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VENEZUELA.

VENEZUELA

 % Change (In millions US $)

 Interest Trade
Date CPI M1 Rate(%) Imports Exports Bal

 1990 36.50 20.80 36.80 6,765.00 17,587.00 10,822.00
 1991 31.00 30.50 37.52 10,181.00 15,127.00 4,946.00
 1992 31.90 10.00 41.40 12,470.00 14,200.00 1,730.00
 1993 45.90 20.00 59.00 11,013.00 14,222.00 3,209.00
 1994 70.80 -- -- 8,000.00 16,467.00 8,467.00
 1995 56.70 12.00 40.00 11,631.00 18,584.00 6,958.00
 1996 103.20 60.00 38.00 9,105.00 22,802.00 12,204.00
 1997 37.60 50.00 -- 12,311.00 23,711.00 11,400.00
 1998 29.90 -6.00 44.10 14,249.00 15,449.00 1,200.00
 1999 20.00 23.00 31.89 12,669.00 20,915.00 9,164.00
Jan 2.20 -6.60 38.96 893.00 259.00
Feb 1.70 -4.40 39.73 832.00 263.00
Mar 1.20 -4.60 34.38 894.00 344.00 764.00
Apr 1.10 0.50 31.84 894.00 285.00
May 2.00 2.30 34.22 1,036.00 320.00
Jun 1.50 1.70 32.16 1,117.00 286.00 1,358.00
Jul 1.60 4.60 31.48 1,294.00 340.00
Aug 1.50 -0.90 30.04 1,338.00 325.00
Sep 0.90 0.30 29.62 959.00 306.00 3,213.00
Oct 1.60 4.50 28.60 1,064.00 372.00
Nov 1.50 18.70 27.85 1,389.00 386.00
Dec 1.70 5.70 28.13 960.00 281.00 3,829.00
 2000 13.40 31.40 23.91 16,100.00 33,600.00 17,970.00
Jan 1.70 -4.00 29.15 903.00 352.00
Feb 0.40 -3.80 28.97 1,044.00 399.00
Mar 0.90 0.30 25.14 1,217.00 372.00 4,330.00
Apr 1.50 3.90 26.00 1,114.00 333.00
May 1.00 -4.40 23.10 1,489.00 359.00
Jun 1.10 3.00 26.19 1,184.00 424.00 4,108.00
Jul 1.00 4.60 23.42 1,207.00 403.00
Aug 0.80 -3.10 23.69 1,388.00 467.00
Sep 1.70 3.30 23.69 1,167.00 434.00 12,679.00
Oct 0.80 1.70 21.09 1,209.00 433.00
Nov 0.60 23.80 21.67 1,451.00 467.00
Dec 1.00 5.80 21.98 1,210.00 350.00
 2001 12.00 8.00 22.00 17,000.00 29,000.00 12,000.00
Jan 0.90 -5.90 22.43
Feb 0.50 -0.80 21.14
Mar 0.80 -0.40 21.07
Apr 1.10 -1.30 20.02
May 1.50 -4.20 20.82
June 1.00
Column
Number 1 2 3 4 5 6

 (In millions US $)

 Current Exchange Rate
Date Acct Bal Reserves Off/Par

 1990 8,279.00 11,500.00 50.58
 1991 1,200.00 13,232.00 61.65
 1992 -3,720.00 14,400.00 79.55
 1993 -1,815.00 12,656.00 106.20
 1994 2,450.00 11,900.00 170.00
 1995 1,500.00 8,575.00 290.00 332.00
 1996 6,296.00 15,133.00 475.00
 1997 5,860.00 17,700.00 503.00
 1998 -1,800.00 14,849.00 564.00
 1999 5,500.00 15,379.00 648.75
Jan 14,334.00 573.00
Feb 13,857.00 577.00
Mar 370.00 13,442.00 583.00
Apr 13,968.00 590.00
May 14,208.00 598.00
Jun 517.00 14,342.00 606.00
Jul 14,592.00 612.00
Aug 14,561.00 619.00
Sep 2,318.00 13,989.00 628.00
Oct 14,676.00 631.00
Nov 15,646.00 638.00
Dec 3,045.00 15,164.00 649.00
 2000 13,400.00 15,781.00 699.50
Jan 15,223.00 654.75
Feb 14,491.00 661.25
Mar 3,505.00 14,419.00 669.50
Apr 14,942.00 674.50
May 14,375.00 683.50
Jun 3,153.00 15,094.00 681.50
Jul 15,785.00 687.00
Aug 15,879.00 689.25
Sep 9,42 16,545.00 690.50
Oct 17,167.00 693.50
Nov 17,570.00 696.50
Dec 15,883.00 699.50
 2001 6,000.00 12,000.00 750.00
Jan 16,668.00 700.20
Feb 15,854.00 703.20
Mar 2,617.00 14,865.00 707.20
Apr 14,298.00 711.70
May 13,799.00 714.50
June 13,403.00 718.50
Column
Number 7 8 9 10

