Reuters, 06.04.03, 5:59 PM ET By Ana Isabel Martinez CARACAS, Venezuela, June 4 (Reuters) - A Venezuelan central bank director on Wednesday rebuked the state currency control board for its slow allocation of funds and warned the country's recession would worsen without a swift release of dollars. Armando Leon, one of the directors of the Venezuelan Central Bank, urged the foreign exchange board Cadivi to ease its stranglehold on access to hard currency, which the battered economy badly needs for growth. "We are getting into an extremely complicated and difficult situation, and we need to ease the currency control system," Leon told reporters. He insisted the Central Bank was not calling for an end to the curbs, established four months ago to halt capital flight and protect the local bolivar. But he urged Cadivi to speed up the flow of foreign currency to the economy, which relies on imports for 60 percent of its needs. The economy of the world's No. 5 oil exporter contracted around 29 percent in the first quarter of 2003 after a two-month opposition strike slashed crude production and the strict currency controls hampered growth. "The situation in the country is very complex, and I don't know who is going to be to blame if the economy keeps falling or unemployment keeps growing while public policies are so ineffective," he said. Leon forecast that gross domestic product (GDP) could fall around 10 percent this year even if the economy sees a recovery in the last few months of 2003. "There will be a very serious contraction but much less than what we saw in the first quarter," he said. The central bank director said that since February only about $18 million had been actually handed out by Cadivi to companies and importers compared with $40 million to $60 million traded daily in the foreign exchange market before the controls. Even in recession, the economy required about $30 million to $33 million daily, he said. Cadivi said on Tuesday that it had authorized about $469 million since March, but it did not give details on how much of that had been actually handed over to applicants. ECONOMY IN CURRENCY BOARD'S HANDS While Leon said improved flow of currency is essential for economic recovery, he said the oil sector -- one third of GDP -- had recovered from the strike in December and January, implying vital crude revenues had returned to normal levels. "The danger is that if the system for assigning dollars continues to be so inefficient, the economic slide could be repeated, but this time because of Cadivi," he said. The scarcity of dollars has spawned a black market where the U.S. dollar trades at 2,400 to 2,500 bolivars against the official fixed rate of 1,600 bolivars to the greenback. The government boasts the controls have allowed it to bolster international reserves, help bring down interest rates and improve investors' perception of the country's risk. But opposition leaders and private sector representatives say the controls have come at a cost: a suffocated economy, thousands of firms closed, unemployment approaching 20 percent and accumulated inflation at nearly 14 percent in May.

smh.com.au June 4 2003

Seventy-one contestants end more than two weeks of hectic preparations as they go before the judges and an estimated 600 million television viewers today for the 2003 Miss Universe title.

Among the favourites in the field of 71 contestants - 15 finalists have already been chosen, but their names won't be announced until the awards ceremony - are South Africa, the Dominican Republic, Colombia and Venezuela.

The winner will replace Justine Pasek of Panama, the first runner up last year who took the crown after the Russian winner surrendered the title voluntarily.

But many here are already betting on Miss Dominican Republic, a tall aspiring singer named Amelia Vega, 18, whose uncle is well-known Merengue singer Juan Luis Guerra.

Vega is following in the family footsteps in more than one way: her mother represented her country in the 1980 Miss Universe pageant.

Miss Venezuela, Mariangel Ruiz, is the Cinderella of the contest: the 22-year-old almost couldn't come to the competition, because of financial problems in her home country. A donor finally turned up to meet the costs of her trip.

Cindy Nell, 21, is a bit of a departure among the favourites; a refined South African tourism promoter in a field dominated by Latin Americans.

And the favourite among local photographers is another aspiring singer, Miss Colombia Diana Mantilla, who happily poses for photos and even released a record of her songs here.

It's also showtime for Panama, which will have a few minutes of prime time to promote itself as a new tourist destination after decades of living under the shadow of the US military that long protected the Panama Canal.

On December 31, 1999, the United States took its last soldiers home and handed Panama the canal administration.

The women arrived on May 15 and have visited schools and hospitals amid rehearsals for the finals.

"I am excited and anxious. I have been preparing for this for 10 months," said Vega. "It is partly because of confidence and the personal pride of representing your country."

Mantilla said the contest also has a social purpose, noting the winner promotes the fight against AIDS. "It is not just a search for a pretty woman."

Today's finals start at 9 pm (1500 AEST Wednesday), and will be hosted by television personalities Daisy Fuentes and Billy Bush. Puerto Rican Pop singer Chayanne and Bond, a female quartet, will perform.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Friday, May 30, 2003 By: Jose Gregorio Pineda & Jose Gabriel Angarita

VenAmCham's Jose Gregorio Pineda (chief economist) and Jose Gabriel Angarita (economist) write: The economic agents in search of a way to meet their avid demand for US dollars have resorted to buying telephone company (CANTV) shares as a way to get around the total absence of legal foreign exchange availability. The shares, bought on the Venezuelan capital market, are brought together in a portfolio of 7 and turned into American Depositary Receipts (ADR), CANTV securities listed on Wall Street.

