Monthly Economic Bulletin October 2010 - Banco Mercantil

ECONOMIC SITUATION
Oil Market
External Sector
Government Finance
Public Debt
Monetary Market
Interest Rates
Real Sector
Labor Market
Prices
NEW LEGISLATION
ECONOMIC INDICATORS
ECONOMIC SITUATION
GEMA MURILLO *
gmurillo@bancomercantil.com
1
CONTENT
OIL MARKET
The prices of the principal marker crudes increased
substantially in the month of October over September,
when there were only minor adjustments and, in some
cases, actual declines. This development was largely
explained by expectations of another round of major
financial stimulus in the United States. Starting in October,
petroleum prices reflected the belief that the Federal
Reserve would increase the supply of money and affect the
value of the dollar early in November.
As a result, the average price of the WTI marker crude in
October reached US$/b 81.9 for an 8.9% increase over
September when this marker had fallen by 2.3%. The
OCTOBER 2010
average year-to-date (January-October 2010) price of WTI
came to US$/b 78.1, for a 33% increase over the same
period of 2009. The average price of the Brent marker
crude came to US$/b 83.5 in October for a 7% increase
over September and the highest month-to-month increase
since the month of April. On a year-to-date basis the price
of Brent averaged US$/b 78.5, for a 31.5% rise over the
same period of 2009.
The prices of the OPEC crude basket and of the
Venezuelan export basket followed the changes of the
marker crudes. The average price of the OPEC basket in
October of the current year was US$/b 79.8, for a 7.2%
increase over the preceding month and for the highest
month-to-month increase during last year. The average
price of the OPEC basket during the first ten months of the
year came to US$/b 75.7 for a 30.5% rise over the same
period of 2009. The average price of the Venezuelan
export basket was US$/b 74.3, up 9.4% over September
and the highest month-to-month increase since June,
2009. As a result, the average price of the Venezuelan oil
export basket reached US$/b 70, nearly US$/b 16 higher
than during the same period of 2009.
According to Bloomberg, the average Venezuelan crude
production during the first ten months of the current year
reached an average of 2.188 million barrels per day for a
gradual increase by 14,000 barrels per day compared to
the same period of 2009 (See Figure 1). Data provided by
the same source indicate that Venezuelan crude
production reached a level of 2.2 million barrels per day for
the second time during the year.
* Economist, Mercantil Banco Universal, Economic Research Unit.

Crude Oil Production
2
2,550
2,400
2,250
2,100
1,950
1,800
1,650
1,500
Oct-08
Dec-08
Feb-09
Apr-09
Figure 1
Venezuela: Oil Price and Production
Crude Oil Production
Price of the Export Basket
Jun-09
Aug-09
Oct-09
Dec-09
Source: Bloomberg and Ministry of the Popular Power for the Energy and Petroleum
Until US$ 3,000 100% of the position
Greater than US$ 6,000 US$ 5,000
From US$ 3,000 to US$ 750,000 100% of the position
Greater than US$ 750,000 US$ 750,000
Source: PDVSA
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
90
80
70
60
50
40
30
Price of the Export Basket
was offered for exchange, representing a placement of
US$ 618.6 of the new PDVSA 2013 bond.
EXTERNAL SECTOR
The BCV reported a Balance of Payments deficit of
US$ 221 million in the third quarter of the current year,
substantially better than the US$ 1.006 billion deficit
recorded in the second quarter but still considerably worse
than the US$ 2.364 billion surplus in the third quarter of
2009 (See Table 2). This deficit is due to the combined
effects of the deficits in the Capital and Financial accounts
and in Errors and Omissions which offset the surplus in the
Current account.
In October, PDVSA issued the US$ 3 billion “PDVSA 2017”
bond at the official exchange rate of Bs. 4.30 per US dollar.
The total amount was placed. Demand by investors for this
issue reached nearly US$ 7 billion. This bond matures in
November 2017 and carries an 8.5% coupon. PDVSA
required minimum bids of US$ 3,000 and priced the issue
at 100% for a total of Bs. 12.9 billion, to be invested in
PDVSA corporate projects. The procedure followed for the
allocation of the bids is show on Table 1.
This latter account registered a US$ 2.571 billion surplus in
the third quarter of 2010, similar to the second quarter but
US$ 2.8 billion lower than the surplus recorded in the third
quarter of 2009. This was due to the deceleration of the
commercial surplus by 27.6% as a result of lower exports
and higher imports. In the third quarter of the current year,
petroleum exports, at US$ 14.661 billion, were down 5.4%
Table 1 compared to the same quarter of 2009. This
PETROBONO 2017 Bond Allocation Mechanism result was caused by lower export volumes, in
INDIVIDUALS
view of the fact that oil export prices actually
Ranges Allocation
rose by 6% during the quarter. Imports in that
same third quarter increased by 13% compared
LEGAL PERSONS
to the same period of 2009, due to the increased
Ranges Allocation
purchases of material and equipment for public
works principally for electricity generation. In this
regard it should be noted that the share in
imports by the public sector has increased
PDVSA also offered to exchange the US$ 3 billion
“Petrobono” maturing in 2011 for a new International Bond
maturing in 2013 with an 8% coupon. Venezuelan
individuals and corporations holders of the 2011
considerably over the last six years, reaching 32% of the
total in the third quarter of the current year, for an increase
of 440 basis points (bp) over the same period of 2009
when the level of public sector imports had come to 27.3%.
“Petrobono” would receive an exchange incentive of
US$ 1.125 of the new bond per US$ 1.000 of the
“Petrobono” if they made the exchange before October 28.
The incentive would be reduced to US$ 1.095 for
exchanges made later than October 28. PDVSA reported
that 18.3% (US$ 550 million) of the original “Petrobono”
The Capital and Financial account showed a deficit of
US$ 1.882 billion, similar to the previous quarter and
32.1% lower than the deficit on record during the third
quarter of 2009. The deficit in this account is basically the
result of the deficit in the Other Investment Account of

US$ 2.0 billion (30% higher than that recorded in the same
quarter of 2009), as the result of the initial disbursements
under the Long-Term Financing granted to BANDES by the
National Bank of China.
The net result of the current capital transactions and
imputations to the Errors and Omissions Account
determined a level of reserves in the hands of the BCV at
the close of September of US$ 28.618 billion, that is,
US$ 6.382 billion less than at the close of 2009 (US$ 35
billion). The most recent information about the international
reserves at the close of October, showed a decline by
US$ 5.967 billion compared to the month of December,
mainly as the result of the transfer of US$ 6 billion from the
BCV to FONDEN in the first semester of the year 1 , to reach
a net of US$ 29.033 billion. To be noted is that
approximately half of these reserves correspond to the
BCV position in gold.
In addition, the Foreign Currency Administration
Commission (CADIVI – Comisión de Administración de
1 Originally, the Central Bank had announced its intention of transferring US$ 7
billion to FONDEN during the first semester of the year. To be noted is that, of the
US$ 1 billion remaining, US$ 500 million were transferred in November.
3
Table 2
Balance of Payments
Third Quarter (Million of US$)
2009 2010
CURRENT ACCOUNT 5,377
Trade Balance 7,623
Total Export 16,445
Oil 15,494
Non-Oil 951
Total Import (8,822)
Oil (1,086)
Non-Oil (7,736)
Services (1,765)
Rent (471)
Current Transfers (10)
CAPITAL & FINANCIAL ACCOUNT (2,773)
Direct Investment (2,143)
Abroad (572)
In the Country (1,571)
Portfolio Investment 909
Other Investment (1,539)
Public Sector 3,036
Private Sector (3,985)
ERRORS & OMISSIONS (240)
GLOBAL BALANCE 2,364
Source: Central Bank of Venezuela
2,571
5,523
15,491
14,661
830
(9,968)
(916)
(9,052)
(2,103)
(726)
(123)
(1,882)
(1,212)
94
(1,306)
1,330
(2,000)
1,778
(2,644)
(910)
(221)
Divisas) published the statistics corresponding to the
authorizations and liquidations of foreign exchange during
the third quarter of the year. According to CADIVI, in the
amount accumulated during the first nine months of the
year, the total requests approved increased by barely 3.2%
compared to the same period of last year, in spite of the
higher oil prices, which stood on average 32.2% higher
than in the first nine months of 2009. Likewise, currency
actually liquidated by the BCV showed a year-on-year
growth of 1.8%, explainable in part by the delays resulting
from the establishment of the new system of multiple
exchange rates at the beginning of the year. Consequently,
during the first nine months of the year, the daily average
of foreign exchange liquidated by the BCV came to
US$ 118 million, 2.5% over the record during the first nine
months of the year 2009.
By type of request, according to s supplied by CADIVI, in
the first three quarters of the year (US$ 20.991 billion)
70.4% went for imports, 14.4% for outlays charged to the
ALADI Agreement, 4.5% for airlines, 4% for credit cards
and 6.7% to Others. To be noted, almost half of the types
of requests for currency declined in comparison with the
same period of 2009. However, the increases shown in the
requests for Imports, Students, Special Cases, Airlines and
Cash for Travels, as a result of their high participation in
the total liquidated foreign exchange (78%), partially offset
the decline in the amount actually liquidated.
The total foreign exchange liquidated for imports during the
period in question, not including imports under the ALADI
Agreement, came to US$ 14.792 billion. Of this amount,
the economic sectors receiving more currency were: Food
(20.8%), Health (19.5%), Automotive (12.1%), Commerce
(12%), Machinery and Equipment (6.7%) and Chemicals
(6.6%). In this connection, to be noted is the significant
growth by 67.4% of liquidations destined to the Health
sector which explains the increase by slightly over 320
basis points (bp) in the participation of the total foreign
exchange for imports, which went from 16.1% in the
January - September period of 2009 to 19.5% in the same

