Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

REPÚBLICA BOLIVARIANA DE VENEZUELA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of March 31, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: July 1, 1976.
Exchange Measures
Restrictions and/or multiple currency practicesInformation is not publicly available.
International security restrictionsNo.
References to legal instruments and hyperlinkswww.bcv.org.ve; www.cadivi.gob.ve.
Exchange Arrangement
CurrencyThe currency of República Bolivariana de Venezuela is the Venezuelan bolívar.
Other legal tenderVenezuelan gold coins are legal tender, but do not circulate.
Exchange rate structure
DualSome of the foreign exchange transactions take place in the parallel market at exchange rates that may differ from the official exchange rate. Effective January 1, 2006, the exchange rate structure was reclassified to dual due to technical corrections in the classification.
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 National Executive Power, may adjust the exchange rate at any time. On March 3, 2005, the bolívar was devalued by 11.98% to Bs 2,144.60 (buying) and Bs 2,150.00 (selling) per $1 and has been maintained since then at this level.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
References to legal instruments and hyperlinkswww.bcv.org.ve.
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 República Bolivariana de Venezuela and the other LAIA countries may be settled through the accounts jointly maintained with each other by the CBV and other CBs.
Clearing agreementsYes.
Administration of controlThe CADIVI is responsible for the coordination, administration, control, and establishment of rules, procedures, and restrictions applicable under the current exchange regime. The main administrative procedures for the foreign exchange control system are (1) obligatory surrender requirements to the CBV and (2) a foreign exchange allocation approved by the CBV and prior authorization by the CADIVI for the purchase of foreign exchange at the official exchange rate. The National Executive Power established several lists for imports of goods and services and requires importers to submit documentation stating that they do not have any pending fiscal obligations. Effective March 22, 2007, Petróleos de Venezuela, S.A. (PDVSA), may purchase foreign exchange directly from the CVB for certain purposes. The treatment applicable to the PDVSA is extended to Petroquímica de Venezuela, S.A., except for certain payments the PDVSA is required to make to a fund the National Executive created for financing investment projects in the real economy, education, and health; for improving the public debt profile and balance; and for dealing with special and strategic situations, in accordance with the provisions of the Law to Promote the Development of Petrochemical, Carbochemical, and Similar Business.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)The CBV participates in, regulates, and executes operations in the gold market.
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 national production; the remainder must be offered to the domestic market.
Controls on exports and imports of banknotes
On exports
Domestic currencyn.r.
Foreign currencyExports of foreign currency (coins and banknotes) and bank checks denominated in foreign currency of more than $10,000 are subject to declaration. Failure to declare is subject to a fine twice the amount not declared. Exports of foreign banknotes of legal tender by universal and commercial banks, credit and saving entities, and exchange houses are subject to prior authorization by the CBV.
On imports
Domestic currencyYes.
Foreign currencyImports of foreign currency (coins and banknotes) and bank checks denominated in foreign currency of more than $10,000 are subject to declaration. Failure to declare is subject to a fine twice the amount not declared.
References to legal instruments and hyperlinkswww.bcv.org.ve.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyNo.
Held abroadYes.
Accounts in domestic currency held abroadn.r.
Accounts in domestic currency convertible into foreign currencyNo.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedNo.
Domestic currency accountsNo.
Blocked accountsThese mechanisms apply only in cases of inheritance, preventive judicial measures, and narcotics trafficking activities.
References to legal instruments and hyperlinkswww.sudeban.gob.ve.
Imports and Import Payments
Foreign exchange budgetThe CBV sells foreign exchange to finance imports in the amount authorized by the CADIVI.
Financing requirements for importsAuthorization by the CADIVI is required.
Minimum financing requirementsn.r.
Advance payment requirementsn.r.
Advance import depositsn.r.
Documentation requirements for release of foreign exchange for importsPrior authorization by the CADIVI is required for the purchase of foreign exchange. Authorization is subject to compliance with CADIVI requirements.
Domiciliation requirementYes.
Letters of creditOther payment instruments are also admissible.
Import licenses used as exchange licensesSome products may be subject to restrictive licensing.
Othern.r.
Import licenses and other nontariff measuresSome imports are subject to licensing for environmental, health, or security reasons. 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 armaments must be authorized by the Ministry of the Popular Power of Defense. Imports of nonmilitary weapons must be authorized by the Ministry of the Popular Power 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 weighing less than 4,500 kilograms, 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.