The arrangement is as follows: Once the shares have been converted into an ADR, it is sold in the United States and the value of the transaction deposited in an overseas account belonging to the seller.

This has three important consequences: An effect on the price of CANTV stock, an effect on the Caracas Stock Exchange (BVC), and the reaction of authorities responsible for operating the exchange control system.

First, the price of CANTV stock has risen 54% so far in 2003, according to figures published by El Universal, to 3,785 bolivares.  Second, stock trading in Venezuela has grown and the BVC Index had climbed to a record 11,532.92 points by Wednesday, May 28. But the most controversial of these consequences is the reaction of public officials responsible for regulating the economy.

Finance (Hacienda) Minister Tobias Nobrega announced that an important announcement on these transactions will be made in the next few days, but made it clear that they are in no way illegal. On the contrary, he acknowledged that this procedure is not regulated in the exchange control rules. Members of the CADIVI board, on the other hand, said these transactions are not authorized by the rigorous exchange control system and criticized their speculative nature.

For the time being, the transactions show that the price of a dollar on that market is in the neighborhood of 2,300 Bs./US$ ... but if they came to be regulated, the foreign exchange market's shutdown would be more complete, and hence, the negative effects of the exchange control regime would become even stronger, driving up the black-market exchange rate.

Venezuela seguirá los próximos meses con una situación económica caracterizada por una combinación de recesión con inflación, afirmó el directivo del Banco Central, Domingo Maza Zabala.

“Habrá más recesión y más inflación. Ante esa situación, la tasa de desocupación no disminuirá y la economía informal estará más ampliada”, dijo Maza Zabala.

Venezuela había sufrido este fenómeno a mediados de los 90, durante la administración del democristiano Rafael Caldera (1994-98), caracterizada por una parálisis económica con alta inflación.

Según el directivo del BCV, el control cambiario aplicado por el gobierno no ha surtido un efecto positivo, porque ha restringido los inventarios de bienes y ha encarecido los productos.

“Con esa disminución de bienes los inventarios se han reducido y los productos que existen en el mercado tienen precios más elevados. A esa situación se suman las previsiones de que los precios seguirán altos en los próximos meses”, dijo Maza Zabala.

“El control de cambio no ha tenido los resultados previstos y ha actuado para restringir las compras que se hacen en el exterior”, remató el economista.

El directivo del BCV señaló que “durante el primer trimestre del año se registró una caída importante de la producción, debido a que la paralización de actividades dejó una secuela negativa. Adicionalmente, las expectativas de los sectores económicos estuvieron y siguen afectadas por la incertidumbre política”.

Maza Zabala estimó que “aún hay seis meses por delante y durante ese período se puede concretar el acuerdo político que ayudaría a atenuar la situación económica”.

El gobierno de Venezuela suspendió la venta de divisas durante el paro opositor y días después anunció un control cambiario que recién comienza a implementarse.

El gobierno fijó el cambio controlado en 1.600 bolívares por dólar, pero el propio Maza Zabala admite que “no se puede negar la existencia de un mercado alternativo que está formando precios más elevados que los del control”.

El Producto Interno Bruto venezolano cayó 29% en el primer trimestre de 2003 y la balanza de pagos tiene un déficit de US$45 millones.

El desempleo se ubicó en marzo en 19,8%, mientras la inflación repuntó 2,3% en mayo, para un índice acumulado de 13,8% en lo que va de 2003.

En contrapartida, Venezuela tiene US$16.454 millones de reservas monetarias y alcanzó ya su cuota de producción petrolera de 2,8 millones de barriles diarios.

Las empresas alemanas radicadas en Venezuela cerrarán sus puertas si no se produce un cambio en la situación política y económica bajo el gobierno del presidente Hugo Chávez, advirtió hoy la influyente organización "Ibero-Amerika Verein".

Para Peter Roesler, directivo de la Asociación Iberoamérica, que nuclea a la mayoría de las empresas alemanas con negocios en Latinoamérica y tiene su sede en Hamburgo, la situación para las firmas germanas radicadas en el país sudamericano es muy complicada, ya que no pueden producir por falta de materias primas.

La falta de reglas claras es "el principal obstáculo" para el funcionamiento del sector privado en Venezuela, agregó Roesler, agregando que "existen muchos problemas para la importación de insumos, porque el gobierno venezolano mantiene un férreo control sobre el movimiento de divisas".

"No existen condiciones de mercado favorables y está visto que el presidente Chávez no se preocupa por el sector económico", alertó dijo Roesler. La profunda crisis política de la nación caribeña genera incertidumbre y preocupación entre los inversores extranjeros, como en este caso los alemanes.

Luego de medio año de tratativas entre el gobierno y la oposición, ambos sectores acordaron la semana anterior la realización de un referéndum, para que el pueblo venezolano decida si Chávez continua o no en el poder. Sin embargo, el gobernante exige que primero se hagan consultas populares para confirmar o revocar a alcaldes y gobernadores, según declaraciones formuladas a la prensa el domingo pasado.

En febrero del presente año entró en vigencia el nuevo régimen de control de cambio. El gobierno argumentó en su momento que la medida apostaba a contrarrestar los efectos del paro nacional convocado por la oposición.