period of this year. This higher participation of the Health
sector was at the expense of the Food and Automotive
sectors, which declined by 252 bp and 185 bp respectively
(See Figure 2).
Foods
Health
Automobile
Commerce
Others
Machineries and Equipment
Metallurgic
Chemistry
Rubber and Plastic
Telecommunications
Services
Informatic
4
Figure 2
Sectorial distribution of FX sold for imports
(Third Quarter)
2010
2009
0% 5% 10% 15% 20% 25% 30%
Note: Not include imports under ALADI agreement
Source: CADIVI and Own Calculations
The SITME started operations in early June. Up to the end
of September, the daily average of currency provided
through the SITME 2 came to US$ 30.9 million at an implicit
weighted average exchange rate of Bs./US$ 5.30. To be
noted is that the daily average of foreign exchange
delivered through this procedure increased notably during
the month of October to US$ 43.2 million. Consequently, a
total of US$ 3.330 billion have been provided through
SITME (See Figure 3).
GOVERNMENT FINANCE
The financial performance of the Central
Government, according to the most recent
information provided by the National Treasury
Office (ONT -Oficina Nacional del Tesoro)
during the first ten months of the year, again
showed a deficit as a result of a moderate
government spending together with still low oil
income on record and its notably diminished
participation within the total revenues.
2 In early June, the BCV approved the System of Transactions with Securities in
Foreign Currency (SITME – Sistema de Transacciones con Títulos en Moneda
Extranjera), by which government securities may be negotiated under the terms and
conditions established by the BCV through authorized financial institutions. For this
purpose, the BCV publishes daily in its web page the maxi-mum and minimum
prices at which securities of the Republic and of PDVSA may be purchased and sold
in bolivares. Companies and individuals may participate in the SITME with restricted
quantities, whereas Commercial and Universal Banks, and Savings and Loans
Entities, act both as intermediaries (ex-change operators) as well as suppliers of
bonds in this new system.
The ordinary revenues of the Central Government during
the first ten months came to Bs. 122 billion (68.1%
provided by non-oil contributions), for an increase of barely
2.9% over the same period of 2009. After adjustment for
the high inflation during the period, the result in real terms
was a decline by 18.3%.
45
40
35
30
25
20
15
10
5
0
Figure 3
SITME
Daily Average (Million of US$)
Jun-10 Jul-10 Aug-10 Sep-10 Oct-10
Source: Central Bank of Venezuela and Own Calculations
To be noted is that the highest nominal cumulative
expansion during the January to October period of this
year was in non-oil income (+4.9%), while oil income
declined by -1.2%. In real terms, oil income dropped by
21.6%, and non-oil by 16.7%.
Nominal Real
Jan-Oct 2009 Jan-Oct 2010 Change Change
I.- ORDINARY 118,534 121,965 2.9% -18.3%
Oil 39,391 38,914 -1.2% -21.6%
Tax Income 8,293
7,179 -13.4% -31.3%
PDVSA's Cash Royalties 28,034 30,044 7.2% -15.0%
PDVSA's Dividends 3,064
1,691 -44.8% -56.2%
Non-Oil 79,143 83,051 4.9% -16.7%
Primary Expenditures 135,977 152,854 12.4% -12.8%
Surplus/Deficit (23,199) (30,889) 33.1% 5.7%
Source: National Treasury Office, Central Bank of Venezuela and Own Calculations
Table 3
Central Government Financial Management
Acumulated to October
Million of Bs.
The nominal decrease of oil income was a result of the
decline in payment of Income Tax (-13.4%) and of
Dividends (-44.8%). This was offset in part by a 7.2%
increase in payment of Royalties (See Table 3). This lower
oil income occurs in a context in which the value in
bolívares of the oil income increased by 100% as a result

of the exchange rate adjustment at the beginning of the
year.
5
Payments and 4.4% to pending obligations budget of the
previous year.
In addition, internal tax collections under SENIAT
jurisdiction came to Bs. 82.6 billion in the first ten months
50%
Figure 4
Primary Expenditures executed by the Treasury
(Accumulated to October)
of the year, almost 25% over the same period of 2009.
However, the high inflation rates throughout the year led to
40%
30%
Nominal Change
Real Change
a decline in real terms by 3.6% (during 2009, the real de-
20%
cline was 13.3%). By type of contributions, the Value
10%
Added Tax showed a real year-to-year increase of 6.5%;
0%
Domestic and Customs Incomes increased by barely 0.8%
-10%
2007 2008 2009 2010
and 0.3% respectively. Income Tax (ISLR – Impuesto
-20%
sobre la Renta) showed a real 17.8% year-on-year decline,
-30%
Source: Ministry of the Popular Power for the Economy and Finances and Own Calculations
930 bp more than the real decline during the same period
of last year (See Table 4).
As a result of the combined effect of increased public
spending and lower growth of ordinary
Table 4
Domestic Taxes income, the Central Government’s fiscal
Acumulated to October (Million of Bs.)
performance (ordinary income – ordinary
Income Tax
Value Added Tax
2009
22,235.9
32,692.4
2010
23,634.7
44,936.8
Nominal Change
6.3%
37.5%
Real Change
-17.8%
6.5%
expenditures) showed a significant deficit
by Bs. 30.9 billion during the first ten
Wholesale Operators
Imports Operators
26,229.6
6,462.8
36,316.4
8,620.4
38.5%
33.4%
7.5%
2.3%
months of the year; this was 33.1% higher
Customs
Domestic Income
Alcoholic Beverages
5,352.8
4,729.5
951.3
7,003.3
6,169.1
1,234.4
30.8%
30.4%
29.8%
0.3%
0.8%
-0.2%
than the deficit during the same period of
2009 (Bs. 23.2 billion), and the highest for
Tabacco
Fiscal Duties
3,415.7
49.4
4,521.0
43.4
32.4%
-12.2%
2.5%
-31.9%
the January-October period since the
Inheritance
Gambling & Casinos
Others
145.5
167.6
1,328.1
180.1
190.2
901.3
23.8%
13.5%
-32.1%
-4.7%
-12.2%
-46.8%
monthly statistical series became available
(1998) (See Figure 5). To be noted is that
Total
Source: SENIAT and Own Calculations
66,338.7 82,645.2
24.6% -3.6%
this deficit was basically covered with
domestic public debt.
On the other side of the budget balance, primary
expenditures according to the Treasury stood at Bs. 152.9 Concerning the fiscal budget of this year, the additional
billion during the first ten months of the year, for a nominal credits approved by the National Assembly and decreed by
increase of 12.4% compared to the same period of last the Executive stood at Bs. 66.4 billion up to October; this
year. However, in real terms, this was a 12.8% contraction was 85.4% higher than the amount approved during the
(See Figure 4). To be noted is that during the period, an same period of 2009. Consequently, the fiscal budget to
average of 9% of the budgeted amounts of Bs. 168.1 billion date comes to Bs. 203.6 billion, that is, 27.7% higher than
was not disbursed. According to the composition of the initially approved fiscal budget (Bs. 159.4 billion). By
expenditures during the January-October period of this sectors, these additional credits were distributed as
year, 34.3% in Other Transfers were assigned to follows: 44.1% to Other sectors, 37.3% to Social sectors,
decentralized entities of the Public Administration, 30.4% 12.1% to Productive sectors, and 6.5% to General sectors.
went to Remunerations, 24.4% to Legal Contributions of To be noted in this connection is that, to date this year no
state governments and municipalities, 6.5% to Other additional credits have been approved for the Law of
Special Economic Allocations (LAEE - Ley de

