1,492 1,840
2005 (1) -1,460 2,957 1,497
(1) Preliminary figures
Source: Central Bank of Venezuela.
--------------
CARACAS STOCK EXCHANGE INDEX
--------------
15. (U) The Caracas Stock Exchange (CSE) index recovered
during the first two months of 2006 after declining 31.9
percent in 2005. This recovery could be explained by the
excess liquidity in the market, the decreasing interest rates
in the Venezuelan banking system, the government controls on
the capital movements, and the lack of options to invest.
According to the CSE President Nelson Ortiz, 2006 could be a
good year for the Venezuelan capital market. As an indicator
of the current strong market, local media report that in
three years the price of a trading desk at the Caracas Stock
Exchange increased from USD 14,000 to USD 465,000.
CARACAS STOCK EXCHANGE CAPITALIZATION INDEX
(DECEMBER 1993 = 1,000)
--------------
2004 2005 2006
JANUARY 27,956.14 29,303.14 25,119.59
FEBRUARY 27,484.76 30,388.61 28,260.50
MARCH 26,579.69 28,977.07
APRIL 25,879.34 25,089.14
MAY 25,405.73 22,493.91
JUNE 25,285.17 21,595.64
JULY 25,611.18 20,561.79
AUGUST 27,263.38 19,702.21
SEPTEMBER 30,111.62 20,769.36
OCTOBER 29,618.87 19,651.74
NOVEMBER 29,306.54 19,992.69
DECEMBER 29,952.18 20,394.83
SOURCE: Caracas Stock Exchange, Banco Mercantil, and
Metroeconomica.
--------------
CENTRAL GOVERNMENT FINANCIAL RESULTS
--------------
16. (U) Total central government ordinary expenditures
increased to 27.4 percent of GDP. This increase in public
spending was initiated in mid-2003, and has been possible
because of stronger oil prices, as well as higher internal
tax collection, especially sales tax and import duties. The
Venezuelan Tax Authority (SENIAT) has increased tax
collection 106 percent from USD 8.66 billion in 2003 to USD
17.85 billion in 2005. Although the 2005 central government
financial results show a fiscal surplus (2.1 percent of GDP),
total government off-budget expenditures could have reached
USD 5 billion. During the first two months of 2006, the
National Assembly approved 8 trillion Bolivars (USD 3.7
billion) in additional credits to be spent by the government.
This is in addition to the already approved 2006 National
Budget (USD 40.5 billion). We anticipate that at government
expenditures to be at least 30.5 percent of GDP, with
potential off-budget spending of up to 10 percent of GDP in
2006.
CENTRAL GOVERNMENT FINANCIAL RESULTS
(Percentage of GDP)(1)
--------------
2004(2) 2005(2)
TOTAL REVENUES 23.9 29.5
Oil income 11.5 14.6
Non-oil income 12.5 14.9
TOTAL EXPENDITURES 26.3 27.4
OVERALL FISCAL SURPLUS/DEFICIT(-)-2.4 2.1
(1) Including FONDEN
(2) Preliminary figures
Source: Central Bank of Venezuela.
--------------
PUBLIC SECTOR DEBT
--------------
17. (U) The government has been actively refinancing its
domestic and external debts since 2003. In late February, the
Finance Minister announced that the BRV will reduce debt by
27.4 percent by the end of 2007. The BRV plans to prepay
some of its most expensive external debt and improve the
maturity profile of domestic debt (reftel E). During November
2005, the Ministry of Finance allocated bonds for the
equivalent of USD 3.0 billion (reftel C). These dollar
denominated bonds, which mature in the years 2016 and 2020,
were bought by local investors in local currency. Domestic
debt increased substantially (295 percent in current US
dollars) during Chavez, administration, from USD 4.1 billion
at the end of 1998 to USD 15.5 billion at the end of 2005.
END OF PERIOD PUBLIC SECTOR DEBT
(USD BILLION)
-------------- --------------
2003 2004
2005(1)
CENTRAL GOVERNMENT 38.6 42.0 46.0
FOREIGN DEBT 23.7 26.6 30.5
RESTRUCTURED DEBT 5.8 4.8 4.4
NON-RESTRUCTURED DEBT 17.9 21.8 26.1
DOMESTIC DEBT 14.9 15.4 15.5
AGENCIES 1.1 0.9 0.6
-------------- -------------- --------------
PUBLIC SECTOR DEBT (2) 39.7 42.9 46.6
(1) Preliminary figures.
