Colombia, Venezuela Cenbanks to huddle on forex

www.forbes.com Reuters, 01.29.03, 2:25 PM ET

BOGOTA, Colombia, Jan 29 (Reuters) - The Central Bank chiefs from Colombia and Venezuela will soon meet in the Colombian city of Cartagena to discuss concerns that planned Venezuelan currency controls could disrupt debt payments, Colombia's government said on Wednesday.

Colombia, which counts Venezuela as its No. 2 trading partner behind the United States, is concerned that Venezuelan businessmen will not be able to repay their sizable debts to Colombian merchants once the controls are imposed, possibly next week.

"In the coming days, these payment issues will be discussed by Central Bank directors from Colombia and Venezuelan," Finance Minister Roberto Junguito told reporters. Cartagena is Colombia's top tourist destination, a colonial town on the Caribbean coast where business meetings are frequently held.

Strike-bound Venezuela announced on Sunday it will use currency controls to protect international reserves. Government and banking sources said discussions are focused on creating a single rate for the beleaguered bolivar currency lasting four months, adjusted monthly, followed by a dual rate.

Venezuela's bolivar has slipped 28 percent against the dollar since opposition leaders launched a general strike on Dec 1, stemming oil exports from the world's No. 5 oil exporter in a bid to force President Hugo Chavez from power.

Colombia's banking association sounded the alarm over potential payment problems earlier this week, but did not provide liability figures. Analysts estimate Venezuelan businesses owe about $200 million to Colombian firms.

Between January and November last year, Colombia exported $1.07 billion to Venezuela. The figure is 33 percent lower than in the same period of 2001, showing economic troubles well beforethe damaging general strike begun in December.