Asignaciones Económicas Especiales), nor for the
Allocations to the States (Situado Constitucional), whereas
during the same period of last year 17.3% of the approved
credits had been assigned to these sectors (See Table 5).
(Acumulated to October) Million of Bs.
10,000
5,000
SUPERAVIT (+)
0
-5,0001998
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-10,000
-15,000
-20,000
-25,000
DEFICIT (-)
-30,000
-35,000
Note: 1/ Calculated as the difference between the Ordinary Revenues
and the Ordinary Expenditures
Source: Ministry of the Popular Power for the Economy and Finances, National Treasury Office
and Own Calculations
TOTAL 2009 20,686
January -
February -
March 100
April 479
Mayo 1,491
June 2,108
July 304
August 2,465
September 5,632
October 8,106
TOTAL 2010 24,743
January -
February 405
March 2,182
April 1,532
Mayo 890
June 3,588
July 265
August 10,219
September 532
October 5,131
6
Figure 5
Central Government Fiscal Management 1/
Social
Sectors
Productive
Sectors
3,847
-
-
-
-
220
2,126
230
1,009
46
216
8,032
-
-
3,348
1,975
100
118
48
292
102
2,048
General
Sectors
766
-
393
-
-
-
-
58
-
220
95
4,319
-
33
-
-
-
1,013
500
1,322
1,100
352
Note: 1/ Law of Special Economic Allowances.
Source: Official Gazettes of the Bolivarian Republic of Venezuela and Own Calculations
PUBLIC DEBT
The low level of fiscal oil income recorded in the National
Treasury during the first ten months of the year led to the
Central Government’s increased need for further financing.
Consequently, a program of weekly auctions of Treasury
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bills 3 was initiated in early February as a result of which a
cumulative total placement of Bs. 14.6 billion was made
during the January-October period of this year. This was
1.1 times higher than placements on record in the same
period of the previous year 4 . In terms of maturity, the award
of this type of instrument was carried out as follows: 94.1%
at 91- and 105-days terms, and the remaining 5.9% at
terms of 182 and 364 days. However, these higher
placements had an average yield almost 130 bp below that
of last year to stand at 8.5% 5 .
In addition, a program of weekly auctions of VEBONOS
and TIF 6 was launched in the second week of February.
Consequently, Bs. 31.6 billion were placed during the
January-October period, 55.8% more than during the first
ten months of 2009, with
an effective yield of
15.5%, that is 320 bp
LSEA
over the yield on record
during the same period
4,417 1,784 4,289 35,788 of last year. To be noted
-
-
-
-
-
-
-
393 is that 92% of the
-
-
-
-
109
30
209
509
placement was awarded
- -
29 1,740 by auction and the
4,417
-
1,784
-
1,240
637
11,675
1,230 remaining 8% by direct
- -
450 3,924 award.
1/
Table 5
Additional Credits by Economic Destiny
Million of Bs.
Other
Sectors
TOTAL
Public Debt Constitutional
Allowances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38
1,756
29,272
-
-
-
201
3,668
17,507
2,235
3,196
1,109
1,355
5,936
10,173
66,366
-
438
5,530
3,708
4,658
22,226
3,049
15,028
2,843
8,886
Maturities of domestic
public debt in the
January-October 2010
period added up to Bs.
17 billion of which 76%
in Treasury Bills and
24% in DPN bonds. As
a result, the net
3 Under the issue approved in Official Gazette N° 39,349 of January 19 of this year,
a maximum circulation at the close of the fiscal year 2010 of Bs. 5.15 billion was
approved.
4 When the oil price was 30% lower than the current price.
5 Consequently reducing not only the financing cost of this instrument but also the
cost of payment of interest of VEBONOS, which are linked to the rate of yield of
Treasury Bills.
6 In the framework of issues approved in Official Gazettes N° 39,362 and 39,392 of
February 5 and March 23 of this year, when the issue of a maximum Bs. 45.7 billion
were approved to finance Public Debt Service and Fiscal Performance.

indebtedness rose by Bs. 29.2 billion for the highest level
since this statistical series became available in 1999 (See
Figure 6), 62.5% higher than the net positive indebtedness
of Bs. 18 billion in the same period of 2009.
30,000
26,000
22,000
18,000
14,000
10,000
6,000
2,000
-2,000
-6,000
-10,000
7
1999
2000
Figure 6
Net Domestic Borrowing Requirement
(DPN Bonds + Treasury Bills) (Acumulated to October)
Billions of Bs.
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Central Bank of Venezuela and Own Calculations
The high awards of DPN bonds and Treasury Bills brought
the total stock of debt securities held by the Central
Government at the close of October, 2010, to Bs. 81.1
billion (93.6% of which were in DPN bonds), for a 58.4%
increase in the net debt in circulation at the close of the
year 2009 (Bs. 51.2 billion). The current level of domestic
debt securities in stock represents 30.9% of total monetary
liquidity, the highest amount since October 2006, although
still well below the historical maximum of 83% in October,
2003.
MONETARY MARKET
The performance of the monetary market to date this year
showed a moderate expansion of money in circulation,
resulting mostly from the domestic economic contraction,
the lesser secondary creation of money by way of credits,
the delivery of dollars by CADIVI at a higher exchange
rate, the sterilization resulting from the various issues of
Bs/US$ Bonds (International Sovereign Bonds and
PETROBONOS), and to a lesser degree, through
mechanisms such as SITME.
In effect, Monetary Liquidity (M2) came to Bs. 262.3 billion
during the week of October 29; this was a cumulative
11.4% expansion compared to the close of 2009, and
scarcely more than 140 bp below the 12.9% expansion
during the same period of 2009 (See Figure 7). However,
after discounting the effects of the higher inflation rates
throughout the period, the contraction of M2 continued
during this year. In effect, at the close of the first ten
months of the year, the real contraction stood at 10%, 180
bp over the real decline on record in the same period of
2009 (-8.2%).
54%
46%
38%
30%
22%
14%
6%
-2%
-10%
-18%
2000
Monetary Liquidity
Monetary Base
2001
2002
2003
2004
Figure 7
Liquidity & Monetary Base
% Change Accumulated to October
2005
2006
2007
2008
2009
2010
Source: Central Bank of Venezuela and Own Calculations
By components, Money in Circulation (Coins and Bills plus
Sight Deposits) caused the overall nominal development of
liquidity, which grew by a cumulative 20.4%, somewhat
over 1,000 bp over the cumulative increase during the
same period of 2009 7 . At the same time, Quasimoney
(Savings and Term Deposits) showed a cumulative
decrease by 7%, in significant contrast with the 17.4%
increase during the same period of last year (See Figure
8). As a result, the participation of Money in Circulation
rose from 62.4% at the end of October 2009 to 71.2% in
the same month of this year. To be noted is that this
participation of Money in Circulation is the highest since
the statistical series became available (December 1968) 8
(See Figure 9).
7 To be noted is the quite different performance of the components of Money in
Circulation. In effect, Sight Deposits grew by a cumulative 26.4%, which explains the
increase of Money in Circulation. However, Coins and Bills declined by a cumulative
6.5%.
8 This performance of Money in Circulation may be reflecting the greater preference
of the public for more liquid instruments in a scenario of high inflation rates and
economic recession.