(2) It does not include PDVSA,s nor Central Bank,s debts.
SOURCES: Ministry of Finance, and Santander Investment.
--------------
BANKING SYSTEM
--------------
18. (U) Profits (net financial margin) decreased during 2005
because around 32 percent of the total loans given by the
banks must be allocated by law to specific economic sectors
at preferential interest rates, including housing (10
percent),agriculture (16 percent),micro-busines (3
percent),and tourism (2.5 percent) (reftel F). However,
loans for consumption increased 91 percent during 2005. This
increase can be attributed to the strong economic growth (9.3
percent) prompted by increased BRV spending, relatively low
interest rates, and probably a desire to buy now before an
expected devaluation in early 2007. The car loans increased
180 percent during 2005, while the mortgage loans increased
by 146 percent. A new government-owned bank (Treasury Bank)
started operations during 2005, but it is not fully
operative. The BRV created the Treasury Bank in August 12,
2005 to act as the BRV financial agent, to pay the debt
service for domestic and external debt, conduct foreign trade
operations, receive income taxes, and serve as the BRV
cashier. The new Treasury Bank will also hold accounts for
FONDEN and FIEM (Now FEM).
BANKING SYSTEM KEY INDICATORS
(percentages)
--------------
DEC 04 JUL 05 DEC 05
Past due loans/
gross loans 1.65 1.47 1.08
Credit portfolio allowance/
past due loans 224.45 205.99 251.34
Equity/total assets 12.57 12.03 11.12
Net financial margin/
average asset 5.89 3.57 3.66
Net financial margin/
average equity 45.21 30.86 32.49
Net loans/
total deposits 48.04 47.75 54.86
Source: SUDEBAN
--------------
INTEREST RATES
--------------
19. (U) The BCV started to apply interest rate regulations at
the end of April 2005, by which a maximum and a minimum
levels were set for the banking system lending (28 percent)
and deposit (6.5 percent) interest rates. On January 31,
2006, the BCV issued a resolution keeping the same maximum
and minimum interest rates, but reducing the interest rates
that the BCV pays on the certificate of deposit issued by the
monetary authority (28 days) from 11.5 percent to 10.0
percent (reftel B).
AVERAGE INTEREST RATES OF THE SIX MOST IMPORTANT
COMMERCIAL AND UNIVERSAL BANKS
-------------- ---
Loans Deposits
-------------- --------------
Savings 90 days
1999 31.89 7.05 18.90
2000 23.91 3.35 14.80
2001 25.64 2.40 14.13
2002 37.08 3.90 28.29
2003 24.05 6.15 17.58
2004 17.06 4.52 12.93
2005 15.36 6.64 11.74
2006
JAN 14.93 7.39 10.48
SOURCE: Central Bank of Venezuela.
--------------
INTERNET RESOURCES
--------------
19. INTERNET RESOURCES:
AMEMBASSY CARACAS WEBSITE: www.embajadausa.org.ve
-
EXCHANGE RATES AND INTERNATIONAL RESERVES: www.bcv.org.ve
-
STOCK EXCHANGE: www.caracasstock.com
-
TRADE AND LABOR FORCE STATISTICS: www.ine.gov.ve
-
BUSINESS INFORMATION: www.venamcham.org
-
INVESTMENT OPPORTUNITIES: www.conapri.org
-
PETROLEUM INFORMATION: www.pdvsa.com,
www.mem.gov.ve
-
PUBLIC FINANCE INFORMATION: www.mf.gov.ve
-
FINANCIAL INDICATORS: www.sudeban.gov.ve
-
ECONOMIC PUBLICATIONS: www.metroeconomica.com.ve,
www.veneconomy.com, www.bancomercantil.com, www.provincial.com
-
NEWSPAPERS: www.eluniversal.com,
www.el-nacional.com
-
LEGAL PUBLICATIONS: www.datalegis.com.ve,
www.bpmaw.com, www.traviesoevans.com,
www.tpa.com.ve, www.drba.com.ve
-
VENEZUELAN GOVERNMENT: www.venezuela.gov.ve,
www.platino.gov.ve
BROWNFIELD
SIPDIS
SIPDIS
STATE FOR WHA/AND, WHA/EPSC, EB
TREASURY FOR OASIA - GIANLUCA SIGNORELLI
USCINCSO FOR POLAD
BUENOS AIRES FOR TREASURY - MHAARSAGER
E.O. 12958: N/A
TAGS: ECON EFIN PGOV VE
SUBJECT: VENEZUELA MACROECONOMIC UPDATE
REF: A. CARACAS 00485
B. CARACAS 00512
C. CARACAS 03601
D. CARACAS 03782
E. CARACAS 00632
F. CARACAS 00208
SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET DISTRIBUTION.
