Reuters: Regulatory News: UPDATE 1-Venezuela eases access to dollars for business

Reuters: Regulatory News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 1-Venezuela eases access to dollars for business Jan 31st 2013, 19:38 Thu Jan 31, 2013 2:38pm EST * Business leaders complain over delays and red tape * Government intent on shunning near-term devaluation By Eyanir Chinea and Pablo Garibian CARACAS, Jan 31 (Reuters) - Venezuela's government on Thursday introduced measures to streamline access to dollars for a private sector that frequently complains of shortages of hard currency to buy imports, which business leaders say hurts the economy. In a decree published in the Official Gazette, the authorities said it would be easier for businesses to cut red tape in applying for up to $50,000 a time for the purchase of raw materials and certain types of machinery. The decree was the latest of several moves by a government that looks intent on avoiding or delaying a politically painful devaluation while President Hugo Chavez recuperates in Cuba after cancer surgery in December. The new measure, which takes immediate effect, scraps a requirement of businesses to certify that goods they seek to import cannot be produced in Venezuela, or that there is a shortage of them in the country. The paperwork needed proved hard to obtain for many importers. Business leaders say they sometimes have to wait up to six months for dollars in Venezuela, which enforces a particularly complex multi-tiered currency control system, and it was not immediately clear how much impact the new rules would have. Jorge Botti, head of Fedecamaras, the country's main business chamber, cautiously welcomed the latest move and said it could help relieve the pressure for the government to order a devaluation in the short-term. "It looks very good to me and points coherently in the direction that we want to go," Botti told reporters. A long list of items approved under the new system was published in the Gazette on Thursday, ranging from seeds and livestock to tractors and components to produce medicines. Vice President Nicolas Maduro said last weekend that Chavez had taken a series of economic decisions to strengthen exports, stoking speculation that a currency devaluation was imminent. OIL TAX CHANGE The main announcement since then was on Monday, when the government said it was changing the structure of its windfall taxes on crude production so that state oil company PDVSA could provide the central bank with an extra $3 billion this year. Analysts said that would let the central bank sell more dollars to businesses and individuals. In 2003, Venezuela imposed capital controls, which over the years have increasingly restricted access to dollars. The change to the windfall oil tax system also means PDVSA will cut its contributions to Fonden, a controversial off-budget state investment fund, by almost $3 billion this year. Fonden, which critics say is secretive and funnels huge amounts of money into projects with little or no oversight from lawmakers, received more than $15 billion from PDVSA last year. "What's clear is that the money that was previously going from PDVSA to social projects will now go to strengthening the economy. That's good news. Those are signs something is going to change," said Botti, the president of Fedecamaras. Fedecamaras complained this month about growing economic imbalances that it said had been caused by insecurity, bad policies and uncertainty over the president's prolonged absence. Periodic shortages of products have become a fact of life under Chavez. But in Venezuela's distorted, oil-driven economy, it is the staple goods that go scarce, while luxury and niche-market items remain easy to find. Analysts say the government is worried about the political costs of shortages and rising inflation, but appears unwilling or unable to make any major economic reforms, including a hefty devaluation, while Chavez remains hospitalized in Havana. A devaluation would make exports more competitive by lowering local production costs and spur domestic industries by making imports less competitive with locally-produced goods. It would improve state finances by providing more bolivars per dollar of oil exports, but would also push up inflation in a country that already has one of the highest rates in the region. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions