MSG077G/01E VENEZUELA-FINANCE: Hard Currency Loans Authorised for Businesses
CARACAS, Dic 27 (IPS) - Venezuelan businesses are once again authorised to take out loans in foreign currency, in a new measure to flexibilise the exchange controls introduced in June, Vice Finance Minister Luis Grisanti explained Tuesday.
The new measure will "increase the international financial and commercial sectors' trust in Venezuela, putting the resources necessary for investment projects within reach of the national productive sector," Grisanti said.
He added that foreign creditors would be fully guaranteed that the businesses would have access to hard currency for payment.
With the exchange rate still fixed at 170 bolivars to the dollar and foreign currency available only to travelers and for imports authorised by a special committee, the vice-minister said the promised flexibility would be seen in the coming year.
Repatriation of capital and dividends by foreign businesses operating in Venezuela was authorised in October.
Central Bank President Antonio Casas said Monday that the exchange controls - which at first represented a virtual freeze on the dollar supply - allowed the country to add some three billion dollars to its national reserves, which reached 11.9 billion by the end of the year.
Although this is more than four billion dollars over total 1994 imports, it is 752 million dollars below 1993 reserves as a result of capital flight, the plunging value of the national currency and runaway inflation in the first half of 1994.
Once the reserves reach 12 billion dollars, the exchange controls will be applied only to capital transfers, according to government officials.
Some analysts fear that the absence of currency controls will provoke further depreciation. Casas favoured a dual exchange rate, arguing that the current fixed rate is not far from the true value of the bolivar.
However, the currency is exchanged at national borders and on the black market for as little as 24 percent of its official value. Independent economists warn that the controls are producing an overvaluation of some five percent a month.
Grisanti said the newly authorised international credit in the private sector may be used to import goods and services, refinance previous loans, or in other ways to finance short- and long-term projects.
The resolution will help Venezuela fulfil its bilateral and multialateral agreements on trade openness, he said, such as the Group of Three free trade agreement with Colombia and Mexico, to go into effect Monday.
© Inter Press Service (2014) — All Rights Reserved. Original source: Inter Press Service