Venezuela Forex Shortage Hits GM, Ford, Toyota -Newspaper

Source Monday March 31, 11:42 PM

CARACAS (Dow Jones)--General Motors Corp. (GM), Venezuela's biggest automobile manufacturer, has stopped producing vehicles at its local plants due to the lack of foreign currency to buy raw materials, local daily El Nacional reported Monday.

Ford Motor Co. (F) may have to shut production by the end of April, and the report said Toyota Motor Corp. (TM) is similarly affected.

Rafael Ortega, public relations head for GM, which sold 38,044 units last year, declined to comment on the story, saying he had to wait for authorization by Luis Costa, a director in charge of communications with the government.

But Ricardo Tinoco, spokesman for Ford, which sold 17,971 vehicles in 2002, told Dow Jones Newswires his company will decide in the next 10 days if it will have to halt production.

Toyota's General Manager for Marketing and Planning, Enrique Pinochet, was quoted in El Nacional as saying: "we'll produce in April, we have imported materials for April and May...(but) what's short is local materials because those producers haven't received dollars to buy their raw materials."

Pinochet couldn't be reached for comment. Toyota sold 20,934 units last year.

Ford's Tinoco said his company "has been having very open conversations with the government...nonetheless there still has been no dollars issued, but they keep saying dollars will be available."

Venezuela halted foreign exchange sales Jan. 21 as a precursor to capital and import controls which the government announced about three weeks later.

But the new exchange control commission, Cadivi, said last week - more than two months after the initial halt - that it has only just released about $5 million for imports and about $30,000 for students living overseas.

Venezuela's imports usually run about $1 billion a month, and account for some 60% of consumption.

Cadivi officials couldn't be reached for comment.

The currency and import controls are a bid to protect international reserves which stood at $13.5 billion March 27, according to the central bank.

Reserves were severely affected by a two-month general strike that began Dec. 2, which all but shut down Venezuela's vital oil industry, among many other sectors.

Opposition leaders are demanding President Hugo Chavez agree to early elections, blaming his left-leaning policies for the country's deepening economic crisis.

The economy contracted 8.9% in 2002, amid 17% unemployment, and 32% annualized inflation sparked by a 46% loss of value of the bolivar. The currency lost a further 25% this year before currency sales were halted.

Meanwhile an unofficial parallel market has developed with the bolivar trading at between VEB2300 and VEB2800 per dollar versus VEB1598 set by the government.

Chavez has said the problems are due to an "economic coup" led by his opponents.

El Nacional Website: www.el-nacional.com

• By Jehan Senaratna, Dow Jones Newswires; 58212 564 1339; jehan.senaratna@dowjones.com