FOOTNOTES BY COLUMN: Annual figures for 2001 are projections. 1-2:
Annual figures represent January-December increase. 3:
Average preferential borrowing rates of top six
commercial banks. Annual figure represents average for year. 4-9:
Monthly export figures are nontraditional only. Government not
providing monthly oil export figures. Quarterly
figures include oil exports. Annual figures are values at year
end including oil exports. 8: Reserves figures do not include
monies allocated to the macroeconomic stabilization fund
(FIEM, not supposed to be used to defend the currency), which
range from at least $4.5 $6 billion more per month. 9:
The official rate floats and equals the parallel rate.

SOURCES BY COLUMN: 1-9: Central Bank, as of fourth quarter 1998.
Prior to that, Central Bank and Instituto de Comercio Exterior.


FINANCIAL OUTLOOK

* First-half inflation slowed to 5.9% from 6.8% year-on-year, as the government continued to hold prices down, mainly by controlling the bolivar's slide against the dollar and keeping public and private-sector wage increases low. A 10% minimum wage increase was approved in mid-July. Inflation in the 12 months to June was 12.5%, down year-on-year from 16.4%. Despite modest growth, spare industrial capacity and high unemployment continue to cool inflationary pressures.

* Interest rates on bank deposits remain low (around 13%, barely in line with inflation) and the average cost of borrowing remains high, despite government attempts to narrow the spread. Average borrowing rates stood around 22% in June, practically unchanged from the first quarter, per central bank figures. But commercial lending rates charged by some major banks remain as high as 35%. In May, the central bank launched repurchase agreements (repos) on government debt to broaden tools for monetary policy and raise deposit rates.

* Venezuela posted a $2.617 billion current account surplus in first-quarter 2001, down from $3.470 billion year-on-year. Reasons include lower oil exports and a rise in imports due to the overvalued bolivar. Many economists predict declining oil prices and potential OPEC production cutbacks could combine with an increase in demand for imports to slash the current account surplus well below last year's $13.4 billion. Venezuela has already trimmed oil production levels by 9% since January, which could considerably shrink exports in 2001.

* Reserves fell to $13.403 billion at the end of the second quarter, down 16% from $15.883 billion at end-2000. Deposits in the macroeconomic stabilization investment fund (FIEM) picked up pace, pushing it from $4.588 billion at end-2000 to $6.567 billion at the end of the second quarter. Authorities insist that, despite high public spending, the FIEM should cushion the economy against the oil shocks that have rocked it in the past.

* The bolivar slipped 2.6% in first-half 2001, against inflation of 5.9%. Healthy oil prices continue to lend credibility to the exchange rate band, and the central bank keeps reining in depreciation despite the ongoing belief that it is overvalued by more than 20%. The decline in foreign reserves - excluding FIEM - prompted a speculative attack in May, worsened by President Hugo Chavez' announcement that he was considering emergency measures to curb, among other things, financial speculation. Heavy dollar selling by the central bank calmed the market. The bolivar continues to trade in a 7.5% band on either side of central parity, but the rate of slope on the band has been slowed to 7% this year from around 12% in 1999.

ECONOMY MONITOR

* Growth Outlook: CDP grew 3.5% in the traditionally slowest first quarter, powered by 3.6% expansion in the non-oil sector, which makes up one-third of economic activity. Communications continued to grow at a staggering 16.2%, fuelled by foreign investment in telephony. But most economists predict growth will not meet this year's official 4.5% target, and will end up at 3.5%-4%, as inefficient state spending drains growth.

* Political Factors: The moment of truth is approaching for the Chavez government. A slew of new legislation, including controversial social security laws and an agrarian reform bill, is due for approval within the next few months. Initial indications are that the legislation will err on the side of caution. President Hugo Chavez quickly sidelined suggestions that he might assume sweeping emergency powers to combat crime, corruption and poverty when this proposal whipped up controversy both at home and abroad. Polls show his personal popularity level remains around 60%, although the verdict on his government's track record on crime and poverty is scathing even among his own supporters. A diplomatic spat surrounding the June capture of Peru's ex-spy chief Vladimiro Montesinos in Caracas led to a row with Lima that dealt a blow to hopes of Andean integration and revealed FBI mistrust of Venezuelan authorities, in supreme court ruling denying a journalist the right to rebut accusations made by the president during his radio show has raised fears about official commitments to civil liberties.

