ECONOMY SITUATION REPORT

April, 2006

Behavior of main indicators CPI, WPI, CPI Core (Monthly Variation)

5,0%

Prices 4,0%

3,0%

According to figures submitted by BCV, the Prices Index to 2,0%

Consumers of the Caracas Metropolitan area, registered 1,0%

along March, a variation rate 0.9% higher than February’s (-
0,0%
0.4%). With it, the accumulated variation of IPC, during the first
quarter of the current year is placed in 1.3% while the annual -1,0%

inflation March 2006 / March 2005 is placed in 12.1%. The M A M J J A S O N D-05 J F M

increase experimented by the inflation rate during March Fuente: BCV CPI WPI CPI Core
obeyed so to the 0.9% acceleration as to a 1.0% in the variation
rate of the controlled products, such as the increase from b 57.64 augmenting in US$/b 0.80 in respect to the one
a –1.5% to 0.8% in items which are not under prices control. registered in February (US$/b 56.84) and the Venezuelan
With these results the annual inflation of controlled prices, basket averaged $/b 53.74, increasing in US$/b 1.59 in relation
reaches a 10.8% and a 13.3% for non controlled. to the prior month.

During this month , the increase of the controlled products During the first week of April the increase in oil prices
obeyed, mainly, to the increase over electric tariffs, that caused continued, sustained by
that the group of Housing Services increases from a 0.5% up current tensions in several nations of the Middle East,
to 1.5% and the Food and non-alcoholic beverages from a – dreading (fearing) the oil supply to be interrupted by a long
3.8% to a 0.3%. standing period, which would affect the distilled products
% CPI consumers. So that, for April 7, the Venezuelan basket is
2006 1 2 3 4 5 6 7 8 9 10 11 12 13
placed in US$/b 57.19, increasing its price in US$/b 3.45 in
March 0,9 0,3 2,3 1,2 0,3 3,8 1,0 1,2 0,6 0,0 1,8 1,5 1,8 1,3
respect to the month of March, on its side the OPEP basket
Variation placed in US$/61.44 for the same period, augmenting in US$/
Mar.06/Mar.05 12,2 13,8 21,2 10,1 6,9 4,8 17,8 11,7 13,2 1,8 2,6 16,5 20,1 13,8

GROUP DESCRIPTION:
b 3.80.
Group 1 Foods and non Alcoholic Beverages Group 7 Health Care
Group 2 Alcoholic Beverages ang Tobaco Group 8 Transportation
Group 3 Clothing and Footwear Group 9 Communications
Group 4 Housing Rentals Group 10 Recreation and Culture
Group 5
Group 6
Utilities, except telephone and gas
Household Equipment
Group
Group
11
12
Educational Services
Restaurants and Hotels International reserves
Group 13 Miscellaneous Goods and Services

At the end of March, the International Assets of the country

For its part, the inflationary nucleus, underlay inflation
indicator, registered an acceleration from 0.9% in February to
1.2% in March; so the variation during last twelve months
reached the 13.3% and the cumulated 3.2% during the year. In
like manner , the wholesale prices augmented in a 0.9% ,
showing a slight acceleration respect to the one registered
during February (0.8%), so the wholesale cumulated inflation
during the first quarter of the year is placed in 3.2% and the
annual variation (March 2006/March 2005) in an 11.8%. The
price acceleration shown at wholesaler level, is a consequence
of higher inflation of national goods, since the imported good
decelerated during the month.
Petroleum Market
During the month of March, the petroleum prices were
boosted because of expectations related to Iran, Irak and
Nigeria and also because of oil and gas supplies in the
forerunning Summer. So that the OPEP Basket placed in US$/
(BCV+FEM) were located in US$ 32,070 million, representing
an augment of US$ 2,443 million in relation to figures of
February (US$ 29,627 million). From this global amount, US$
31,331 million are from BCV and US$ 739 million from FEM.
To this date, the partial or total assignment or delivery has not
yet been done in a partial or total way the transfer as a currency
backing of said US$ 4, 000 million of surplus reserves (as
currency backing) that BCV transferred to Fonden according to
interpretation the National Assembly will make about the
reform made last year to the Law of BCV; it is esteemed that this
will be made into three parts, the first one was held on April 3,
for an amount of US$ 1,400, the second is expected to be
cashed this month and the last one in May. The Director of
the Emitting Entity Maza Zavala informed that these resources
will be destined to the reduction of the public external debt,
besides to be used for the development of sources to activate
the production, the employment and the social development.
Now well, if US$ 6,000 million delivered by BCV to Fonden last
year, the above said new sum is added; Fonden then, would

MetroEconómica S.C. / Av. Circunvalaciòn del Sol, Centro Profesional Santa Paula, Torre A, piso 5, oficina 56, Santa Paula, Caracas, Venezuela.
Telf: (58-212) 985 0454 / 985 1249 / 985 4790 / 987 6922. Fax: (58-212) 985 5321
have received from reserves an amount of about more than EXCHANGE RATES AND PARITY IMPORTS
US$ 10,000 million.
3.500
FOREING RESERVES AND VENEZUELAN OIL 3.250

BASKET PRICES 3.000

2.750
2.500
34 62
FIEM BCV PPV 58
2.250
32
2.000
30 54
1.750
28 50
1.500
46
26
1.250
42
Millions of US$