--------------
OVERVIEW
--------------
1. (SBU) Venezuela,s strong economic growth performance
will most certainly continue through 2006 given the continued
high oil price scenario and profligate BRV spending this
election year, which is fueling a consumption boom. We
also expect the state to continue to consolidate its role in
the nation,s economic life. The quality of economic growth
remains poor with low net new job creation, private sector
direct investment remains anemic given the uncertain
political environment, and the high levels of monetary
liquidity are creating their own set of difficulties for the
Central Bank. For now, the high levels of BRV spending,
which could reach 40 percent of GDP this year, will continue
to mask a multitude of economic distortions and structural
weaknesses that have been created through Bolivarian economic
mismanagement.
--------------
ECONOMIC GROWTH
--------------
2. (U) Real GDP grew by 9.3 percent in 2005. The 2004
economic recovery continued in 2005, driven largely by a huge
increase in government expenditures as a result of the
continued oil bonanza (see table). Importantly, the non-oil
sector has led the economic growth in 2005: mining (1.7
percent),manufacturing (8.7 percent),electricity and water
(8 percent),commerce and repair services (19.9 percent),
construction (20.1 percent),transportation and storage (13.9
percent),communications (15.9 percent),and finance and
insurance (27.2 percent). The oil sector has only
registered 1.7 percent growth due to low PDVSA investment to
support increased production. The increase in economic
growth in the oil sector is mainly due to the high oil
prices. In 2006, we expect the economy to grow around 6 to 7
percent, assuming continued high oil prices and anticipated
aggressive BRV election year spending (at least 30.5 percent
of GDP, with potential off-budget spending of up to 10
percent of GDP).
REAL GDP GROWTH RATE
(PERCENTAGE)
--------------
OIL NON-OIL TOTAL
1999 -3.8 -6.9 -6.0
2000 2.3 4.2 3.7
2001 -0.9 4.0 3.4
2002 -14.2 -6.0 -8.9
2003 -1.9 -7.5 -7.7
2004 11.6 17.8 17.9
2005 (1) 1.7 10.3 9.3
2006 (2) 3.0 7.4 6.7
(1) Preliminary figures.
(2) Projections.
SOURCE: Central Bank of Venezuela and Metroeconomica
--------------
UNEMPLOYMENT
--------------
3. (U) Second semester 2005 figures from the National
Institute of Statistics (INE) show an average unemployment
rate of 11.4 percent, the lowest in seven years. However,
workforce shifts from unemployed to inactive, rather than
substantial new job creation, have helped to lower the
unemployment rates. The inactive category includes all
persons 15 years or older who are not seeking employment.
This includes students, homemakers, retirees, those
physically unable to work, and those that work for less than
15 hours a week without pay for other family members. The
informal sector of the economy accounted for 48 percent of
the occupied working labor force.
4. (U) Despite 2005,s impressive economic growth rate of 9.3
percent, the number of private sector jobs decreased by
230,890 (2.5 percent) and public sector jobs increased by
47,914 (2.8 percent),from December 2004 to September 2005.
Some analysts suggest that private firms are producing more
with the same number of employees because of the high costs
to hire an additional employee. Under current Venezuelan
labor laws, large companies in the formal economy pay on
average the equivalent of 24 months of salary per employee
per year. The increase in unemployment to 12.9 percent for
January 2006 is normal for the first month of the year, after
an adjustment for seasonal increases in employment for the
Christmas holidays.
UNEMPLOYMENT (percentage in second semester)
--------------
1999 14.5
2000 13.2
2001 12.8
2002 16.2
2003 16.8
2004 13.9
2005 11.4
2006
JAN 12.9
SOURCE: BRV National Institute of Statistics (INE).