* Fiscal Situation: The fiscal deficit in first-half 2001 fell under 2% of CDP, comfortably below the 3% target, said finance minister Jose Rojas. The figure is in line with last year's 1.8% deficit. It has been helped by an increase in non-oil tax revenues, which have roughly met official projections so far, and strong oil prices - which will become increasingly important in the second half. The administration still plans to boost spending by more than 10% this year to Bs.23.2 trillion ($32 billion). In the first six months, the price of Venezuela's basket of crude oil and refined products has averaged $22.10 a barrel, well above the $20 a barrel forecast in the budget.

* Major Sectors: The first natural gas licensing round made a strong showing, with foreign investors purchasing six of 11 blocks. Venezuela holds the eighth-largest gas reserves in the world, but most are tied to its huge petroleum reserves. France's TotalFinaElf won coveted Yucal Placer North and South, which have 2 tcf of proven reserves. Other winners were Argentina's Pluspetrol, Spain's Repsol YPF and Argentina's Perez Companc. In the oil sector, many large multinationals are said to be losing money because of a freeze on gasoline prices and disappointing returns from the third round mature fields licensed in 1997. A forthcoming hydrocarbons law - due to lift the royalty tax from 16% to 20% but cut income tax rates on oil firms - will be a decisive factor for future investment. Worries surrounding international steel prices, now near a 20-year low, are spilling over onto the Ciudad Guayana-area refineries. Banking creditors of the IBH Orinoco iron plant announced in May they were calling in its $623 million in debt, but would not interrupt access to cash flow. The iron export venture defaulted on a $16 million debt service payment March 30 and is still negotiating a debt restructuring agreement after Australia's BHP, which holds a 50% stake, announced it would not commit further funds. South Korea's Pohang Iron and Steel said it would repay $160 million owed by its Venezuelan affiliate.

* Employment: Unemployment remains stubbornly high, despite government attempts to reactivate the economy, as the small private formal sector refuses to invest amid uncertainty over policy. First-quarter 2001 unemployment averaged 14.2%, down 1.1 percentage points year-on-year. Unemployment ended 2000 at 12.1%, and official statistics bureau OCEI attributed the higher first-quarter jobless rate to seasonal reasons.

* Stock Market: Caracas' IBC stock index inched up 2.8% in nominal terms to end June at 7,559.88 points, a net drop after accounting for inflation of some 3.6% during the period. The IBC sank back from May highs after a takeover bid failed to materialize for telecom CANTV despite rumors that Spain's Telefonica could be looking to wrest control from US-based Verizon. The index was pulled higher in late June by news that Empresas Polar would launch a public offering for the 2% it does not already own of consumer goods firm Mavesa.

COMPANY MONITOR

* Citgo Petroleum, the US retail unit of state oil company PDVSA, is studying a possible $260 million expansion of its refinery at Lake Charles, Louisiana, to boost its capacity of 320,000 b/d by 100,000 b/d.

* Santander Investment Venezuela, a subsidiary of Spain's Banco Santander Central Hispano, said it completed a $150 million syndicated loan to AES-owned Electricidad de Caracas, intended to help finance new investment plans and reschedule short-term debt. The Andean Development Corp. (CAF) also participated.

* Paper maker Venepal has sought an injunction to prevent falling into default. The move should give the firm a year to regroup and pay off debts. Venepal - 20% owned by Smurfit Stone Container (which declined to act on an option to buy 64%) - owes $78 million to banks, with undisclosed debt to workers and contractors.

* Steelmaker Sivensa said in May it was selling to US auto parts manufacturer Dana Corp. its stakes in three automotive joint ventures for $21 million. The sale was part of a debt restructuring process.

* In April, French aluminum group Pechiney signed a $208 million deal to expand Venezuela's state-owned bauxite and aluminum producer Bauxilum and clean up waste. Pechiney also confirmed interest in building a $1.6 billion, 460,000 metric-ton-per-year smelter, according to state industrial holding CVG. CVG estimates the plant would require 2.5-3 million metric tons of bauxite, meaning CVG would have to open new bauxite mines.
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Title Annotation:economic indicators
Publication:America's Insider
Article Type:Illustration
Geographic Code:3VENE
Date:Aug 3, 2001
Words:2426
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