Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

REPÚBLICA BOLIVARIANA DE VENEZUELA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of March 31, 2005)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: July 1, 1976.
Exchange Arrangement
CurrencyThe currency of the República Bolivariana de Venezuela is the Venezuelan bolívar.
Other legal tenderVenezuelan gold coins are legal tender, but they do not circulate.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe exchange rate of the bolívar is pegged to the dollar. The Central Bank of Venezuela (CBV), by joint agreement with the executive branch, may adjust the exchange rate at any time. Effective March 3, 2005, the bolívar was devalued by 11.98% to Bs 2,144.60 (buying) and Bs 2,150.00 (selling) per $1. Previously, on February 6, 2004, the bolívar was re-pegged to Bs 1,915.20 (buying) and Bs 1,920.00 (selling) per $1 (from Bs 1,596 per $1 buying and Bs 1,600 per $1 selling).
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirements
Use of foreign exchange among residentsThe use of foreign exchange among residents is not allowed.
Payments arrangements
Bilateral payments arrangements
InoperativeThere is an arrangement with Malaysia.
Regional arrangementsPayments between the República Bolivariana de Venezuela and the other LAIA countries may be settled through the accounts maintained with each other at the CBV.
Clearing agreementsYes.
Administration of controlThe Foreign Exchange Administration Commission (CADIVI) is responsible for the coordination, administration, control, and establishment of requirements, procedures, and restrictions applicable under the current exchange arrangements.
International security restrictionsNo.
Payments arrears
OfficialArrears are maintained on interest payments related to external public debt that is under litigation.
Controls on trade in gold (coins and/or bullion)The CBV participates in, regulates, and executes operations in the gold market.
Controls on external tradeThe export of nonmonetary gold and its alloys in any form (other than jewelry for personal use) requires prior authorization from the CBV. The CBV may authorize the export of gold bars up to 85% of local production; the remainder is supplied to the domestic market.
Controls on exports and imports of banknotesExports of banknotes are subject to prior authorization from the CBV.
On exports
Domestic currencyYes.
Foreign currencyExports of foreign currency above the equivalent of $5,000 are subject to declaration.
On imports
Domestic currencyYes.
Foreign currencyImports of foreign currency above the equivalent of $10,000 are subject to declaration.
Resident Accounts
Foreign exchange accounts permittedYes.
Held abroadYes.
Accounts in domestic currency held abroadThese accounts are not covered by the deposit insurance system.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedNo.
Domestic currency accountsNo.
Convertible into foreign currencyNo.
Blocked accountsThese apply only in cases of inheritance, preventive judicial measures, and narcotic trafficking activities.
Imports and Import Payments
Foreign exchange budgetThe CBV may to sell foreign exchange to importers authorized by the CADIVI, subject to availability.
Financing requirements for importsAuthorization by the CADIVI is required.
Documentation requirements for release of foreign exchange for importsPrior authorization by the CADIVI is required for the purchase of foreign exchange. Authorization is granted on a discretionary basis and is subject to evidence of tax compliance and registration requirements.
Domiciliation requirementsYes.
Letters of creditOther payment instruments are also admissible.
Import licenses used as exchange licensesSome products may be subject to restrictive licensing.
Import licenses and other nontariff measuresSome imports are subject to licensing for environmental, health, or security reasons. Import licenses are also required for sugar cane, milk and its derivatives, and various types of oils and fats. Other imports paid for with foreign exchange granted by the CADIVI are subject to certification that the goods are not produced locally or are produced locally in insufficient quantities.
Positive listThere is a list of items for which the provision of foreign exchange is authorized. Imports of military arms must be authorized by the Defense Ministry. Imports of nonmilitary weapons must be authorized by the Ministry of Domestic Affairs and Justice.
Negative listThe importation of used motor vehicles is prohibited, except for hearses, prison vans, and ambulances.
Licenses with quotasA number of agricultural products (142 tariff lines, or 2.12% of total lines) are subject to tariff quotas.