--------------
INTERNATIONAL RESERVES
--------------
5. (U) The Central Bank (BCV)-held international reserves
increased to USD 30.4 billion at the end of 2005 because of
higher than expected oil export revenue (approximately USD
48.1 billion). This level of reserves covers approximately
15 months of imports. The reserves would have been higher,
but the BCV transferred USD 6 billion to the National
Development Fund (FONDEN) during the last quarter 2005, as
required by the Central Bank Law (passed in July 2005). The
level of international reserves is expected to decrease
during 2006 because the Central Bank Law established that
PDVSA will only transfer foreign exchange earnings needed for
its domestic expenses, taxes, royalties, and dividends to the
BCV, and the rest to FONDEN. (Note: Currently, FONDEN has
USD 8.425 billion, including direct transfers from PDVSA. End
Note.) In February 2006, Chavez called for the transfer of
USD 4.0 billion from the BCV to FONDEN. The Central Bank Law
also directed the BCV to determine the adequate level of
reserves, which we anticipate will be USD 25 billion, based
on prior Chavez, statements (reftel A).
6. (U) The results below include the Macroeconomic
Stabilization Fund (FEM),which was originally established in
1998 as a savings fund to reduce the impact of oil income
fluctuations on the fiscal, foreign exchange and monetary
balances (a rainy day fund). The maximum level reached by
this Fund was USD 7,116 million on December 12, 2001. In
2002 and 2003, the Venezuelan government used the funds to
cover the fiscal deficit and in a widely publicized scandal
suspended transfers of USD 3.2 billion to the FEM. The
balance was USD 737 million on March 1, 2006.
INTERNATIONAL RESERVES (USD MILLIONS)
--------------
BCV FEM TOTAL
1999 DEC 15,164 215 15,379
2000 DEC 15,883 4,588 20,471
2001 DEC 12,296 6,227 18,523
2002 DEC 12,003 2,857 14,860
2003 DEC 20,666 700 21,366
2004 DEC 23,498 710 24,208
2005 DEC 29,636 732 30,368
2006
JAN 27,888 734 28,622
FEB 28,603 736 29,339
SOURCE: Central Bank of Venezuela.
--------------
MONEY SUPPLY/M2
--------------
7. (U) Monetary liquidity or money supply grew 52.7 percent
during 2005, largely as a result of foreign exchange controls
and increased government expenditures (reftel B). This is
the third annual consecutive huge increase, which implies
potential higher inflation rates in the medium-term. Most of
the excess liquidity accumulated in the economy during these
months has been withdrawn by the Central Bank (BCV) issuing
short-term certificates of deposits, mostly to domestic
banks. The net balance in circulation of certificates of
deposit was 30.10 trillion Bolivars (approximately USD 14.0
billion) at the end of January 2006, or 42.7 percent of the
total money supply.
8. (U) The Finance Ministry also issued USD 3.0 billion in
dollar-denominated bonds, purchasable in local currency
(reftel C). This alleviated some of the excess liquidity,
which if left unchecked, would cause inflationary pressures.
The BRV also purchased USD 2.8 billion and resold
approximately USD 1.1 billion in dollar-denominated Argentine
bonds to local investors(reftel D). In both cases, local
investors could sell the bonds overseas, obtaining dollars,
and reducing the supply of Bolivars. We anticipate that the
BRV will complete similar issuances in 2006.
MONEY SUPPLY/M2 (3) MONETARY BASE
-------------- --------------
End of: (million Bs.) Pct.Chg. (million Bs.) Pct.Chg.
1999 12,740,836 20.0 4,909,822 32.1
2000 16,284,578 27.8 5,790,841 17.9
2001 16,976,364 4.2 6,478,295 11.9
2002 19,573,369 15.3 7,701,120 18.9
2003 30,835,975 57.5 11,274,439 46.4
2004 46,363,672 50.4 16,524,461 46.6
2005 70,794,342 52.7 23,086,512 39.7
2006 (4)
JAN 70,434,577 (0.5) 22,042,400 (4.5)
(3) M2 includes currency, demand deposits, savings,
and certificates of deposit.
(4) Preliminary figures.
SOURCE: Central Bank of Venezuela (BCV).