-10%
-20%
8
50%
40%
30%
20%
10%
0%
Figure 8
Change of Liquidity, Accumulated
(by Components)
Term Deposits
Saving Deposits
Demand Deposits
Cash
Monetary Liquidity
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Central Bank of Venezuela and Own Calculations
The Monetary Base or high-powered money reached
Bs. 100.6 billion as of October 29, representing a
cumulative growth of barely 1.7% compared to the close of
2009, 60 bp over the cumulative increase in the same
period of last year (1.1%). To be noted is that to date this
year no detailed information on the components of the
Monetary Base has been published.
80%
70%
60%
50%
40%
30%
20%
1990
1991
Figure 9
Money in Circulation (Cash + Demand Deposits)
as percentage of Monetary Liquidity
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Central Bank of Venezuela and Own Calculations
Bank liquidity surpluses came to Bs. 15.5 billion on
average during the fist ten months of the year, which is 3.8
times higher than the average on record for the January-
October period of 2009 9 . As a result, liquidity surpluses
over M2 went from 1.9% in the first ten months of 2009 to
6.7% in the same period of this year.
9 To be pointed out is that the strong expansion of surplus liquidity in the banking
system in late 2009 and, to a lesser degree, throughout the current year, was the
result of a lesser increase in loans, as well as of the limits imposed on CDs and
Repos by the Central Bank since December of last year.
Regarding the management of monetary policy, during the
first ten months of the year the BCV showed a more lax
performance than last year with respect to awarding
Certificates of Deposit (CDs) and Repos. This is explained
in part by the limits established on placement of CDs and
Repos (the Central Bank’s main instruments to control
Money in Circulation). In effect, placements of these
absorption instruments during the period came to Bs. 93.6
billion, which was 43.4% lower than during the January-
October period of 2009.
Injection operations in an amount of Bs. 27.3 billion were
carried out by means of Purchase of DPN Bonds under
Resale Pact (Reverse Repos) up to October at an average
rate of 19.4%, while during the same period of last year
placements were, 1.3 times lower (Bs. 11.7 billion).
Maturities of both CDs and Repos during the January-
October period came to Bs. 95.1 billion compared to
Bs. 180 billion during the first ten months of 2009. As a
result, open market operations, both of absorption and
injection, resulted in a slight expansion of liquidity of barely
Bs. 21.4 million (See Figure 10), in contrast with the strong
expansion by Bs. 13.5 billion during the same period of
2009. Given the lower awards of credit instruments by the
BCV together with the decrease by some-what over 200
bp in the average weighted yield of CDs and Repos,
interest paid by the Central Bank during the first ten
months of the year declined by 70.8% compared to the
same period of last year, for a total Bs. 600.6 million.
Figure 10
Net Effect of Open Market Operations
Repos+Certificates of Deposits+Reverse Repos. Million of Bs.
10,000
8,000
6,000
4,000
2,000
0
-2,000
-4,000
-6,000
-8,000
Oct-08
Dec-08
Feb-09
INYECTION
Apr-09
Jun-09
ABSORPTION
Aug-09
Oct-09
Issuance of Bonds (Bs. / US$)
Jun-09: PETROBONO 2011
Oct-09: Bonos Soberanos Internacionales
Oct-09: PETROBONO 2014,2015 y 2016
Aug-10: Bono Soberano Internacional 2022
Oct-10: PETROBONO 2017
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Source: Central Bank of Venezuela and Own Calculations

As a result, the stock in circulation of CDs and Repos fell
from Bs. 10.2 billion at the close of 2009 to Bs. 9.3 billion
at the close of October of this year. This level is equivalent
to 3.5% of M2, 120 bp less than in the same month of
2009, and represented the lowest on record since May of
2002, when this ratio stood at 2.7%. In addition, this level
was significantly lower than the historical maximum on
record, when this ratio reached 46.2% in April 2006 (See
Figure 11).
16%
14%
12%
10%
9
8%
6%
4%
2%
Oct-08
Dec-08
Feb-09
Figure 11
BCV's Stock of Securities (Cd's+Repos)
as percentage of Monetary Liquidity
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Source: Central Bank of Venezuela and Own Calculations
In connection with legal matters, according to Official
Gazette N° 39,538, for the second time this year,
on October 26, 2010 the minimum legal reserve
that financial institutions must maintain for the increase
of their deposits with respect to the
Reserves Base (July 14, 2006) was reduced from
20% to 17%. This lower reserve entailed freeing
bank funds by approximately Bs. 9.6 billion.
INTEREST RATES
To date this year, interest rates have continued
their downward trend recorded throughout 2009. In
effect, the nominal active rate of Commercial and
Universal Banks averaged 18.3% in the first ten
months of the year, equivalent to a decline by 262
bp compared to the average rate during the same period of
2009, and represented the lowest on record since the
same period of 2007. By economic destination, the rates
charged declined for all items, particularly Mortgage
Loans 10 (-537 bp compared to the January-October
average of 2009), Communications (-325 bp), and
Commerce (-278 bp) (See Table 6).
The Savings Deposits rate reached an average 12.6%
(vs. 13.6% during the same period of 2009), while the 90day
Fixed Term Deposits rate declined by 100 bp for an
average 14.7% during the first ten months of the year, both
barely higher than the regulatory minimums of 12.5% and
14.5% respectively. Consequently, the relative financial
margin stood at 19.3% on average for the period, that is
320 bp below that of the January-October period of 2009
(22.5%), which also is the lowest level for a similar period
since 1993 (See Figure 12).
As a result of the high rates of inflation of the period, the
average lending and borrowing rates continued to be
negative for the fifth year running in the case of loans, and
for the ninth consecutive year in the case of the deposits
with highest yields. In effect, the real lending rate was
-7.7% (-5.6% on average for the first ten months of 2009),
Table 6
Commercial and Universal Banks
Average Interest Rates by Economic Destination
Average until October
2008 2009 2010
AVERAGE LENDING RATE 23.4
21.0
18.3
Agriculture 13.4
12.6
12.3
Industrial 22.2
19.6
17.5
Commerce 25.8
23.9
21.1
Services 24.7
23.5
22.0
Mortgage 21.3
16.3
11.0
Transportation 26.3
22.8
22.2
Tourism 19.5
17.7
15.5
Communication 25.7
23.4
20.2
Vehicles 26.8
25.2
22.8
Other Private Sectors 24.8
23.7
22.5
Mining and Quarries 26.8
23.2
20.9
Electricity and Water 26.1
24.2
22.5
Credit Cards 31.2
30.0
28.6
Source: Central Bank of Venezuela and Own Calculations
whereas the real borrowing rate came to -10.4% (-9.2% in
the same period of last year). It is important to point out
that negative real interest rates usually stimulate demand
for credit and the substitution of savings by consumption
10 To be pointed out is that some of the Sectors subject to measures of preferred
rates, like Mortgage and Farming, stayed at the lowest level of the classification of
asset yields by economic destination.

(in anticipation of future prices higher than the yields of
savings).
%
48
44
40
36
32
28
24
20
16
12
10
1990
1992
REAL SECTOR
Figure 12
Financial Gap
Commercial and Universal Banks. Average to October
1994
1996
1998
2000
2002
2004
2006
2008
2010
Source: Central Bank of Venezuela and Own Calculations
The oil product during the third quarter of the current year
came to -2.1%, similar to the preceding quarter, but 750
basis points less than the decline during the same period
of 2009. This result was recorded in spite of the slight
20,000 b/d (-0.9%) drop in oil production and of the 5.8%
higher average price of the Venezuelan oil export basket.
Figure 13
Absolute deviation of Non Oil GDP by Economic Activity
with respect to Total Non Oil GDP
Government General
Services
Social and Common
Services
Real Estate and Services
provided
Finance & Insurance
Mining
12.0%
8.0%
4.0%
0.0%
-4.0%
-8.0%
-12.0%
Manufacturing
Electricity & Water
Construction
Commerce & Repair
Services
Transportation &
Warehousing
The Central Bank (BCV) reported that the Gross Domestic
Communications
Product (GDP) had declined by 0.4% in the third quarter of
Non Oil GDP by Economic Activity Total Non Oil GDP
2010 when compared with the same period of 2009,
Source: Central Bank of Venezuela and Own Calculations
significantly less than the 1.9% decline of the second On the other hand, the non-oil activity fell by merely 0.2%,
quarter and 420 basis points less than the reduction for the lowest decline since the second quarter of 2009.
registered in that same period of last year. This means that The rate of decline has decelerated considerably from the
the Venezuelan economy was in decline for the sixth high -4.9% of the first quarter of this year. An analysis of
consecutive quarter. The GDP fall during the first nine the decline by type of economic activity shows that the
months of 2010 reached 2.4%.
economic activity fell in most of the sectors, particularly in
Table 7 Mining (-10.6%), Construction (-7.9%) and -
Gross Domestic Product 7.2% in Electricity. In the case of Construction
Third Quarter (Annual % Change) the rate of decline was the highest since the
fourth quarter of 2003. Communications,
Communications
Government General Services
2008
13.9
4.1
2009
11.8
2.4
2010
9.4
3.2
Government Services and Transportation
increased by 9.4%, 3.2% and 2.7%
Transportation & Warehousing
Manufacturing
0.5
-0.3
-10.7
-9.1
2.7
0.1 respectively. The growth of the Transportation
Social and Common Services
Real Estate and Services provided
Non Oil Sector
9.6
1.6
3.9
3.8
-2.9
-3.1
0.0
-0.1
-0.2
sector was in notable contrast to the 10.7%
drop in the same period of 2009 (See Table
TOTAL 3.8 -4.6 -0.4 7). Figure 13 allows the differences in
Others absolute terms between the non-oil activity as
a whole and its component sectors.
1/
At 1997 Prices
6.4 0.2 -1.0
Oil Sector 4.4 -9.6 -2.1
Commerce & Repair Services 1.9 -11.0 -4.4
Finance & Insurance -5.1 -3.6 -5.0
Electricity & Water 9.5 4.0 -7.8
Construction 3.7 1.8 -7.9
Mining 0.9 -18.3 -10.6
Note: The activities were ordered in accordance with the highest growths recorded in the third quarter of 2010. 1/ Private
Agriculture, Restaurants & Hotels and Public Activities.
Source: Central Bank of Venezuela and Own Calculations
On an institutional basis, the BCV reported
that the product of the public sector fell for the
fifth consecutive quarter, although only by
0.1%, 140 basis points less than in the
preceding quarter and 30 basis points lower than in the