Other nontariff measuresThere are minimum prices for certain imports.
Import taxes and/or tariffsThere are four basic ad valorem tariff rates on manufactured goods (5%, 10%, 15%, and 20%), except for motor vehicles, which are subject to a special regime under the Andean Community. The tariffs on imported components for vehicles are 35% for passenger cars; 15% for cargo and commercial vehicles, except for vehicles under 4,500 kg, such as pickup trucks, for which the rate is 35%; and 3% for vehicle components. The industrial free zone of Paraguana and the free port of Margarita Island enjoy a special customs regime that includes exemptions from customs tariffs. There are multiple trade agreements, ranging from agreements with partial coverage to free trade agreements and integration agreements on free trade. There is a customs handling fee of 1%.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirementsAll foreign exchange earnings from exports, including export proceeds of the state petroleum company, must be surrendered to the CBV. However, certain exceptions apply. Certain exporters may retain 10% of their export proceeds for export-related expenses. This does not apply to companies subject to the Hydrocarbon Law, and effective May 13, 2004, the Gaseous Hydrocarbons Law, for which other facilities are in place.
Financing requirementsNo.
Documentation requirementsAuthorization is granted on a discretionary basis and is subject to evidence of tax compliance, social security payments, and registration requirements. An export declaration is required.
GuaranteesYes.
DomiciliationDomiciliation is required for exports meeting certain financing criteria.
Preshipment inspectionYes.
Export licensesNo.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Trade-related payments
Prior approvalYes.
Indicative limits/bona fide testYes.
Investment-related paymentsEffective September 3, 2004, payments of principal and interest on external private debt with foreign creditors are authorized through banks and other foreign exchange operators.
Prior approvalYes.
Indicative limits/bona fide testYes.
Payments for travel
Quantitative limitsEffective January 25, 2005, Venezuelans traveling abroad may take with them up to the equivalent of $400 in cash a person a year.
Indicative limits/bona fide testYes.
Personal payments
Prior approvalYes.
Quantitative limitsThere are limits for expenses related to study abroad and medical expenses.
Indicative limits/bona fide testYes.
Foreign workers’ wages
Prior approvalYes.
Indicative limits/bona fide testYes.
Credit card use abroad
Prior approvalUse of credit cards abroad requires prior approval.
Quantitative limitsEffective October 1, 2004, the limit on use of credit cards abroad is $4,000 a person a year and the limit on payments for credit card charges for electronic purchases is $2,500 a person a year. Effective the same date, Venezuelans may withdraw up to $400 a month in cash at automatic teller machines abroad. These withdrawals are counted against the $4,000 limit on use of credit cards abroad. Previously, on March 1, 2004, the use of credit cards abroad was subject to a limit of the equivalent of $2,000 a person a year. On June 29, 2004, this amount was increased to $3,000 a person a year and the use of credit cards for electronic (Internet) purchases was authorized up to $1,500 a person a year.
Indicative limits/bona fide testYes.
Other payments
Prior approvalYes.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsAll foreign exchange proceeds must be surrendered to the central bank through an AD.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instrumentsAccess to foreign exchange for capital transactions is subject to authorization by the CADIVI.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsForeign investors are allowed to purchase corporate stocks on the Caracas Stock Exchange but must inform the Superintendency of Foreign Investment (SIEX) of such purchases at the end of each calendar year.
Sale or issue locally by nonresidentsAuthorization from the Comisión Nacional de Valores (CNV) is required.
Sale or issue abroad by residentsAuthorization from the CNV is required.
Bonds or other debt securitiesTransactions involving government bonds denominated in foreign currency in the secondary domestic market have been suspended.
Sale or issue locally by nonresidentsAuthorization from the CNV is required.
Sale or issue abroad by residentsAuthorization from the CNV is required.
On collective investment securities
Sale or issue locally by nonresidentsAuthorization from the CNV is required.
Controls on derivatives and other instrumentsThere are some regulations for market participants.
