Here is our monthly summary of recent economic developments in Venezuela:

• The U.S. Department of the Treasury on Oct. 21, 2019, renewed for three months a license granted to several U.S. oil companies so that they may continue operating in the country until Jan. 22, 2020. Chevron is the only company that still carries out relevant operations in Venezuela. The license has been renewed several times for certain periods since the U.S. issued an Executive Order on Aug. 5, 2019, prohibiting U.S. companies from dealing with the Nicolás Maduro regime. If the license is not renewed on Jan. 22, 2020, an important and negative impact is predicted for the already diminished oil production of Venezuela.
• On the other hand, on Nov. 5, 2019, the Trump Administration relaxed sanctions imposed and decreed against Venezuela in August, issuing licenses that allow some U.S. companies to pay taxes and import tariffs to the Venezuelan government with connection to their normal business operations in the country. The sanctions will not affect public employees and contractors that work in hospitals, schools and universities who before ran the risk of having their accounts and assets located in the U.S. blocked.
• Oil production was estimated at 600,000 barrels per day for the month of October. This represents a significant decrease from the average oil production of 2014 that once amounted to more than 2 million barrels per day and around 1 million barrels per day at the end of 2018.
• In October, Venezuela exported 812,775 barrels per day, a much lower quantity than the 1.13 million barrels per day exported in June 2019. Exports were mainly sent to Rosneft (62 percent) and China (32 percent). The number of oil exports for crude and refined products was higher than the actual oil production for the month, resulting in a reduction in the country's inventories, which is estimated to have decreased to 39 million barrels for the end of October.
• Venezuela imported 213,000 barrels per day of refined products in October to support the lack of oil production of its refineries. This is an increase from the 184,700 barrels per day imported in September.
• The Petróleos de Venezuela, S.A. (PDVSA) 2020 bond incurred "default" by virtue of not making a payment of US $913 million. On Oct. 24, 2019, a U.S. court did not allow the holders of such bonds the execution of guarantees that consisted of CITGO shares. CITGO owns refineries that are now controlled by the government of Interim President Juan Guaido and represent an important asset.
• With regard to the BOD Financial Group, operations in several countries (Venezuela, Curacao and Panama) were intervened during September. On Nov. 8, 2019, the Superintendency of Banks of Panama ordered the forced liquidation of AllBank Corp., its business operation in Panama.

European Union's Foreign Affairs Council Extends Sanctions Against Venezuela and Government Officials

The Foreign Affairs Council of the European Union (Council) on Nov. 11, 2019, decided in their meetings to extend for one more year the sanctions (restrictive measures) that were imposed against Venezuela and Venezuelan government officials on November 13, 2017.1 In November 2017, the Council decided to impose such sanctions in view of the deterioration of Venezuela's democracy and rule of law, and human rights violations in that country. Restrictive measures include, among others, the seizure of weapons and equipment intended for internal repression, as well as a travel ban and freezing of assets to 25 people who hold official positions considering that, according to the Council, they are "responsible for human rights violations and/or for undermining democracy and the rule of law in Venezuela."2

Central Bank of Venezuela Issues Resolution on Indexation of Loans

The Central Bank of Venezuela (BCV) on Oct. 21, 2019, published Resolution 19-09-01 in the Official Gazette that regulates new loans indexed to an account unit called Commercial Credit Value Unit (UVCC). This unit is determined according to the Investment Index (IDI), and will be calculated in bolivars and adjusted according to the market reference exchange rate published every day onmthe BCV website. For the purpose of complying with the Resolution, banking institutions should:

1. at the execution date of the loan, issue the obligation in bolivars and pursuant to the UVCC (the division of the amount to be settled from the credit granted and the IDI in force at said date)
2. charge clients for active operations derived from commercial loans in installments to be granted to natural persons for payroll loans, loans granted to employees and managers of said banking entities and microcredits, an annual interest rate that may not exceed the rate in force for active operations related to credit cards, published every month through official notice by the BCV
3. annually charge customers for active operations in the national currency established through the use of the UVCC, an annual interest rate that may not exceed 6 percent or be less than 4 percent
4. annually charge a maximum of 0.50 percent, in addition to the annual interest rate established in the respective operation, in accordance with the above, for the delinquent obligations of customers

For the purposes of the accounting valuation and the amortization or prepayment of the credits and loans granted, the loan balance at a specific date will result from multiplying the liability position in UVCC by the IDI value at that date. If the IDI of the anticipated date is lower than the IDI of the concession date, the current IDI will be used for the credit concession date.

Commercial credits granted prior to the entry into force of the Resolution – those regulated by Article 1 of Resolution 19-01-06, dated Jan. 30, 2019 – will maintain the conditions under which such credits were agreed until their full settlement, with the understanding that banking institutions may not charge an annual interest rate greater than 36 percent for such loans.