same quarter of the previous year. In the case of the
private sector, it fell 0.7% compared to the same period of
2009, for the lowest such fall in the last six quarters.
The notable decrease in the rate of decline of the non-oil
activity can be explained in part by the performance of the
Aggregate Internal Demand (AID) which grew by 4.1%
after falling for five consecutive quarters, in contrast with
the 0.9% fall in the preceding quarter and with the 10.9%
decline in the same quarter of last year. The rise in the
Aggregate Internal Demand is the result of the increases in
the Gross Formation of Fixed Capital and of Government
Consumption.
Private Consumption represented 57,1% of AID but
declined by 2.1% for 30 basis points less than the
contraction in the second quarter and 240 basis points
lower than the decline in the third quarter of 2009. The
Gross Formation of Fixed Capital represents 25% of AID
but after the five consecutive quarters of decrease it rose
by 4.4% while in the same period of 2009 it dropped by
13.6%. Government Consumption continued to rise,
currently at the highest rate in the last seven quarters
when it reached 3.4%, the highest increase from fourth
quarter in 2008.
On the other hand, External Demand (ED) contracted by
17.6%, down to its minimum in real terms and – excluding
the first quarter of 2003 – the lowest level on record since
this series became available in 1998 (See Table 8).
Table 8
Aggregate Demand and Gross Domestic Product
Third Quarter (Annual % Change)
2009 2010
1. Final Consumption -3.3% -1.1%
Public Sector 2.6% 3.4%
Private Sector -4.5% -2.1%
2. Gross Fixed Capital Formation -13.6% 4.4%
3. Domestic Aggregate Demand 1/
At 1997 Prices
-10.9% 4.1%
4. Exports -15.0% -17.6%
5. Minus: Imports -25.5% 6.3%
6. Gross Domestic Product (3+4+5)
Note: 1/ includes the variation of stocks.
Source: Central Bank of Venezuela and Own Calculations
-4.6% -0.4%
11
LABOR MARKET
The National Statistical Institute reported that the average
rate of un-employment in the first nine months of 2010 was
8.8%, 80 basis points higher than in the same period of
2009 (8%) and the highest since the comparable period of
2007.
This result is due to the 10.8% increase in the unemployed
population during the first nine months of this year, nearly
400 basis points higher than the 6.9% increase during the
same period of last year and the highest since 2003. The
average number of unemployed persons during the current
year came to 1,146,170 while the economically active
population only increased by 1.6% during the same period.
On the other hand, the average number of employed
persons during the first nine months of this year rose only
by 0.8%, 130 basis points below the increase recorded in
the same period of 2009 and the lowest since the same
period in 2003, indicating the depth of the economic
recession.
Employment in the public sector during the same period
increased merely by 59,391 (2.6%) for the lowest rise
since 2003 and 530 basis points less than the growth
recorded in the first nine months of 2009. Employment in
the private sector increased by a mere 38,048 (0.4%), 40
basis points less than the increase of the first nine months
of 2009 (0.8%), again the lowest since 2003. The
participation of the public sector in the total employed
population has grown every year for the last seven years,
moving from 14.1% in the first nine months of 2003 to
19.3% in the same period of the present year.
The informal sector of the economy provided the strongest
growth within the employed population, for a 1.6%
increase compared to the same period of 2009. During the
same period employment in the formal sector of the
economy only increased by 0.2%. However, the

participation in the formal sector remained relatively stable,
falling only by 30 basis points - to a total of 56.1%
compared again to the same nine month period of 2009.
The Central Bank reported that the Index of
Remunerations in the formal sector of the economy for the
third quarter of the current year increased by 21.7%,
similar to the second quarter. However, after adjusting for
inflation the Index in real terms discloses a 6.3% fall in
average remunerations which have declined for eleven
consecutive quarters, the level registered in the third
quarter of the current year being the lowest ever in real
terms for any third quarter.
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
12
III-02
I03
III-03
I04
III-04
I05
III-05
I06
III-06
I07
III-07
I08
Figure 14
Wage Index
Annual % Change
III-08
I09
General
Private
Public
III-09
I10
III-10
Source: Central Bank of Venezuela and Own Calculations
The highest increase of the Remunerations Index took
place in the private sector, by 27.4%. However, in real
terms this adjustment translates into a negative 1.8%.
Remunerations in the public sector were up 9.9%, for the
lowest rate of increase since the third quarter of 2003.
After adjusting for inflation, it is found that in this case
there has been a year-to-year quarterly decline for the
eighth consecutive quarter. Specifically, the Index fell by
15.3% in real terms in the third quarter of 2010 compared
to the same period of 2009 (See Figure 14). When
remunerations are compared between the public and the
private sector, it is found that remunerations in the public
sector continue at higher levels than in the private sector. It
should be noted however that after nearly a decade (1998-
2007) of higher salary increases in the public sector this
tendency started to revert at the end of 2007. At that time
average remunerations in the public sector were 38.3%
higher than in the private sector, but the difference is now
down to 11.4%.
PRICES
In October 2010 the National Consumer Price Index (CPI)
accelerated after the slowdown recorded in September. In
October 2010 the CPI rose by 1.5%, i.e. by 40 basis points
over September, although it was 40 basis points lower
than in October 2009. On a year-to-date basis, inflation
rose by 23%, 270 basis points above the level recorded in
the first ten months of 2009. A number of factors
contributed to inflation during the first ten months of 2010:
the modification of the exchange rate, lower supply of local
products, a slower rate of CADIVI authorizations for the
acquisition of foreign exchange, and the eventual complete
shutdown of the parallel exchange market, etc.
The rate of inflation speeded up in all of the eleven cities
included in the monthly survey. On a year-to-date basis, in
only three cities was inflation found to exceed the national
average, namely Valencia (24.4%), Caracas (23.7%) and
Maturin (23.4%). The lowest prices were found in San
Cristóbal and Mérida (20.5% and 22.1%) respectively, but
never much below the national average of 23%. Figure 15
shows the differences between the rates of inflation in the
various cities compared with the national average.
Figure 15
Absolute deviation of cumulated inflation up to October
with respect to the national average
National Rest
San Cristóbal
Maturín
Mérida
Maracaibo
Caracas
1.5%
0.9%
0.3%
-0.3%
-0.9%
-1.5%
-2.1%
-2.7%
Maracay
Ciudad Guayana
Valencia
Barquisimeto
Pto La Cruz / Barcelona
Cumulated Inflation by Cities National Cumulated Inflation
Source: Central Bank of Venezuela and Own Calculations