Controls on credit operationsEffective September 3, 2004, payments of guarantees and other collateral in foreign exchange on external private debt with foreign creditors are authorized through banks and other foreign exchange operators.
Controls on direct investment
Inward direct investmentMass media, communications, newspapers in Spanish, and professional services are reserved for national ownership. New investments do not require prior authorization from the SIEX, but must be registered with the SIEX, and approval is automatically granted if the new investment is consistent with national legislation. Foreign enterprises may establish subsidiaries in the República Bolivariana de Venezuela without prior authorization as long as they are consistent with the commercial code. The SIEX must, however, be notified within 60 working days about newly established subsidiaries. Investment in the petroleum and iron sectors is subject to specific regulations.
Controls on liquidation of direct investmentOwners of direct investments have the right to reexport the proceeds of liquidation; however, the SIEX checks the performance of the commitments of foreign investors in accordance with national legislation. Under the debt-equity program, the registration of proceeds is allowed up to five years after the date of the last debt conversion.
Controls on real estate transactionsNo.
Controls on personal capital transactionsBanks must report to the Superintendency of Banks on a monthly basis any transfer above $10,000 or its equivalent, to or from another country.
Loans
To residents from nonresidentsThese transactions are controlled when denominated in foreign currency.
Gifts, endowments, inheritances, and legacies
To residents from nonresidentsThese transactions are controlled when denominated in foreign currency.
Transfer of assets
Transfer abroad by emigrantsThese transactions are controlled when denominated in foreign currency.
Transfer into the country by immigrantsThese transactions are controlled when denominated in foreign currency.
Provisions specific to commercial banks and other credit institutions
Purchase of locally issued securities denominated in foreign exchangeTransactions involving government bonds denominated in foreign currency in the secondary domestic market are suspended.
Differential treatment of deposit accounts in foreign exchangeDeposit accounts in foreign exchange are not subject to the deposit insurance policy.
Reserve requirementsA reserve requirement of 15% applies to deposits, obligations, and debit operations irrespective of the holder’s residency status.
Open foreign exchange position limitsThe maximum open foreign exchange position for investment banks is limited to 15% of their respective capital funds. For mortgage banks and financial leasing companies, the limit is 5% of their respective capital funds.
On resident assets and liabilitiesYes.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2004
Exchange arrangementFebruary 6. The bolívar was re-pegged to Bs 1,915.20 (buying) and Bs 1,920 (selling) per $1 from Bs 1,596 (buying) and Bs 1,600 (selling) per $1.
Exports and export proceedsMay 13. The companies governed by the Gaseous Hydrocarbons Law were no longer permitted to retain 10% of export proceeds.
Payments for invisible transactions and current transfersMarch 1. Payments for credit card charges abroad were made subject to a limit of the equivalent of $2,000 a person a year.
June 29. The limit on payments for credit card charges abroad was increased to $3,000 from $2,000 a person a year and the use of credit cards for electronic (Internet) purchases was authorized up to $1,500 a person a year.
September 3. Payments of principal and interest on external private debt with foreign creditors were authorized through banks and other foreign exchange operators.
October 1. Credit card holders were permitted to withdraw up to $400 a month in cash at automatic teller machines abroad. These withdrawals counted against the $4,000 annual limit of credit card use per person.
October 1. The limit on payments for credit card charges abroad was increased to $4,000 from $3,000 a person a year and the limit for electronic (Internet) purchases was increased to $2,500 from $1,500 a person a year.
Capital transactions
Controls on credit operationsSeptember 3. The payments of guarantees and other collateral in foreign exchange on external private debt with foreign creditors were authorized through banks and other foreign exchange operators.
Changes During 2005
Exchange arrangementMarch 3. The bolívar was devalued by 11.98% to Bs 2,144.60 (buying) and Bs 2,150.00 (selling) per $1.
Payments for invisible transactions and current transfersJanuary 25. Venezuelans traveling abroad were allowed to take with them up to the equivalent of $400 in cash a person a year.

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