Reuters: Regulatory News: Venezuela seeks to ease access to dollars for business

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Venezuela seeks to ease access to dollars for business Jan 31st 2013, 17:38 Thu Jan 31, 2013 12:38pm EST * Business leaders complain over delays and red tape * Government looks intent on shunning near-term devaluation CARACAS Jan 31 (Reuters) - Venezuela's government unveiled moves on Thursday to streamline access to dollars for a private sector that frequently complains of shortages of hard currency to buy imports, which business leaders say are hurting the economy. In a decree published in the Official Gazette, the authorities said it would be made 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 following cancer surgery in December. The new measure scraps a requirement that businesses 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. A long list of items approved under the mew 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. 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 through its SITME auction system. In 2003, Venezuela imposed capital controls, which over the years have increasingly restricted access to dollars. Venezuelan business leaders complain about growing economic imbalances that they say have 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. 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

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