24

2005,01

2005,02

2005,03

2005,04

2005,05

2005,06

2005,07

2005,08

2005,09

2005,10

2005,11

2005,12

2006,01

2006,02

2006,03
38

US$/b
22
34
20 Oficial CANTV ADR´s Ratio Parity
30
18 26 * At March 08
16 22
14 18 down of –8.3% in respect to US$ 1,796.5 million cashed in
12 14
10 10
February, but an increase of 61.34% in respect to US$ 1,021.3
Sources: BCV, MEM .
M A M J J A S O N D-05 J F M A*
* Foreign reserves at April 5
cashed in March last year ; with it , the amount cashed by the
Oil prices at April 7
BCV between January and March grows up to US$ 5,311.0
For April 5 this year, the level of the national reserves million, which represents a daily average of US$ 87.0 million
diminished to place in US$ 30,765 million, from such an higher in 45.76% at the daily rate of Bs/US$ 87.0 higher in
amount US$ 30,025 million correspond to BCV and US$ 740 45.76% than the US$59.7 million cashed during the first
million to FEM. This diminution is attributed to a first transfer quarter of 2005 by the BCV.
for an amount of US$ 1,400 million from US$ 4, 000 million of
surplus reserves. At the end of March the CANTV exchange placed around
Bs/$ 2,546.08, representing a fall down of –2.01% in relation
to month of February closing (Bs/$2,598.52) while the swap
Exchange Rate exchange placed around Bs/$ 2,565, diminishing in the same
way in –1.91% respect to the prior month. The decrease
During March the exchange rates kept the same in Bs./ observed in those rates obeyed for one side to the seasonal
US$ 2,144.60 for purchase and Bs./US$ 2,150.00 for sale. For effect of income tax, which causes some companies to cash
the same month Metroeconómica calculations esteemed that exchanging positions in order to face their fiscal positions, and
the parity exchange rate for imports, placed in Bs./US$ 2,764.8 on the other hand, to announcement about a next share issue
which compared to the official exchange of Bs./US$ 2,150 of public debt in US dollars or Euros to be placed in the internal
evidences a margin of nominal over valuation of 28.6% and market.
effective of 19.6%, when deducting the protecting effect of
custom duties.
Interest rates and liquidity
In relation to the exchange parity for export, this placed at
the end of March in Bs./US$ 2,734.8, which represents an over Figures emitted by the BCV showed that for March, the
valuation nominal margin of 27.2% and effective of 32.2%. In active interest rate experienced a slight slow-down of -0.49
respect to our main commercial partners (associated) the percentage points, reaching a rate of 14.55% for the six main
following deviations are determined , when taking as a reference banks in the country and the passive interest rate diminished
the official exchange: 20.9% in respect to the United States and in –0.41 percentage points , to settle down in 10.07%. So that,
52.5% in comparison to Colombia. the financial margin reached the 4.48 percentage points in
respect to February. The slow down observed in the interest
As per preliminary figures (not included ALADI Agreement) rates is associated to the strong increase registered by the
during March, the Commission of exchange Administration cash money along the month.
authorized to cash the amount of US$ 1,737.01 million at the
official exchange rate, experimenting still a descent of -8.69% In fact, preliminary figures emitted by BCV show that this
respect to the February figures (US$ 1,902.26 million) but an indicator was placed in Bs.74.436 trillion, which represents an
augment of 16.3% respect to March 2005 amount; the authorized increase of 53.16% in relation to March 2005 (Bs. 48.600 trillion
amount for March this current year represents a daily amount and 4.61% respect to the prior month). In front of the spreading
de US$ 75.5 million. out of the monetary liquidity along the year, BCV has taken
some measures trying to stop the expansion of the current
In relation to this quarter, as a whole, the accumulated asset , as it was the recent disposition to oblige the banks to
amount of exchange currency authorized to be cashed by keep a minimum reserve requirement in a 5% up to a top of
Cadivi ascends to US$ 5,349.4 million, from which 72.3% 15%. In the same way , BCV has understood the need to keep
corresponds to good and services imports, 11.3% to the on a restrictive monetary policy pursuant to the placement of
Agreement ALADI, 6.1% to the private external Debt, 4.7% to absorption instruments ; for March 24, the balance of such
Credit Cards, and 2.5% to Foreign Investments. The authorized instruments reached the amount of Bs. 32.223 trillion,
amount to be cashed by Cadivi, represents a daily amount of representing a 43.3% of the monetary liquidity. We ought to
US$ 87.5 million, which means 34.6% more than the first keep in mind that such instruments bear a significant cost for
quarter of 2005.last year (US$ 65 million). the emitting Entity, which for February closing showed in its
On its side , BCV cashed effectively US$ 1,647.31 million, results an accumulated loss of Bs.257 billion.
approximately US$ 72.0 million per day , representing a slow

MetroEconómica S.C. / Av. Circunvalaciòn del Sol, Centro Profesional Santa Paula, Torre A, piso 5, oficina 56, Santa Paula, Caracas, Venezuela.
Telf: (58-212) 985 0454 / 985 1249 / 985 4790 / 987 6922. Fax: (58-212) 985 5321