References to legal instruments and hyperlinkswww.cadivi.gob.ve
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirements
Surrender to the central bankAll foreign exchange obtained from hydrocarbons exports, including gaseous hydrocarbons and others, must be surrendered to the CBV, except in the case of the PDVSA, which sells to the CBV in the amounts needed for its operating expenses domestically, which are treated as fiscal contributions established by the budget law. In addition, the companies created by affiliation agreements signed by the PDVSA and the mixed companies governed by the Hydrocarbons Law or the Gaseous Hydrocarbons Law are authorized to keep foreign exchange accounts in foreign banks, to cover expenses outside the República Bolivariana de Venezuela; the remaining foreign exchange must be sold to the CBV. Other exporters must sell to the CBV, through authorized foreign exchange dealers, the foreign exchange obtained from their exports, but may retain a maximum of 10% of their export proceeds for export-related expenses.
Surrender to authorized dealersYes.
Financing requirementsNo.
Documentation requirementsRelated authorization requires submission of tax compliance documentation, social security payments vouchers, ex ante and ex post notification of the exports, and other documents related to the commercial transaction.
GuaranteesYes.
DomiciliationDomiciliation is required for exports meeting certain financing criteria.
Preshipment inspectionYes.
OtherAn Intention of Exportation is required before exportation and a Declaration of Exportation later. Without these, exports may not be carried out. The exports of goods and services exceeding $10,000 must be declared and the foreign exchange surrendered to the CBV within 15 days of the date of declaration to the customs authority. Omission of the declaration is subject to a fine twice the amount of the foreign exchange operation.
Export licensesNo.
Export taxesNo.
References to legal instruments and hyperlinksOfficial Gazette 38.156; Decree No. 70, dated March 31, 2005; Decree No. 71, dated March 31, 2005; www.cadivi.gob.ve.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersEffective November 23, 2006, the amount of electronic money transfer allowed to and from República Bolivariana de Venezuela was reduced to $2,000 a person a month from $2,000 a person a day.
Trade-related payments
Prior approvalYes.
Indicative limits/bona fide testYes.
Investment-related paymentsPayments of principal and interest on external private debt with foreign creditors are permitted through banks and other authorized foreign exchange dealers.
Prior approvalYes.
Indicative limits/bona fide testYes.
Payments for travel
Quantitative limitsEffective February 12, 2007, there is a maximum of $600 or €500 in cash a person a year, for traveling abroad to countries listed officially at the CADIVI web page. Previously, the limit was $400.
Personal payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testIndicative limits exist for the authorization of acquisition of currencies related to academic and medical expenses and the mailing of remittances to pensioners and relatives abroad.
Foreign workers’ wagesn.a.
Credit card use abroad
Prior approvalUse of credit cards abroad requires prior approval.
Quantitative limitsEffective February 12, 2007, the limit on use of credit cards abroad is $5,000 (previously, $4,000) a person a year and the limit on payments for credit card charges for electronic purchases is $3,000 (previously, $2,500) a person a year. Venezuelans may withdraw up to $500 (previously, $400) a month in cash at automated teller machines abroad. These withdrawals are counted against the $5,000 limit on use of credit cards abroad.
Indicative limits/bona fide testYes.
Other payments
Prior approvalYes.
Quantitative limitsn.r.
Indicative limits/bona fide testYes.
References to legal instruments and hyperlinkswww.cadivi.gob.ve.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirements
Surrender to the central bankAll foreign exchange proceeds must be surrendered to the central bank through an AD.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinkswww.bcv.org.ve.
Capital Transactions
Controls on capital transactionsAccess to foreign exchange for capital transactions is subject to authorization by the CADIVI.
Repatriation requirementsYes.
Surrender requirements
Surrender to the central bankAll foreign exchange proceeds must be sold to the CBV through ADs.
Controls on capital and money market instruments
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 declare acquisitions to the Superintendency of Foreign Investment (SIEX) of such purchases at the end of each calendar year.
Sale or issue locally by nonresidentsAuthorization from the National Stock Commission (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, except those related to the national public debt issued in accordance with decrees No. 4.947 and 5.187, effective November 9, 2006 (trading of securities used under the 697th Issuance of National Public Debt Bonds was authorized by the CBV on the secondary market in domestic currency) and February 23, 2007 (trading of securities issued under the 698th Issuance of National Public Debt Bonds was authorized by the CBV on the secondary market in domestic currency, to finance public internal and external debt services), respectively.
