<a href=www.vheadline.com>Venezuela's Electronic News Posted: Monday, June 23, 2003 By: Patrick J. O'Donoghue

Venezuelan Tourist Minister Wilmar Castro has invested 30 billion bolivares into Venezuela's depressed tourist industry to promote participation from the private sector. 

Castro admits that the industry has suffered a 46% drop in international tourists. " The good news is that movement of national tourists increased 17% in Carnival and Easter Week but the spending power was definitely down from last year." 

* The relatively light increase is partly due to the facts that airlines have been getting preferential dollars ($1/1,600). 

Tourist High Council (Consuturismo) president, Alvaro Montenegro reports that hotel occupation is experiencing a steady recovery .... "from 15% occupancy in January hotels are currently reporting a 30% occupancy in the provinces and 45% in Caracas ... the reduction in hotel prices in bolivares has helped." 

5-star Eurobuilding Hotel operations manager Miguel Angel Marino say the reduction of tariffs and increase in room occupancy has resulted in sales 50% less than for the same period last year.

<a href=www.vheadline.com>Venezuela's Electronic news Posted: Sunday, June 22, 2003 By: David Coleman

Finance Minister Tobias NobregaFinance (Hacienda) Minister Tobias Nobrega says Venezuela's economy is expected to contract 10.7% by year's end adding to last year's negative GDP 8.9% drop.  The figures are said to be the worst in Venezuela's recent financial history and come on the heels of a punishing 2-month national labor stoppage and continuing efforts by opposition elements to sabotage the nation's economic life.

Central Bank of Venezuela (BCV) figures published this weekend have prompted the Finance Minister to tell El Nacional "the bad news is that it will be a year of recession ... but the good news is that the worst has already passed."

Venezuela's economy buckled 29% during Q1 2003 compared with the same period 2002 as the December-January stoppage failed to achieve its unilateral purpose to force President Hugo Chavez Frias to step down.  Nobrega admits that the economy has been slow to pick up since February because of high inflation ... currently at 35% ... as the government fights to control its crippled finances with strict foreign exchange controls and already seriously depleted foreign currency reserves.

Restrictions have forced Venezuelan industries to turn more to abundant domestic sources of raw material over imports which had accounted for some 60% of consumables.

Foreign currency transactions have traditionally been used as a convenient cover for money-laundering operations with a monthly demand in the neighborhood of $1.2 billion.  Nobrega says $230 million has been released by the government and, against a background of industry unwillingness to submit to certification procedures that could expose them to endemic tax fraud, he says the controls will not be abolished anytime soon, although the government is willing to evaluate modifications.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Sunday, June 22, 2003 By: David Coleman

El Nacional reports that authorizations for sales in US$ will be transferred from the Foreign Exchange Control Administration (CADIVI) which will take on a subordinate operations role within the Ministry from this week.

The move is seen as an effort on the part of President Hugo Chavez Frias' reform government to speed up transactions which have been under strict restrictions since an opposition-led 2-month labor stoppage failed to overthrow President Chavez in February.

Latest available figures show that the stoppage had cost the Venezuelan economy some $7.5 billion in lost revenues and will presumably cost more as opposition diehards continue to disrupt the nation's efforts at economic recovery after almost a half-century of unbridled political and economic mismanagement and corruption.

Venezuelan Central Bank HQ in Caracas

Central Bank of Venezuela (BCV) figures show that foreign reserves reached $16.27 billion June 18 ... up from $11 billion in January ... but Chavez Frias' most ardent critics seen in corrupt business leaders and equally corrupt trade union bosses, blame the President and the lack of hard currency after their government-wrecking maneuvers for deepening Venezuela's economic crisis where unemployment is already running at some 20%

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, June 19, 2003 By: Jose Gabriel Angarita

VenAmCham economist Jose Gabriel Angarita writes: Nearly five months after exchange controls were imposed by Venezuelan authorities, and in the midst of speculation on what system will replace them, there is still no clear definition of the actions that could be taken once they are lifted.

Finance Minister Tobias Nobrega announced to the media that he will shortly be revealing to the Venezuelan public the changes to be made in the foreign exchange system. But the proposals, which Minister Nobrega indicated were quite far along, have not even been submitted to the Central Bank of Venezuela (BCV), according to Board member Domingo Maza Zavala: "I can tell you, as a director of the BCV, that I have no knowledge that the Board has received any proposal from the government to alter the foreign exchange scheme."

One of the most powerful bases for endowing these announcements with credibility is the reputation of the policy makers during the period of restricted foreign exchange availability; they have transmitted signals of a coming relaxation of controls but have done nothing concrete about it. The exchange control system should have been conceived as a temporary expedient, which became unnecessary and inefficient once the resumption of oil exports normalized the inflow of foreign exchange.

The longer the foreign exchange market continues to be restricted, the higher will be the cost of its eventual liberalization, though that cost will depend on the arrangement that is adopted. However, relaxation of controls will be accompanied by a major devaluation of the exchange rate, perhaps to the levels at which CANTV ADRs are now trading (an average of 2,400 bolivares per US dollar); that is the reference exchange rate for the parallel market. Liberalization will also have an impact on interest rates and inflation.

Whatever the follow-on arrangement is, there is no way to prevent a demand repressed for five months, which has put pressure on interest rates and led to a growth of deposits from the public in the financial system, from moving massively to the foreign exchange market ... unless the authorities continue certain restrictions with the aim of gradually reducing them or continuing to dole out foreign exchange in discretionary fashion. Hence, the prospects are not encouraging. The damage is already done and there is no sign of a willingness among the authorities to speed up the liberalization process, despite all the pressure being applied by the different economic sectors and even the international community.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, June 18, 2003 By: David Coleman

Foreign Minister (MRE) Roy Chaderton Matos has held talks with his Colombian counterpart Carolina Barco on bilateral relations, especially economic cooperation agreements achieved by Presidents Chavez Frias and Colombia's Alvaro Uribe Velaz recently in Puerto Ordaz.

Talks also included Venezuelan currency control approval of some $300 million to cover Venezuelan merchant outstandings to Colombian suppliers ... "we have now made good progress; some payments have been made but it is necessary that Venezuelan merchants who require foreign currency to pay their debts should register and fill out the necessary forms for approval ... and nobody in the Venezuelan government knows if the debts really exist until they are satisfactorily verified."

Meanwhile in Caracas, the Currency Control Committee (CADIVI) has asked the Director of Public Prosecutions to open investigations into some 80 businesses who have sought to obtain foreign currency with forged documents claimed to be from the Adult Training Program (INCE) and Social Security as well as IRS/Seniat.

Authorities had been on the alert since foreign exchange controls were first introduced in February that there would be subversive efforts to obtain currency by fraudulent means.  CADIVI officials had appealed to companies to make sure their documentation was in order and to avoid using traditional go-betweens who have in many cases been seen to specialize in using forged documents and attempting to corrupt approvals staff.

Under current legislation anyone found to have contravened currency laws will risk a prison term of 18 months to 5 years, a total ban from all further currency transactions and confiscation of all funds that may be deemed to have been illegally used.