--------------
EXCHANGE RATES AND BCV LIQUIDATIONS
--------------
9. (U) The National Exchange Control Administration
(CADIVI),created in February 2003, oversees authorized
foreign exchange transactions. Currently, approximately 95
percent of the private foreign exchange is processed through
CADIVI and approximately 5 percent is processed by the
parallel market. Public sector entities can acquire foreign
currency directly from the Central Bank for public sector
imports, debt payments, and other expenses abroad. In 2005,
CADIVI authorized on average USD 83.2 million a day, and the
BCV liquidated on average USD 78.6 million a day in exchange
transactions. The parallel market exchange rate was 2,616
Bolivars per dollar as of March 1, 2006. BRV officials have
promised no devaluation for this year. At 2,150 Bolivars per
dollar, we estimate that the Bolivar is approximately 20
percent overvalued. Economic sources anticipate a devaluation
in early 2007.
END OF PERIOD EXCHANGE RATES (Bs./USD)
AND BCV LIQUIDATIONS
-------------- --------------
OFFICIAL FOREX
OFFICIAL MARKET PARALLEL MARKET LIQUIDATIONS
(MILLIONS USD)
-------------- --------------
1999 648.25
2000 699.75
2001 763.00
2002 1,401.25
2003 1,600.00 2,875.00 4,594.52
2004 1,920.00 2,673.41 14,780.80
2005 2,150.00 2,586.08 19,430.50
2006
JAN 2,150.00 2,643.80 1,867.20
SOURCE: Central Bank of Venezuela, and Metroeconomica.
--------------
CONSUMER PRICE INDEX
--------------
10. (U) The BCV reported that consumer prices for the
Caracas metropolitan area rose 12.5 percent from February
2005 to February 2006. This is the lowest annual inflation
rate of the last 50 months. However, around 50 percent of
all consumable goods have been under a price control regime
since February 11, 2003. Core inflation removes the most
volatile categories from the CPI. Both indicators increased
at similar rates during the last two years. Effective
February 1, 2006, the government increased the minimum wage
by 15 percent to 465,750 Bolivars (USD 216.6) per month. This
is expected to have a limited effect on 2006 inflation, which
could be higher than 2005. For 2006, the BRV has an inflation
target of 10 percent (Dec-Dec).
CONSUMER PRICE INDEX (1997 AVG = 100) and CORE INFLATION
-------------- --------------
CPI CPI CORE INFLATION
END OF PERIOD (% change) (% change)
1999 181.6 20.0 N/A
2000 206.0 13.4 12.8
2001 231.3 12.3 11.3
2002 303.5 31.2 31.2
2003 385.7 27.1 37.9
2004 459.7 19.2 21.1
2005 525.7 14.4 14.6
SOURCE: Central Bank of Venezuela.
--------------
BALANCE OF PAYMENTS
--------------
11. (U) The overall balance of payments may show a deficit
during 2006 for the first time in the last four years because
of the expected continued capital flight, including PDVSA,s
depositing funds abroad. This deficit is the equivalent to a
decrease in the international reserves. During the period
2003-2005, with exchange controls in force, private sector
capital flight increased by around USD 15.7 billion.
Additionally, public sector assets abroad also increased
during those years by USD 18.9 billion. One of the main
reasons for the large public sector deposits abroad for 2005
is the reform of the Central Bank Law in July 2005 by which
the BCV transferred USD 6 billion to the National Development
Fund (FONDEN). Currently, FONDEN holds an estimated USD 8.425
billion, including transfers from PDVSA. With additional
transfers from PDVSA and an additional USD 4 billion transfer
from the international reserves, FONDEN could have USD 18
billion by year,s end.
BALANCE OF PAYMENTS SUMMARY
(USD BILLION)
-------------- -
2002 2003 2004 2005 2006
(1) (2)
CURRENT ACCOUNT (A) 7.6 11.4 13.8 25.4 13.7
EXPORTS, FOB 26.8 27.2 38.7 55.5 55.4
IMPORTS, FOB -13.4 -10.7 -17.3 -24.0 -31.8
TRADE BALANCE 13.4 16.5 21.4 31.5 23.6
NET SERVICES AND RENT -5.6 -5.0 -7.5 -6.0 -9.8
NET TRANSFERS -0.2 -0.1 -0.1 -0.1 -0.1
CAPITAL AND FINANCIAL
ACCOUNT (B) -9.2 -5.0 -9.0 -16.1 -11.9
DIRECT INVESTMENT -0.2 1.3 1.9 1.5 3.2
PORTFOLIO INVESTMENT -2.3 -1.0 -2.0 2.7 3.1
OTHER INVESTMENT -6.7 -5.3 -8.9 -20.4 -18.2
NET ERRORS AND
OMISSIONS (C) -2.8 -1.0 -2.9 -3.8 -3.4
OVERALL BALANCE
(A) (B) (C) -4.4 5.4 1.9 5.5 -1.6
(1) Preliminary figures.