Inflation increased in six of the thirteen groups considered
for the monthly study. The highest rates of increase
occurred in Alcoholic Beverages and Tobacco (2.9% vs.
1%), Food and Non-Alcoholic Beverages (1.6% vs. 0.3%)
and Home Rentals (1.1 vs. 0.8%). During the first ten
months of the current year the prices of five of the 13 items
used for the Index increased at higher rates than the
national average. These items represent about 54% of the
total, as follows: Alcoholic Beverages and Tobacco
(33.6%), Food and Non-Alcoholic Beverages (29.2%),
Entertainment and Culture (25.6%), Diverse Goods and
Services (24.4%) and Restaurants and Hotels (23.7%)
(See Table 9).
Core Inflation, which excludes seasonal changes and
price-controlled items, increased by 1.7% in October 2010,
for a total increase during the first ten months of 22.6%,
only 40 basis points below the 23% of the National Index.
To be noted is that during the same period of 2009 the
National Inflation Index was considerably higher – by 410
basis points - than the Core Inflation.
The CPI in the Caracas area rose by 1.5% in October after
five consecutive months of deceleration, for an increase of
20 basis points over September and reaching 23.7% for
the first ten months of the year and 70 basis points above
the level in the same period of last year.
Five of the 13 groups used to compile the price index had
higher prices than the national index of 1.5%, namely
13
Alcoholic Beverages and Tobacco (2.4%), Various Goods
and Services (2.1%), Food and Non-Alcoholic Beverages
(1.9%), Clothing and Footwear (1.8%), and Health (1.6%).
It is of interest that the increase of prices for Food and
Non-Alcoholic Beverages registered in October followed a
0.1% price decrease in September.
Core Inflation at 1.6% exceeded the national CPI for the
sixth consecutive month, although barely 10 basis points
over the level of September. The rates of Core Inflation
have been gradually approaching the national index. In
October 2010 the difference between the CPI and the Core
Inflation was down to 60 basis points, compared to 662
basis points of difference in October 2009.
26%
24%
22%
20%
18%
16%
14%
12%
10%
Figure 16
CPI-Metropolitan Area of Caracas by Income levels
% Change Accumulated to October
2003
2004
2005
Level I
Level IV
2006
Table 9
Inflation by Sector
% Change Accumulated to October
National Barquisimeto Barcelona Caracas Ciudad Guayana Maracaibo Maracay Maturín Mérida San Cristóbal Valencia Rest 1/
GENERAL INDEX 23.0 22.4 22.8 23.7 22.5 23.0 22.8 23.4 22.1 20.5 24.4 22.9
Foodstuffs & Non-Alcoholic Beverages 29.2 27.0 27.8 30.1 28.5 30.3 30.2 30.1 30.2 26.7 30.9 28.8
Alcoholic Beverages & Tobacco 33.6 34.8 34.3 39.3 33.3 34.4 34.2 33.1 35.2 31.9 31.6 31.5
Clothing & Footwear 12.1 12.7 11.2 14.7 10.5 13.6 10.1 11.9 13.3 10.2 16.0 11.0
Housing Rent 9.7 9.6 12.3 9.7 11.0 9.2 9.7 10.6 12.0 11.7 11.5 9.3
House Services (excluding Phone Services) 8.3 9.9 10.3 4.7 10.1 -0.3 13.8 13.3 11.5 15.2 13.7 11.1
Home Equipment 20.9 19.6 20.4 26.2 19.7 24.8 19.6 18.7 14.9 17.3 18.2 18.6
Health 21.6 18.4 24.0 22.3 21.5 26.8 18.4 29.4 28.0 18.8 23.3 18.9
Transportation 22.7 25.4 26.6 24.1 21.8 16.3 25.4 19.6 23.8 20.6 29.8 22.1
Communications 5.9 6.7 6.4 6.0 6.2 6.5 5.4 6.8 5.1 4.6 5.9 5.5
Culture 25.6 28.5 19.1 24.3 19.6 20.4 20.5 19.4 23.1 17.3 21.8 29.5
Education Services 21.7 20.3 20.3 23.9 24.0 24.1 17.9 19.5 20.9 20.0 19.7 18.9
Restaurants & Hotels 23.7 21.0 21.0 25.5 18.4 22.4 19.7 25.4 21.2 22.1 22.5 24.4
Other Good and Services 24.4 23.6 25.7 25.3 24.6 26.1 24.8 25.0 25.7 20.4 25.1 23.4
Note: 1/ Include a representative sample of 74 localities (cities small medians and, as well as rural areas).
Source: Central Bank of Venezuela and Own Calculations
2007
2008
2009
2010
Note: Levels I and IV correspond to households
with lower and higher income, respectively.
Source: Central Bank of Venezuela and Own Calculations
In terms of level of income, the key item is Food and Non-
Alcoholic Beverages which is not only the principal
component of the price index but also causes the greatest
impact on the low-income sectors. Inflation in October on
Level 1 (the quartile of homes with the lowest incomes)
was 1.8% while the effect on Level 4 the quartile of homes

with the highest incomes was only 1.4%. Cumulative
inflation during the first ten months in Level 1 was 22.4%,
223 basis points higher than the same quarter in 2009 and
the highest rate of year-to-date inflation since 2008, when
it reached 24.9% (See Figure 16). On the other hand, the
effect of inflation on Level 4 for the ten-month period of
2010 was only 20.6%, 170 basis points lower than during
the same period of 2009.
The Diversity Index measures
the availability of certain brands,
forms of presentation or varieties
of merchandise in Caracas.
14
In October of the current year this index came to a level of
161, indicating only a minor improvement of 3.9% in
diversity since the close of 2009 and well below the 8.8%
increase in diversity in the first ten months of 2009.
Finally, the government increased the prices for sale to the
public of a number of price-controlled items. The principal
changes are listed on Table 10.
Date Official Gazettes Measures
November 5, 2010
Source: Official Gazettes of the Bolivarian Republic of Venezuela
Table 10
Principal price adjustments in goods under control
N° 39,546
NEW LEGISLATION IN THE ECONOMIC AND SECTORIAL FIELD
MONTH OF OCTOBER 2010
* An upward adjustment in the Maximum Sale Price of the
following goods: White Rice Type I, II and III (1 kg) (average
21.1%) and corn flour (1 kg) (23.9%).
OFFICIAL GAZETTE N° DATE SUMMARY
39.522 10/01/10 Regulations of Foreign Exchange transactions.
39.526 10/07/10 Regulation extending by 30 banking days the period during which financial institutions are allowed to charge commissions, fees, etc.
39.527 10/08/10
Law approving a joint venture between Venezuela and China to develop Block Junin 4 of the Orinoco Oil Belt Law approving a joint venture between
Venezuela and China to develop Block Junin 4 of the Orinoco Oil Belt.
39.533 10/19/10 Regulation of mandatory deposits (encaje legal) in the Central Bank.
39.538 10/26/10 Regulation of mandatory deposits in the Central Bank.
Source: Official Gazettes of the Bolivarian Republic of Venezuela
This bulletin has been prepared by the Economic Research Management, by Mercantil C.A., (Banco Universal), coordinated by
Francisco Vivancos Cabello.
Economic Research team: Inés Fasanaro, Andreas Faust, Gema Murillo, Carmen J. Noguera, Leonardo Vera.
The opinions expressed in this bulletin are responsibility of the authors and do not necessarily express the opinion of the institution.
Edificio Mercantil, Av. Andrés Bello, N° 1-Zip Code N°789 - Caracas 1010A. Venezuela.
Legal Deposit: 83-0181. Vol 32, N° 07.

