Venezuela Weekly Report
- We estimate the financing from BCV to PDVSA at VEF7.4tn or 67% of the amount that the BCV registers as “Other assets in foreign currency”
- PDVSA and PetroVietnam are negotiating the restarting of operations of the PetroMacareo JV
- The Congress CPI showed a 92.8% YTD increase as of April. The increase in monetary liquidity and the financing to the central government and PDVSA are the major drivers, in our opinion
The Central Bank of Venezuela (BCV in Spanish) published its balance sheet for March where the hard currency availability shows an important growth considering the same structure we previously used for calculating January’s, standing at USD1.1bn at 31 March, which makes sense given the increase in oil prices that increased the value of oil imports importantly. Nevertheless, the performance of one particular item caught our attention and we decided to dig deeper in order to discover why it has been growing rapidly.
Argentina Weekly Report
- Inflation, fiscal deficit and wages are the main concerns for the “captains of the industry” when looking ahead on the Argentinian economy
- The government sees the Mining Accord in place by year-end; the agreement that reconciles provincial and federal legislation that will draw larger investments to this sector
- INDEC figures reveal that inflation rose to 2.6% m-o-m in April, above official estimates, while y-o-y comparisons place inflation at 27.5%
This week, Argentina hosted its Third LatinFinance Financial Summit, an event that gathers government executives as well as businessmen and economists. The event held panels for several topics, from global context and real economy to infrastructure and local financial markets. From the government, Dujovne, Caputo and Frigerio were responsible for addressing main concerns on the economic and political ground. Even though concerns regarding the recovery of the Argentinian economy were on top, the participants showed confidence of the agenda set by the government and shared most of the same issues regarding what to do next.
Dominican Republic Bi-Weekly Report
• According to the Central Bank, Dominican Republic grew 5.2% y-o-y in 1Q17, while the MEAI for March showed a 6.2% y-o-y expansion. We believe the results reinforce DR’s trend to growth above its potential
• Once again tourism results exceeds expectations with a 15% y-o-y growth in tourist arrivals in April and a 9.9% y-o-y increase in related income for 1Q17
• The increase in foreign currency inflows made the Central Bank to reach its highest level of international reserve in history, equivalent to 4 months of imports
The Central Bank of the Dominican Republic (BCRD in Spanish) released the preliminary results for the economic performance in 1Q17 and, as usual, DR continues making bids for another promising year. In detail, the BCRD showed that Dominican GDP expanded 5.2% y-o-y in 1Q17, which is consistent with the macroeconomic projections and their tendency to grow above its potential. In addition, the monetary authority also released the Monthly Economic Activity Index (MEAI) which registered a y-o-y variation of 6.2% in March. In our view, the latest results on this index show DR’s capacity to keep growing above its potential and the trend so far this year leads us to believe that there is room for further improvement. All-in, we maintain our forecast of GDP growth for 2017 near the 7% y-o-y, which goes in line with the BCRD expectations (6.4%-7.4%) but well above the most recent forecast of ECLAC (5.3%).
Ecuador Bi-Weekly Report
- The Central Bank reported a GDP contraction of 1.5% in 2016, but the 4Q16 saw increases of 1.7% q-o-q and 1.5% y-o-y. For 2017, the government expects a GDP growth of 1.42%
- Finance Minister Patricio Rivera headed a mission of the economic cabinet meeting with investors in the US and London
- Exports in the first two months of 2017 increased 34.1% y-o-y, with the oil-related exports more than doubling 2016’s total
The Central Bank of Ecuador (BCE in Spanish) confirmed recently that the country suffered in 2016 its first GDP shrinkage in 10 years, after a -1.5% result provoked by – according to the BCE – the low oil prices, the USD appreciation, the April earthquake and the payments to Chevron and Oxy. The government expects a change in the trend in 2017 in order to grow 1.42%, but we continue to believe that the difficult macroeconomic conditions – with a still insufficient fiscal income, weak oil prices and increasing public indebtedness – will not change substantially and, therefore, we maintain our estimation of a -1% GDP contraction by year-end.
Corporate Weeky Report
- Last July, Pampa Energia finished the acquisition process for Petrobras Argentina S.A, turning it into the largest private energy company in Argentina
- Currently away from top positions, Pampa is likely to improve in its market share position for both oil and gas by next year, once the merge with Petrobras is totally complete
- An upcoming issuance, which is set to repay a bridge loan which permitted the acquisition of Petrobras, is expected to be of USD600mn, which would be the largest issuance of the company
Pampa Energia S.A. is one of the principal energy companies in Argentina and through its subsidiaries manages to participate in all stages of the electricity activity, from exploration and production to distribution. Its activities are separated over three different segments: generation, transmission and distribution. Moreover, the company has participation in production and distribution of general gas. Just to set an example, through Edenor in the distribution segment, Pampa has an important participation in the Argentine market with an estimate 21% of participation in the whole supply of electricity.