MSG052G/01E VENEZUELA-FINANCE: Currency Devaluation Predicted for 1995
CARACAS, Dic 13 (IPS) - The Venezuelan State Petroleum company (PDVSA) is predicting a currency devaluation of more than 17 percent and inflation of some 50 percent for 199520 points above government estimatesit was reported on Tuesday.
PDVSA believe that the currency will drop to 200 bolivars to the dollar - its current value on the black market, against 170 bolivars on the official fixed market.
The federal budget for next year was designed based on exchange rates of only 180 bolivars to the dollar.
With five percent montly inflation, the fixed exchange rate has overvalued the currency. Nonetheless, President Rafael Caldera's economic advisers are unwilling to opt for devaluation and claim that the exchange rate will improve.
When economists recently declared that inflation for 1995 could reach 100 percent and the bolivar could fall to 294 against the dollar, Caldera referred to them as "traitors to the fatherland."
The petroleum industry - which provides three quarters of Venezuela's foreign earnings and half the national income - have estimated that their own costs will be far larger than allowed for in the government budget.
Devaluation would immediately solve the problem of the 2.8 billon bolivar (around 15.5 billion dollars) deficit in the 1995 budget, an option used to tackle a similar situation in 1994.
However, the PDVSA calculations do not take into account the government planners' predicted 30 percent inflation rate, which they plan to limit to 25 percent.
The PDVSA fears that the combination of inflation and devaluation will affect the cash flow of their operators, who were planning expenditures of 10 billion dollars in the next year.
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