15
ECONOMIC INDICATORS 2007 2008 2009 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 % Change % Change
EXTERNAL SECTOR Accumulated 12 Months
Volume of Production of Crude (thousands of barrels) 2,413
2,353
2,181
2,195
2,200
2,190
2,200
2,180
-1.8% -1.8%
Price West Texas Intermediate (WTI) (US$/bl) 72.2
99.9
61.7
76.1 77.0 75.2 81.9 84.1 12.8 % 7.7 %
Venezuelan Oil Basket Price (US$/bl) 64.6
86.4
56.9
67.3 68.9 68.0 74.3 77.0 11.6 % 6.3 %
OPEC Price (US$/bl) 69.1
94.4
60.7
72.4 74.3 74.4 79.8 82.6 11.7% 8.4%
Non Traditional Exports (Million of US$) 16,964
5,426
2,380
200
150 221 -3.5% -3.5%
Imports 1/ (Million of US$) 41,911 45,128 36,908
2,942
2,998
3,075
18.1% -6.2%
Gross International Reserves (Million of US$) 33,477 42,299 35,000 27,389 28,234 28,618 29,033
27,135 -22.5% -16.6%
Priority Imports Exchange Rate (Bs./US$) 2.15
2.60
2.60
2.60
2.60
2.60
20.9% 20.9%
Non-Priority Imports "Oil Dollar" Exchange Rate (Bs./US$) 2.15
2.15
2.15
4.30
4.30
4.30
4.30
4.30
REAL SECTOR
Sales Volume Index 196.0
216.6
192.6
171.6
174.1
174.6
-30.3% -5.3%
Wholesale 140.5
143.3
122.1
131.9
136.6
143.0
18.7% 13.4%
Detail 233.2
265.7
239.8
198.3
199.2
195.8
-42.0% -12.3%
Automotive Vehicles 245.3
189.8
127.4
75.4
80.1
79.9
-30.5% -14.8%
Parts, Pieces & Accessories of Automotive Vehicles 142.1
171.7
149.5
144.6
163.7
150.2
-0.5% 2.6%
Fuels for Automotive Vehicles 116.3
128.9
180.7
167.4
169.5
167.0
-42.1% 10.1%
Foods, Beverages & Tobacco in Non-Specialized Storehouses 312.4
337.0
324.2
260.6
246.7
237.0
-43.5% -19.8%
Other Products in Non-Specialized Storehouses 105.6
159.1
247.7
176.8
175.6
164.6
-54.2% -24.2%
Foods, Beverages & Tobacco in Specialized Storehouses 229.6
248.7
217.4
201.9
208.0
195.6
-3.6% -9.5%
Pharmaceutical & Medicinal Products, Cosmetic & Toiletries 302.4
401.7
409.3
303.7
307.6
294.1
-23.1% -30.2%
Textile Products, Apparel, Footwear & Leather's Articles 327.2
490.8
394.4
316.6
332.8
360.3
-55.9% -4.6%
Articles & Equipment of Domestic Use 433.5
608.1
490.7
379.6
408.9
308.2
-60.6% -30.8%
Articles of Ironworks, Paintings & Products of Glass 97.7
107.2
99.8
82.3
82.8
92.6
2.3% -13.4%
Other Products in Specialized Storehouses 83.5
85.8
90.0
100.0
102.1
110.6
-31.6% 20.0%
Volume Index of Private Manufacturing Industry 123.9
125.6
110.7
109.7
117.0
118.1
28.5 % 3.2 %
MONETARY AGGREGATES
Liquidity (M2) 153,225 194,275 235,401 257,084 258,811 261,114 262,272 278.006 *****/ 18.1% 20.0%
Currency & Demand Deposits (M1) 98,069 124,036 155,269 180,929 183,150 184,581 187,281 198.405 *****/ 27.8% 33.4%
Monetary Base 64,177 83,787 98,903 107.264 */ 104.679 **/ 107.505 ***/ 100.567 ****/ 108.272 *****/ 9.5% 22.4%
Net International Reserves 70,524 89,048 74,544
Net National Treasury Agency (13,879) (9,474) (3,488)
PDVSA (1,181)
(351) (6,091)
Other Net Public Sector Accounts (10,132) 2,624
919
Financial Sector 2
161
3
Credit Instruments Placed by BCV (12,663) (23,041) (7,563)
Capital & Other Net Accounts 13,989 17,477 38,354
MONETARY MARKET
Awarded Repos 27,531
795 12,190
3,600 3,118 2,481 2,910 1,909 149.2 % 22.5 %
Awarded CDs 281,332 179,520 168,813
6,433 6,525 6,669 4,887 6,051 -59.0% -20.0%
Awarded Repos+CDs (Average Weekly) 5,940
3,468
3,481
2,389 2,192 2,080 2,052 1,895 -36.9% 3.9%
Purchases DPN (Average Weekly) 101
586
461
872 998 798 839 977 59.7% -7.1%
Outstanding Repos -
-
2,653
3,204 3,284 2,829 2,725 3,130 18.0% 61.9%
Outstanding CDs 12,613 22,715
7,584
9,318 7,887 8,876 6,572 6,653 -12.3% -25.3%
Average Effective Returns Repos 7.70
6.50
6.27
6.1 6.3 6.0 6.4 6.1 (3.9)
0.1
Average Effective Returns CDs 9.79
12.34
8.97
6.3 6.4 6.2 6.3 6.2 (4.8) (17.1)
COMMERCIAL & UNIVERSAL BANKS
Credit Portfolio 102,542 101,171 139,067 150,307 155,058 156,211 158,679 161.471 ******/ 16.1 % 13.8 %
Investments 47,192 59,049 59,445 81,855 80,291 87,831 58,213 59.283 ******/ -0.3% -13.0%
Total Deposits 141,969 175,984 184,977 218,575 221,043 222,576 213,338 208.561 ******/ 12.7% 7.6%
Demand Deposits 88,210 106,763 115,498 151,607 154,109 154,748 151,135 146.534 ******/ 26.9% 23.5%
Saving Deposits 35,289 45,777 47,996 53,755 53,399 54,081 50,550 50.889 ******/ 6.0% 6.1%
Term Deposits 18,469 23,444 21,483 13,213 13,534 13,747 11,653 11.138 ******/ -48.2% -59.1%
INTEREST RATES
Overnight (Min - Max) 0,1-121,0 0,01-56,0 0,01-38,0 0,2-3,5 0,1-10,0 0,5-20,0 0,1-18,0 3,0-16,0 - -
Overnight (Average) 7.74
10.15
9.30
2.16 2.59 10.09 12.83 11.53 (60)
(728)
Loans (6 Main Banks) 16.77
22.77
20.61
17.73 17.97 17.43 17.70 18,02 *****/ (92)
(82)
90 Days Deposits (6 Main Banks) 10.89
16.55
15.57
14.95 14.58 14.77 15.05 14,91 *****/ (9)
(34)
Libor 90 Days 5.26
2.79
0.65
0.45 0.30 0.29 0.29 0.30 5
4
CENTRAL GOVERNMENT 2/
Ordinary Revenues 141,333 166,098 151,525 10,410 12,923 17,243 11,973
19,206 16.3 % 96.2 %
Oil Ordinary Revenues 71,569 82,432 53,231
2,524
6,103
7,376
1,697
9,445
1.1% 356.7%
Tax Income 19,945 17,834 12,944
574
783
856
1,059
775 -17.8% -13.7%
Royalties 46,093 60,298 35,987
1,107
4,501
3,585
522
8,484
24.3% 624.8%
Dividends 5,532
4,300
4,300
-
182
1,508
-60.7%
Non-Oil Ordinary Revenues 69,764 83,666 98,295
7,886
6,819
9,867 10,276
9,760
26.0% 26.4%
Net Seniat 60,451 73,168 80,011
7,886
6,819
9,867 10,276
9,435
66.0% 22.3%
Gasoline and Derivaties 704
1,174
756
-
-
326
39.0%
Others 8,609
9,324 17,527
-
-
Ordinary Expenses 126,462.1 174,132.8 187,134.6 20,259 18,520 14,379 14,091
32,645
-0.9% 36.0%
Financial Surplus or Deficit 14,871 (8,034) (35,609) (9,850) (5,597) 2,864 (2,118) (13,439) -12.3% -5.5%
Efective Placements of DPN+Treasury Bills 10,548
4,053 28,301
5,356
3,329
4,505
3,061
4,208
63.2% 81.2%
Net Borrowing Bonds DPN 2,365 (5,790) 14,557
4,096
1,943
2,309
1,981
2,810
89.1% 176.2%
Net Borrowing Treasury Bills
Public Debt Securities Average Effective Yields
(1,245)
(90) 2,314
(338)
-714 -910 (135)
102 -26.2% -228.7%
60-360 Days 9.84
361-1080 Days 15.52
12.59
14.19 (1,388) (1,419)
1081-1800 Days 11.86
16.58
12.62
16.11 15.95 16.32 16.99 17.08 1,708
826
1801-2520 Days 7.55
11.87
18.98 18.47 18.40 18.46 18.48 1,848 1,848
2521-3240 Days
3241-5760 Days
7.45
8.48
Treasury Bills Average Yield
60-80 Days
81-110 Days
111-150 Days
8.98
11.52
10.39
8.43 8.58 8.88 8.30 8.19 (155) (156)
151-180 Days 9.69
181-269 Days 11.12
8.53 8.55 8.61 (1,067) (1,074)
PRICE INDEX (CARACAS)
Consumer 22.5
31.9
26.9
1.6 1.4 1.3 1.5 1.3 25.3% 26.9 %
Foods & Non Alcoholic Beverages 30.9
46.7
20.4
0.9 0.9 (0.1) 1.9 0.9 31.3 % 33.1 %
Alcoholic Beverages & Tobaccos 78.1
28.3
47.7
3.1 4.5 1.7 2.4 4.7 45.9 % 47.8 %
Apparel & Footwear 19.1
18.8
22.1
1.2 0.1 2.3 1.8 1.2 16.1 % 17.9 %
House Rent 5.7
7.0
16.1
0.9 0.0 0.8 1.0 0.4 10.1 % 11.7 %
Household Services (excluding Phone Services) 1.8
5.5
3.9
(0.1) 1.6 1.0 (0.2) (0.3) 4.4 % 5.1 %
Home Equipment 22.2
34.7
39.2
0.7 1.4 1.0 0.9 1.5 28.1 % 30.3 %
Health 28.3
26.9
34.3
2.5 1.7 1.2 1.6 0.8 23.2 % 23.7 %
Transport 17.7
29.9
30.5
1.1 2.0 0.9 1.4 1.0 25.4 % 26.7 %
Communications (5.8)
7.3
9.4
0.3 0.7 1.0 0.1 0.3 6.4 % 6.7 %
Culture 16.9
25.1
26.9
3.0 1.6 2.4 0.4 1.6 26.3 % 28.1 %
Educational Services 7.3
28.5
29.4
2.8 0.0 11.9 0.8 0.6 24.7 % 24.7 %
Restaurants & Hotels 42.8
49.6
33.6
3.2 1.8 1.7 1.3 3.1 29.4 % 31.4 %
Miscellaneous Goods & Services 24.7
37.8
50.7
3.0 2.7 1.7 2.1 1.5 27.2 % 30.8 %
Core Inflation 3/
Index 1997 = 100
Million of Bs.
Million of Bs.
Million of Bs.
Million of Bs.
28.3
33.8
34.6
2.1 1.7 1.7 1.6 2.3 27.0 % 29.3 %
Private Manufacturing Production 14.9
25.2
26.5
0.8 0.7 0.9 0.8 1.6 21.2 % 22.3 %
Wholesale 17.2
32.4
24.8
1.3
0.9
0.7
0.7
1.2 23.3 % 24.1 %
National 18.0
36.7
22.2
1.2
1.0
0.7
0.8
1.2 24.8 % 25.5 %
Imported 14.6
17.1
35.7
2.0
0.6
0.8
0.4
1.1 17.9 % 18.9 %
Construction Materials (Wholesales) 15.2
23.3
18.7
1.0
0.6
0.6
0.3
0.1
17.6% 18.7 %
LABOR MARKET
Second Half Percentage Percentage
Unemployment Rate 7.5
6.9
7.5
8.7 9.6 8.4 9.0 243 90
Activity Rate 65.0
65.2
65.0
64.5 65.1 65.5 65.0 (123) (94)
Formal Occupation 56.0
56.6
56.0
55.0 56.6 56.4 123 1
Public Sector Occupation 17.1
18.1
19.7
18.9 19.4 19.5 4 26
Notes: */ As of 07/30/10, **/ As of 08/27/10, ***/ As of 09/24/10, ****/ As of 10/29/10, *****/ As of 11/26/10, ******/ As of 11/12/10
1/ Data from trade are from the National Institute of Statistics. Imports do not include oil the oil sector.
2/ Data from the Central Bank of Venezuela.
3/ Core Inflation: Excludes from the Consumer Price Index those goods subject to seasonal factors and price controls.
Source: Ministry of Finance, Central Bank of Venezuela, Reuters, National Statistics Institute, Bloomberg and Own Calculations