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 instruments
Sale or issue locally by nonresidentsAuthorization from the CNV is required.
Controls on credit operations
Guarantees, sureties, and financial backup facilitiesPayments of guarantees and other collateral in foreign exchange on external private debt with foreign creditors are authorized through banks and other foreign exchange dealers.
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 with prior authorization of the CADIVI; 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 of more than $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 assetsThese transactions are controlled when denominated in foreign currency.
Transfer of gambling and prize earningsThese operations are controlled when they are carried out to or from the national territory in foreign currency.
References to legal instruments and hyperlinkswww.siex.gov.ve; www.cnv.gob.ve; www.bolsadecaracas.com; www.avaf.org.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsIn accordance with Exchange Agreement No. 10, universal and commercial banks, saving and credit entities authorized by the Superintendency of Banks and Other Financial Institutions may acquire on a one-time basis currency directly from the CBV to carry out transactions allowed by the exchange arrangement in foreign currency established by the CBV. However, ADs must respect their open position limits.
Lending locally in foreign exchangeYes.
Purchase of locally issued securities denominated in foreign exchangeTransactions involving government bonds denominated in foreign currency in the secondary domestic market have been suspended, except those contained in CBV Resolutions Nos. 06-11-01 and 07-02-02, related to the national public debt issued in accordance with Decrees No. 4.947 and 5.187, respectively.
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 in accordance with the terms established in CBV Resolution No. 07-03-02.
Open foreign exchange position limitsEffective January 6, 2006, the maximum open foreign exchange position for banks is 30% (previously, 15%) of their capital. For mortgage banks, financial leasing companies, and investment banks, the limits are 5%, 5%, and 15%, respectively, of their capital. For money market funds, the limit is 5% of the yielded investments.
Provisions specific to institutional investors
Pension fundsn.a.
Investment firms and collective investment funds
Limits (max.) on securities issued by nonresidentsThe purchase of financial instruments, other than those issued by República Bolivariana de Venezuela or in accordance with the General Law of Banks and Other Financial Institutions, is subject to authorization by the Superintendency of Banks. The maximum share of foreign financial instruments held by money market funds is set by the CBV.
Limits (max.) on investment portfolio held abroadYes.
Limits (min.) on investment portfolio held locallyYes.
Currency-matching regulations on assets/liabilities compositionThe maximum open foreign exchange position for investment banks is 15% of their capital and for money market funds 5% of the yield on investments.
References to legal instruments and hyperlinkswww.bcv.org.ve; www.sudeban.gob.ve.
Changes during 2006
Exchange arrangementJanuary 1. The exchange rate structure was reclassified to dual due to technical corrections in the classification.
Payments for invisible transactions and current transfersNovember 23. The amount of electronic money transfer allowed to and from República Bolivariana de Venezuela was reduced to $2,000 a person a month from $2,000 a person a day.
Capital transactions
Controls on capital and money market instrumentsNovember 9. Trading of securities used under the 697th Issuance of National Public Debt Bonds was authorized by the CBV on the secondary market in domestic currency.
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsJanuary 6. The maximum open foreign exchange position for banks was increased to 30% of their capital from 15%, For mortgage banks, financial leasing companies, and investment banks, the limits are 5%, 5%, and 15% respectively, of their capital. For money market funds, the limit is 5% of the yielded investments.
Changes during 2007
Arrangements for payments and receiptsMarch 22. The PDVSA was allowed to purchase foreign exchange directly from the CBV for certain payments. The treatment applicable to the PDVSA was extended to Petroquímica de Venezuela, S.A., except for foreign currency transfers the PDVSA is required to make to a fund the National Executive created for financing investment projects in the real economy, education, and health; for improving the public debt profile and balance; and for dealing with special and strategic situations, in accordance with the provisions of the Law to Promote the Development of Petrochemical, Carbochemical, and Similar Business.
Payments for invisible transactions and current transfersFebruary 12. The amount of foreign exchange residents were allowed to purchase for traveling abroad to countries listed officially at the CADIVI web page was increased to $600 or €500.



February 12. The limit on credit card use abroad was increased to $5,000 a person a year and the limit on electronic purchases to $3,000. The monthly limit for cash withdrawals was increased to $500.
Capital transactions
Controls on capital and money market instrumentsFebruary 23. Trading of securities issued under the 698th Issuance of National Public Debt Bonds was authorized by the CBV on the secondary market in domestic currency, to finance public internal and external debt services.

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