(2) Projections.
SOURCE: Central Bank of Venezuela, and Metroeconomica.
--------------
OIL EXPORTS
--------------
12. (U) Total value of the oil exports reached USD 48.059
billion during 2005 with an average export price for the
Venezuelan oil basket of USD 45.4 per barrel. Venezuela,s
current OPEC production quota is 3.22 million barrels.
However, Venezuela,s oil production remains below the quota,
according to OPEC figures. According to OPEC,s Monthly Oil
Report for February 2006, Venezuela,s oil production was
2.54 million barrels per day. The average oil price per
barrel was USD 53.0 as of February 24, 2006.
OIL EXPORTS (THOUSAND B/D)
--------------
AVERAGE
EXPORTS (1) EXPORT PRICE EXPORTS
(THOUSAND B/D) (USD/B) (USD MILLION)
1999 2,785 16.0 16,735
2000 2,791 25.9 27,874
2001 2,711 20.2 21,745
2002 2,681 22.0 21,532
2003 (2) 2,339 25.8 22,029
2004 (2) 2,635 33.1 31,917
2005 (2)(3) 2,900 45.4 48,059
(1) Includes crude oil and oil products.
(2) Figures for 2003 onward appear to include orimulsion and
production from Strategic Associations.
(3) Preliminary figures.
SOURCES: Central Bank of Venezuela, Ministry of Energy and
Petroleum, OPEC, and Embassy,s estimates.
--------------
MERCHANDISE TRADE BALANCE
--------------
13. (U) Total imports increased 38.7 percent during 2005
compared to 2004, largely due to the economic recovery, and
increased approvals and liquidations of foreign exchange
requests by CADIVI. With continued exchange controls, we
believe the Bolivar, valued at 2,150 per dollar, is
overvalued by approximately 20 percent, acting as a subsidy
for imports to Venezuela. According to the National
Statistics Institute (INE),the United States was the largest
exporter to Venezuela (30.4 percent),followed by Colombia
(11.0 percent),Brazil (9.2 percent),Mexico (7.2 percent),
Japan (3.8 percent),and China (3.7 percent). For 2006, we
expect a continued high merchandise trade surplus due to a
stable oil price outlook.
MERCHANDISE TRADE BALANCE (USD BILLION)
--------------
2002 2003 2004 2005(1) 2006(2)
OIL EXPORTS (A) 21.5 22.0 31.9 48.1 47.1
NON-OIL EXPORTS (B) 5.3 5.2 6.8 7.4 8.3
TOTAL EXPORTS (C) 26.8 27.2 38.7 55.5 55.4
TOTAL IMPORTS (D) -13.4 -10.7 - 17.3 -24.0 -31.8
MERCHANDISE TRADE
BALANCE (C)-(D) 13.4 16.5 21.4 31.5 23.6
(1) Preliminary figures
(2) Projections.
SOURCE: Central Bank of Venezuela, and Metroeconomica.
--------------
FOREIGN DIRECT INVESTMENT
--------------
14. (U) Foreign direct investment showed an inflow of USD
1,497 million during 2005. Foreign oil companies operating in
Venezuela reinvested USD 1,519 million of earnings, and
non-oil companies in Venezuela made new foreign direct
investments of USD 990 million. On the other hand, the
Venezuelan oil sector increased investments abroad for an
amount of USD 1,332 million, including reinvestment of
earnings. Foreign direct investment in Venezuela has been
relatively low since 2002 because of the uncertain political
environment, increased government intervention in the
economy, and BRV support for expropriations and seizures of
land and property.
Abroad In the country Net flow
1997 -557 6,202 5,645
1998 -1,043 4,985 3,942
1999 -872 2,890 2,018
2000 -521 4,701 4,180
2001 -204 3,683 3,479
2002 -1,026 782 -244
2003 -1,318 2,643 1,325
2004 348 1,492 1,840
2005 (1) -1,460 2,957 1,497
(1) Preliminary figures
Source: Central Bank of Venezuela.
