ECONOMY-VENEZUELA: Government Increases Flow of Hard Currency

• by IPS Correspondents (caracas)
• Friday, December 23, 1994
• Inter Press Service

CARACAS, Dic 23 (IPS) - The government board in charge of administering Venezuela's exchange rate controls reported Friday that the daily flow of hard currency is returning to levels seen before the implementation of the restrictions six months ago.

Luis Matos, coordinator of the board, said 3.844 billion dollars had been authorised to be delivered up to Thursday, with a daily average of 32.2 million dollars per business day, compared to the 40 million dollar daily average that the Venezuelan market demanded in the first six months of 1994.

The controls on Venezuelan exchange rates were decreed on Jun. 27 by President Rafael Caldera as an economic emergency measure in response to a crisis that hit the banking sector.

The measure was implemented after the country experienced nearly four billion dollars in capital flight during the first six months of the year, while the national currency fell to nearly half its value.

International reserves, which stood at 12.6 billion dollars in December 1993 - with slightly over a third operative - fell to 8.6 million dollars in June, while authorities report that reserves are currently around 11.9 billion dollars.

The first few months of controls on the exchange rate caused a drop in imports, and led to several branches of industry closing down due to a lack of inputs. A black market emerged in which the dollar is worth 10 to 25 percent of its official 170 bolivar price.

The council has made 40 changes in the original decree in an attempt to create greater flexibility. The goal - to be reached some time in 1995 - is to maintain restrictions soley on transfers of capital abroad, Matos said on Friday.

Matos showed that although on average 32.2 million dollars a day were delivered since June, over 50 million dollars a day were authorised in October and November.

Of the 3.844 billion dollars authorised, 67 percent were for imports, 15 percent for debt payments, 15 percent for travellers, students and remittances to immigrants, and three percent for other uses, such as medical treatments.

Matos added that after January requests for currency will be approved - or rejected - in four days, which will provide foreign exporters with more certainty about payments owed them.

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