Venezuela Oil Company To Free Up More Dollars


CARACAS, Venezuela (AP) â¿¿ Venezuela's government announced plans Monday to have the state oil company turn over more of its earnings in dollars to the Central Bank, seeking to confront shortages of some foods and other products that have worsened due to a lack of dollars provided to importers at official rates.

Oil Minister Rafael Ramirez announced the change at a news conference, saying state-run Petroleos de Venezuela SA is to increase by nearly $2.5 billion the amount of dollars it turns over to the Central Bank this year.

Ramirez said that President Hugo Chavez had supported changing the law and that is to be approved by the National Assembly, where pro-Chavez lawmakers hold the majority.

Sporadic shortages of some foods such as cooking oil and chicken have worsened recently while the government has been making available fewer dollars at the fixed exchange rate. Since November, the government has scaled back the amount of dollars it has been providing through its currency agency to businesses and individuals.

The situation has generated growing rumors of a possible devaluation while pushing down the bolivar in street-level black market trading to less than one quarter of the official rate of 4.30 bolivars to the dollar.

Some business leaders have said that the insufficient amounts of dollars provided to businesses has led to fewer imports and worsened shortages of some foods and other products in stores.

Ramirez said the government has sufficient funds to meet the economy's needs for dollars. Oil is the lifeblood of Venezuela, accounting for most of its export earnings and helping to bankroll an economy heavily reliant on imports.

The law modifies the tax scheme for windfall oil earnings in the country, changing the formula to both free up more dollars for the Central Bank and reduce the amount flowing to the National Development Fund, or Fonden. The government uses that fund for a variety of government programs and public works projects.

If you liked this article you might like

What's Behind the Surge in Energy Stocks

Hillary Clinton Says Prosecuting Individuals is Key to Wall Street Reform