--------------
CARACAS STOCK EXCHANGE INDEX
--------------
15. (U) The Caracas Stock Exchange (CSE) index recovered
during the first two months of 2006 after declining 31.9
percent in 2005. This recovery could be explained by the
excess liquidity in the market, the decreasing interest rates
in the Venezuelan banking system, the government controls on
the capital movements, and the lack of options to invest.
According to the CSE President Nelson Ortiz, 2006 could be a
good year for the Venezuelan capital market. As an indicator
of the current strong market, local media report that in
three years the price of a trading desk at the Caracas Stock
Exchange increased from USD 14,000 to USD 465,000.
CARACAS STOCK EXCHANGE CAPITALIZATION INDEX
(DECEMBER 1993 = 1,000)
--------------
2004 2005 2006
JANUARY 27,956.14 29,303.14 25,119.59
FEBRUARY 27,484.76 30,388.61 28,260.50
MARCH 26,579.69 28,977.07
APRIL 25,879.34 25,089.14
MAY 25,405.73 22,493.91
JUNE 25,285.17 21,595.64
JULY 25,611.18 20,561.79
AUGUST 27,263.38 19,702.21
SEPTEMBER 30,111.62 20,769.36
OCTOBER 29,618.87 19,651.74
NOVEMBER 29,306.54 19,992.69
DECEMBER 29,952.18 20,394.83
SOURCE: Caracas Stock Exchange, Banco Mercantil, and
Metroeconomica.
--------------
CENTRAL GOVERNMENT FINANCIAL RESULTS
--------------
16. (U) Total central government ordinary expenditures
increased to 27.4 percent of GDP. This increase in public
spending was initiated in mid-2003, and has been possible
because of stronger oil prices, as well as higher internal
tax collection, especially sales tax and import duties. The
Venezuelan Tax Authority (SENIAT) has increased tax
collection 106 percent from USD 8.66 billion in 2003 to USD
17.85 billion in 2005. Although the 2005 central government
financial results show a fiscal surplus (2.1 percent of GDP),
total government off-budget expenditures could have reached
USD 5 billion. During the first two months of 2006, the
National Assembly approved 8 trillion Bolivars (USD 3.7
billion) in additional credits to be spent by the government.
This is in addition to the already approved 2006 National
Budget (USD 40.5 billion). We anticipate that at government
expenditures to be at least 30.5 percent of GDP, with
potential off-budget spending of up to 10 percent of GDP in
2006.
CENTRAL GOVERNMENT FINANCIAL RESULTS
(Percentage of GDP)(1)
--------------
2004(2) 2005(2)
TOTAL REVENUES 23.9 29.5
Oil income 11.5 14.6
Non-oil income 12.5 14.9
TOTAL EXPENDITURES 26.3 27.4
OVERALL FISCAL SURPLUS/DEFICIT(-)-2.4 2.1
(1) Including FONDEN
(2) Preliminary figures
Source: Central Bank of Venezuela.
--------------
PUBLIC SECTOR DEBT
--------------
17. (U) The government has been actively refinancing its
domestic and external debts since 2003. In late February, the
Finance Minister announced that the BRV will reduce debt by
27.4 percent by the end of 2007. The BRV plans to prepay
some of its most expensive external debt and improve the
maturity profile of domestic debt (reftel E). During November
2005, the Ministry of Finance allocated bonds for the
equivalent of USD 3.0 billion (reftel C). These dollar
denominated bonds, which mature in the years 2016 and 2020,
were bought by local investors in local currency. Domestic
debt increased substantially (295 percent in current US
dollars) during Chavez, administration, from USD 4.1 billion
at the end of 1998 to USD 15.5 billion at the end of 2005.
END OF PERIOD PUBLIC SECTOR DEBT
(USD BILLION)
-------------- --------------
2003 2004
2005(1)
CENTRAL GOVERNMENT 38.6 42.0 46.0
FOREIGN DEBT 23.7 26.6 30.5
RESTRUCTURED DEBT 5.8 4.8 4.4
NON-RESTRUCTURED DEBT 17.9 21.8 26.1
DOMESTIC DEBT 14.9 15.4 15.5
AGENCIES 1.1 0.9 0.6
-------------- -------------- --------------
PUBLIC SECTOR DEBT (2) 39.7 42.9 46.6
(1) Preliminary figures.