Notes: Y o Y: Change of the month with respect to the same month of the previous year. The Emerging Markets Bond Index Plus (EMBI+) tracks total returns for traded external
debt instruments in the emerging markets. The instruments include external-currency-denominated Brady bonds, loans and Eurobonds, as well as U.S. dollar local markets
instruments. Five Year Average Range: Average of the minimum and maximum values of the previos five years. */ As of 11/26/2010
Source: Central Bank of Venezuela, Reuters, Bloomberg, National Statistics Institute, Ministry of Energy & Oil, Cavenez, International Monetary Fund, OPSIS and Own
Calculations
16
Oil Price
(US$/b)
147
126
105
84
63
42
21
Sovereign Spreads.Diferencials EMBI+
Basic Points
1,800
1,500
1,200
900
600
300
0
Nov-05
Nov-05
May-06
May-06
Venezuela
WTI
Nov-06
Nov-06
May-07
International Reserves and Macroeconomic
Stabilization Fund (Million of US$)
48,000
40,000
32,000
24,000
16,000
8,000
0
Nov-05
May-06
Nov-06
May-07
Venezuela
Mexico
Colombia
Brazil
May-07
Monetary Aggregates
% Change Y o Y
120
100
80
60
40
20
0
Nov-05
May-06
Nov-07
Nov-07
May-08
May-08
Nov-08
Macroeconomic Stabilization Fund
International Reserves
Nov-06
May-07
Nov-07
Nov-07
May-08
May-08
Nov-08
Nov-08
Nov-08
May-09
May-09
May-09
Nov-09
Nov-09
Nov-09
May-10
May-10
Economic Indicators
May-10
Liquidity (M2)
Monetary Base
May-09
Nov-09
May-10
Nov-10
Nov-10
Nov-10
Nov-10 */
147
126
105
84
63
42
21
48,000
40,000
32,000
24,000
16,000
8,000
0
1,800
1,500
1,200
900
600
300
0
120
100
80
60
40
20
0
27
24
21
18
15
12
9
NTE
2,500
2,100
1,700
1,300
900
500
100
9
6
3
0
-3
-6
-9
-12
-15
Sep-05
Sep-05
Mar-06
Mar-06
Imports
Non Traditional Exports
Sep-06
Sep-06
Mar-07
Mar-07
Sep-07
Sep-07
Non Traditional Exports (NTE) &
Imports (MMUS$)
Mar-08
Mar-08
Sep-08
Sep-08
Mar-09
Mar-09
Sep-09
Sep-09
Mar-10
Mar-10
Imports
4,900
Energy Consumption Interconected National System
% Change t/t- 12
56,000
48,000
40,000
32,000
24,000
16,000
8,000
0
Nov-05
Nov-05
May-06
Imported
National
May-06
Nov-06
Loans
Deposits 90 days
Nov-06
May-07
May-07
Nov-07
Nov-07
39569
May-08
Interest Rates. 6 Main Banks
%
Nov-08
Nov-08
May-09
May-09
Nov-09
Nov-09
May-10
May-10
Nov-10 */
Sep-10
Sep-10
Nov-10
27
24
21
18
15
12
9
4,100
3,300
2,500
1,700
900
100
9
6
3
0
-3
-6
-9
-12
Sales of Vehicles
Units
56,000
48,000
40,000
32,000
24,000
16,000
8,000
0

Open Market Operations
Repos+CD+Purchase Under Resale Agreement. Million of Bs.
Domestic Debt Stock
DPN Bonds + Treasury Bills
Million of Bs. Millions of US$
80,000
Million of Bs.
24,000
70,000
MM of US$
22,000
17
60,000
45,000
30,000
15,000
0
-15,000
-30,000
-45,000
-60,000
60,000
50,000
40,000
30,000
20,000
Nov-05
Nov-05
May-06
May-06
Nov-06
Nov-06
May-07
May-07
Nov-07
Net Domestic Borrowing 1/
Million of Bs.
7,500
6,000
4,500
3,000
1,500
0
-1,500
-3,000
Nov-07
Labor Market %
and Million of Persons
11.0
9.5
8.0
6.5
5.0
Nov-05
May-08
May-08
Nov-08
Nov-08
May-09
May-09
Nov-09
Nov-09
May-10
Injection
Gross Absortion
Net Effect
May-10
Economic Indicators
Nov-10
Nov-10
12,000
8,000
4,000
0
-4,000
-8,000
-12,000
20,000
18,000
16,000
14,000
12,000
% Million of Persons
14.0
Formal Occupation
Unemployment Rate
7.0
12.5
6.6
Oct-05
May-06
Apr-06
Nov-06
Oct-06
May-07
Apr-07
Nov-07
Oct-07
May-08
Apr-08
Nov-08
Oct-08
May-09
Apr-09
Nov-09
Oct-09
May-10
Apr-10
Nov-10
Oct-10
7,500
6,000
4,500
3,000
1,500
0
-1,500
-3,000
6.2
5.8
5.4
5.0
4.6
Credit, Portfolio Investment
Bs. At Dec-2007 Prices
180,000
Investment in Securities
Loan Portfolio
150,000
Intermediation Index
Commercial & Universal Banks
% Change 2007 2008 2009 IIIQ2010
Total GDP 8.2% 4.8% -3.3% -0.4%
Oil GDP -4.2% 2.5% -7.2% -2.1%
Non-Oil GDP 9.6% 5.1% -2.0% -0.2%
Private Consumption 18.7% 7.1% -3.2% -2.1%
Investment
(Millions US$)
25.3% -3.3% -8.2% 4.4%
Trade Balance 22,979 45,656 19,153 5,523
Current Account 18,098 37,392 8,561 2,571
Capital Account -22,153 -24,820 -14,040 -1,882
Balance of Payments -5,742 9,275 -10,262 -221
Note: M o M: Change of the month with respect to the month previous, 1/ Net Domestic Borrowing is calculated as the difference between placements
and maturities of short-term and long-term Treasury bonds. */ (S/S-2); **/ (Q/Q-4). Source: Central Bank of Venezuela, Balance sheets of Financial Institutions, National Institute of Statistics and Own Calculations
120,000
90,000
60,000
30,000
0
30,000
25,000
20,000
15,000
10,000
5,000
0
Aug-05
Aug-05
6
5
4
3
2
1
0
-1
Nov-05
Feb-06
Feb-06
May-06
Aug-06
Aug-06
Feb-07
Feb-07
Aug-07
Ordinary Revenues
Aug-07
Apr-08
Ordinary Expenditures
% Change Inflation (Caracas)
November 2010: 1.3%
Nov-06
May-07
Nov-07
Feb-08
May-08
Oct-08
Aug-08
Nov-08
Apr-09
Feb-09
Intermediation Index
%
65
Oct-09
Aug-09
Apr-10
Feb-10
Oct-10
Aug-10
61
57
53
49
45
41
Central Government
Bs. At Dec-2007 Prices
Consumer Inflation
Wholesale Inflation
May-09
Nov-09
May-10
Nov-10
6
5
4
3
2
1
0
30,000
25,000
20,000
15,000
10,000
5,000
Inflation (Caracas)
% Change M o M
Real Sector and External Sector
0
-1