<a href=reuters.com>Reuters Mon April 28, 2003 09:49 AM ET

CARACAS, Venezuela, April 28 (Reuters) - Venezuela's No. 1 telephone company CANTV TDVd.CR VNT.N on Monday forecast a 2003 net loss of $73 million to $195 million compared with a 2002 profit of $44 million as it predicted declines in its wireline market and a flat wireless market.

CANTV, whose main shareholder is U.S. telephone company Verizon Communications VZ.N , expects a 2003 year loss of 64 cents to $1.74 per share on an American Depositary Share basis.

For 2003, CANTV sees consolidated revenues of $1.75 billion to $1.95 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) of $535 million to $650 million.

The forecast used a 2003 exchange rate of 1,850 bolivars to the U.S. dollar.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Friday, April 25, 2003 By: VenAmCham

VenAmCham's Jose Gregorio Pineda (chief economist) and Jose Gabriel Angarita (economist) write: Economic analysts do not like the changes in the economic cabinet, and that was immediately reflected in the international markets, which have shown concern. In the first place, the prices of Venezuela's sovereign bonds fell in the latest trading session, with the DBCs losing 1.5 percentage points, the Flirbs retreating 1.0 percentage point, and the Global 27s dropping 1.25 percentage points.

In the second place, JP Morgan, one of the leading investment banks in the United States, downgraded its recommendation on Venezuelan sovereign bonds from "overweight" to "neutral," mainly because of the possibility of an oil price decline but also due to the appointment of Minister Giordani. Venezuela's country-risk remains among Latin America's highest at 1,184 basis, exceeded only by the bonds of Argentina, Uruguay, and Peru.

Analysts never imagined that Giordani's appointment could have so strong an impact. This possible effect chiefly reflects fears that the new minister may be incompatible with Finance Minister Tobias Nobrega, who said a few days ago that Venezuela is interested in a foreign debt swap. That incompatibility could imply Nobrega's departure from the Finance portfolio and a delay in the implementation of the foreign debt swap he advocates.

Another factor that may contribute to explaining this market behavior is that the cabinet shift undermines the continuity of the Chavez administration's economic policy. The president himself has said that Minister Giordani will just go back to the 2001-2007 development plan, which could imply a return to the past. But that is just what worries some analysts, who believe that economic policy was what put Venezuela in such extreme difficulty last year.

• Giordani's return will probably bring greater cohesion among the economic ministers, but it will come at the expense of greater changes in the rest of the cabinet, adding even more justification for the market's high risk perception of Venezuela.

There is no question that the current state of economic policy is very fragile, and major changes in policy making will not contribute to improving economic expectations. In the end, what the government needs to change is not just ministers, but its basic economic strategy. It needs to formulate an economic policy that will elicit trust and put Venezuela on a path of sustained growth based on a strong and vigorous private sector, because private investment is a key tool for achieving higher economic growth, increasing our national wealth, and reducing the level of poverty from its currently high peak.

read this article in Spanish here.

Forbes.com-Reuters, 04.22.03, 6:22 PM ET

CARACAS, Venezuela, April 22 (Reuters) - Venezuela's President Hugo Chavez on Tuesday said the Brazil's National Development Bank would offer a $1-billion line of credit for Venezuelan projects as his government struggles to cover a deep financial shortfall. Leftist Chavez plans to hold talks on Thursday with his Brazilian counterpart Luiz Inacio Lula da Silva in Brazil, where he said officials would finalize the details of the credit agreement. "We will be shaping and putting the final financial touches to an agreement in which Brazil's National Development Bank has offered Venezuela ... a line of credit for up to $1 billion," Chavez said. The Venezuelan leader did not provide further details. Brazil's National Development Bank had previously provided financing for construction works such as an Orinoco River bridge in Venezuela. Venpres official state news agency said that the credit line would go to agricultural projects and small and medium industry. Venezuela's economy has slipped into sharp recession after a year of political conflict between Chavez and opponents demanding early elections in the world's fifth largest oil exporter. Chavez, a former paratrooper, survived a brief military coup in April last year. The nation's economy contracted nearly 9 percent in 2002 and many economists are forecasting a double-digit contraction for this year after a grueling opposition strike disrupted the oil shipments that account for half of government revenues.