(2) It does not include PDVSA,s nor Central Bank,s debts.
SOURCES: Ministry of Finance, and Santander Investment.
--------------
BANKING SYSTEM
--------------
18. (U) Profits (net financial margin) decreased during 2005
because around 32 percent of the total loans given by the
banks must be allocated by law to specific economic sectors
at preferential interest rates, including housing (10
percent),agriculture (16 percent),micro-busines (3
percent),and tourism (2.5 percent) (reftel F). However,
loans for consumption increased 91 percent during 2005. This
increase can be attributed to the strong economic growth (9.3
percent) prompted by increased BRV spending, relatively low
interest rates, and probably a desire to buy now before an
expected devaluation in early 2007. The car loans increased
180 percent during 2005, while the mortgage loans increased
by 146 percent. A new government-owned bank (Treasury Bank)
started operations during 2005, but it is not fully
operative. The BRV created the Treasury Bank in August 12,
2005 to act as the BRV financial agent, to pay the debt
service for domestic and external debt, conduct foreign trade
operations, receive income taxes, and serve as the BRV
cashier. The new Treasury Bank will also hold accounts for
FONDEN and FIEM (Now FEM).
BANKING SYSTEM KEY INDICATORS
(percentages)
--------------
DEC 04 JUL 05 DEC 05
Past due loans/
gross loans 1.65 1.47 1.08
Credit portfolio allowance/
past due loans 224.45 205.99 251.34
Equity/total assets 12.57 12.03 11.12
Net financial margin/
average asset 5.89 3.57 3.66
Net financial margin/
average equity 45.21 30.86 32.49
Net loans/
total deposits 48.04 47.75 54.86
Source: SUDEBAN
--------------
INTEREST RATES
--------------
19. (U) The BCV started to apply interest rate regulations at
the end of April 2005, by which a maximum and a minimum
levels were set for the banking system lending (28 percent)
and deposit (6.5 percent) interest rates. On January 31,
2006, the BCV issued a resolution keeping the same maximum
and minimum interest rates, but reducing the interest rates
that the BCV pays on the certificate of deposit issued by the
monetary authority (28 days) from 11.5 percent to 10.0
percent (reftel B).
AVERAGE INTEREST RATES OF THE SIX MOST IMPORTANT
COMMERCIAL AND UNIVERSAL BANKS
-------------- ---
Loans Deposits
-------------- --------------
Savings 90 days
1999 31.89 7.05 18.90
2000 23.91 3.35 14.80
2001 25.64 2.40 14.13
2002 37.08 3.90 28.29
2003 24.05 6.15 17.58
2004 17.06 4.52 12.93
2005 15.36 6.64 11.74
2006
JAN 14.93 7.39 10.48
SOURCE: Central Bank of Venezuela.
--------------
INTERNET RESOURCES
--------------
19. INTERNET RESOURCES:
AMEMBASSY CARACAS WEBSITE: www.embajadausa.org.ve
-
EXCHANGE RATES AND INTERNATIONAL RESERVES: www.bcv.org.ve
-
STOCK EXCHANGE: www.caracasstock.com
-
TRADE AND LABOR FORCE STATISTICS: www.ine.gov.ve
-
BUSINESS INFORMATION: www.venamcham.org
-
INVESTMENT OPPORTUNITIES: www.conapri.org
-
PETROLEUM INFORMATION: www.pdvsa.com,
www.mem.gov.ve
-
PUBLIC FINANCE INFORMATION: www.mf.gov.ve
-
FINANCIAL INDICATORS: www.sudeban.gov.ve
-
ECONOMIC PUBLICATIONS: www.metroeconomica.com.ve,
www.veneconomy.com, www.bancomercantil.com, www.provincial.com
-
NEWSPAPERS: www.eluniversal.com,
www.el-nacional.com
-
LEGAL PUBLICATIONS: www.datalegis.com.ve,
www.bpmaw.com, www.traviesoevans.com,
www.tpa.com.ve, www.drba.com.ve
-
VENEZUELAN GOVERNMENT: www.venezuela.gov.ve,
www.platino.gov.ve
BROWNFIELD