Guillermo García / / A new exchange scheme?
It seems that in the coming weeks the government will implement a new national currency, where cadivi no longer be responsible and the agency responsible for approving and allocating preferential U.S. dollars to the economy. The appointment of Nelson Merentes, as chairman of the Central Bank of Venezuela (BCV), suggests that the functions which had been serving cadivi body under the Ministry of Economy and Finance, could turn to control the BCV. This change to the BCV of the functions hitherto had held cadivi, would result in a change in the pattern of allocation of dollars to the economy. Under the responsibility of the issuing entity would now not only the settlement of foreign exchange, but the establishment of a new currency would be based on an auction system. With this new mechanism, the BCV establish daily auctions of dollars at a certain price and financial institutions and brokerage firms ofertarían their best prices to obtain U.S. dollars for import of their customers. Applications for foreign exchange to import basic necessities not qualified, would be made and channeled through banks and brokerage firms. With this new scheme would provide an auction exchange rate differential, where for example, goods and services considered basic necessities (food, medicine) receive U.S. dollars at the exchange rate of 2.15 per U.S. dollar, and the large number other non-priority inputs, raw materials and imports are granted at a rate differential greater than the official exchange rate of U.S. $ 2.15, which would be established according to the resulting price of the auction.

With the approval of the negotiated dollar bond issued by the Republic or State enterprises through the Caracas Stock Exchange, established a third kind of exchange (the dollar swap) which would address all those items, services that do not qualify in the schemes of priority allocation of goods, or the price differential resulting from the auctions of BCV. With this new scheme would be established three different types of differential change as there is in other countries and the possibility of improving the efficiency of settlement and improvement of the times and situations of reducing corruption by the preferential allocation of U.S. dollars at the exchange rate Bs 2.15. The new exchange rate differential would lead to an improvement in the Treasury tax bills, since a good portion of the currency would be sold on auction now at a rate higher than U.S. $ 2.15. However, the scheme does not generate an increased supply of foreign currencies, which are tied to the generation of higher oil prices. Within this new auction scheme is speculated that the allocations of dollars at auction would be allocated not only to higher prices, but according to a monthly budget for foreign economic and liquidated according to those budgets. This would be cumbersome and difficult to use, because who determines the allocation criteria? Why a sector should receive more than another? Surely this brings greater accountability to the BCV in the future management of cadivi and the management of monetary policy, exchange rate and tax as well as the development of the economy and the means to pay as its core function.

Within this new exchange scheme is also referred the issue of new bonds in U.S. dollars payable in bolivars. With the recent amendment to the Organic Law on Public Financial Management (LOAFSP), state enterprises can issue bonds. The legal reforms undertaken in April gave the green light to the Executive to extend the debt levels, and emissions are not only confined to the central government and PDVSA, also extend to the rest of the public sector.

State enterprises to their financial requirements are to refine the placement of paper and it is expected that the Venezuelan Guayana Corporation announced a 1.5 billion dollars. The bonds would be denominated in U.S. dollars and payable in bolivars taking as collateral gold production. Besides CVG would be expected that the Electricity Corporation (Corpoelec) also perform an operation by 1.5 billion dollars, Barclays said in a report. However, this operation is still lack of details, one being the assurance that it would offer.

The list is expanding and has been analyzed that the Bank of Economic and Social Development (Bandes) can also make a bond issue, but for now this operation is still under evaluation by the authorities. These new offerings in dollar bonds would feature l Petrobono 2011 (zero coupon), which as we have noted elsewhere, was delineated as a hedging instrument (exchange coverage) and not for the savings and foreign exchange speculation. Companies and portfolio investors should prepare for this new scheme that may be just around the corner.

http://politica.eluniversal.com/2009/07/26/opi_art_un-nuevo-esquema-ca_26A2541483.shtml