Forbes.com-Reuters, 04.22.03, 5:38 PM ET By Manuela Badawy NEW YORK, April 22 (Reuters) - The government of Venezuelan President Hugo Chavez is seeking to attract foreign investors to help develop new oil projects following a crippling anti-government general strike that slashed oil revenues of the world's No. 5 crude exporter earlier this year, Venezuela's ambassador to the United States said on Tuesday. The OPEC nation will tender two new oil fields to foreign companies before the end of this year to oil majors from the United States and Europe, Ambassador Bernardo Alvarez told investors in New York. On the block are the Orocual field in the eastern Furrial region and Tomoporo, which has about 500 million barrels of estimated oil reserves, from the western Lake Maracaibo area. Among the companies interested in operating the fields are Exxon Mobil Corp. (nyse: XOM - news - people), ChevronTexaco (nyse: XOM - news - people), Marathon Oil Co. (nyse: XOM - news - people), Italy's ENI <ENI.MI>, France's TotalFinaElf <TOTF.PA>, Norway's Statoil <STL.OL> and Spanish-Argentine company Repsol-YPF <REP.MC>, said Alvarez, who previously served as a Venezuelan vice-energy minister. Alvarez said U.S.-Venezuelan energy relations should be strengthened as the economies of both countries are interconnected. Venezuela in the past has supplied up to 14.7 percent, about 1.7 million barrels per day (bpd), of all the oil imported by the world's largest consumer, he said. Venezuela's crude exports, which provide half of the government's revenues, were severely cut during the two-month strike started Dec. 2 by opponents of President Hugo Chavez. The loss of shipments from one of its top four suppliers sent U.S. crude prices soaring before troops and replacement workers restored Venezuela's oil production. Government officials say Venezuela's state oil firm Petroleos de Venezuela S.A. (PDVSA) is now pumping at pre-strike levels of over 3 million barrels per day (bpd) of oil. But analysts say that PDVSA may be seeking foreign investment to help compensate for losses incurred during the strike which forced cuts in the exploration and production budget of South America's largest oil firm. Venezuela's oil fields have natural depletion rates of about 25 percent per year, forcing PDVSA to invest heavily to maintain production capacity. Foreign companies have been critical of a nationalistic hydrocarbons law passed by Chavez in 2001 that increased royalty payments and the minimum level of state participation in oil developments. They say the terms are not competitive with contracts offered by other countries and need to be amended. Earlier in April Venezuela approved ConocoPhillips' (nyse: COP - news - people) $480 million development plan for the Corocoro field in country's Gulf of Paria West area, which the U.S. oil major was awarded during under a profit-sharing agreement in 1996. Corocoro is expected to reach output of 55,000 barrels per day of 24.5 degrees API oil two and a half years after development begins, ConocoPhillips said. The field partners are ConocoPhillips with Italy's Eni and Taiwan's Chinese Petroleum Corp. PDVSA also has a 35 percent stake in the field

Forbes.com-Reuters, 04.22.03, 4:49 PM ET

(Adds Giordani's return, analyst's quotes, background) By Silene Ramirez CARACAS, Venezuela, April 22 (Reuters) - Venezuelan President Hugo Chavez Tuesday brought back a veteran left-wing soulmate to serve as his Planning Minister after firing the previous minister for disagreements over economic policies.

Former paratrooper Chavez, whose oil-rich nation is facing its deepest recession in recent history, demanded 48-year-old economist Felipe Perez resign after sharp differences had emerged among members of the president's economic team.

But the biggest surprise came when Chavez named his successor, bringing back 62-year academic Jorge Giordani, who had been the president's first Planning Minister for the first three years of his rule in the world's No. 5 oil exporter.

The announcement came as a shock to many analysts, who had welcomed Giordani's substitution by Perez back in May last year, soon after a dramatic military coup that briefly toppled populist Chavez. They saw Giordani as closely associated with Chavez's left-leaning statist economic policies which have been fiercely opposed by business and labor opponents.

"It was a surprise to a lot of people. I don't think that people expected this," Jose Cerritelli, Andean economist with Bear Stearns in New York, told Reuters.

He recalled that Chavez, who has spooked many investors with his fiery, revolutionary and anti-capitalist rhetoric, had praised Giordani recently for being "an anti-IMF policy maker". Giordani's return was likely to lead to an even wider divergence between Chavez's government and Washington-based lending agencies, Cerritelli added.

"Felipe (Perez) made a great effort in a very difficult period. Now Jorge (Giordani) is coming back to take up again all the main objectives of the great national development project that he used to direct," Chavez said.

POLITICS OVER ECONOMICS

Perez, who has a Ph.D from Chicago University, had publicly disagreed with Chavez's decision, backed by most of the rest of the government economic team, to decree tight foreign exchange and price controls earlier in the year.

Perez had also had differences over forecasts and polices with Finance Minister Tobias Nobrega and directors of the country's Central Bank.

His departure came at a time when Chavez's government was struggling to cope with the deep recession triggered by months of political turmoil and an opposition strike that slashed oil output in December and January. The strike, which fizzled out in early February, severely cut government revenues.

Many local analysts were aghast over the return of Giordani. "It's incredible. This is a minister who left because he failed in the first three years when the economy was quite prosperous. And now Chavez brings him back when the situation is worse," Orlando Ochoa, an economist from Caracas's Andres Bello Catholic University, told Reuters.

"It shows that Chavez's priority is politics, not the economy," he added.

Perez had also been seen as a follower of Chavez's self-styled "revolution" in Venezuela. Under Giordani, the Planning Ministry had been the leading voice in Chavez's economic team.

But Perez's influence, and his credibility among local and foreign investors, waned quickly as he became known for unrealistic forecasts and eccentric public pronouncements calling for "positive thinking" to turn around the economy.

Appearing on his "Hello Economy" show on state television, Perez regularly berated local businessmen for what he called their negative attitude and recommended a change of heart.

BATTLE FOR INFLUENCE

Finance Minister Nobrega, a banking and finance specialist has been spearheading the government's efforts to negotiate voluntary debt swaps with local and foreign bankers to ease a payments crunch.

But analysts said the return of Giordani, who had dominated the government's economic policy when he was in office, could lead to a confrontation with Nobrega.

"I think there could be trouble with Nobrega as they are both strong figures," said Benito Berber, an analyst with New York-based consulting firm IDEAGlobal.

Venezuela's already faltering oil-reliant economy went into a nosedive after the grueling opposition strike, which failed to force Chavez to resign and hold early elections.

Opponents of Chavez accuse him of ruling like a dictator and of dragging oil-rich Venezuela towards economic ruin by trying to install Cuba-style communism.

The strike caused the government to slap tight foreign exchange and price controls onto the economy to stem heavy capital flight and halt a sharp slide in the bolivar currency.

The International Monetary Fund, which urged Venezuela to ditch the currency curbs, has forecast a huge 17 percent contraction for the economy this year following a fall of nearly 9 percent last year. (Additional reporting by Pascal Fletcher, Patrick Markey)