Venezuela approved $100 million for 33 companies to repatriate delayed dividends today in the food, health and finance sectors including Banco del Caribe CA Banco Universal, Kimberly-Clark Corp. and Jarden Corp.
The foreign currency requests that will be granted at the official rate of 4.3 per dollar are the beginning of a process to review dollar needs for foreign companies operating in Venezuela, Vice President Elias Jaua said today during the event in Caracas.
“We respect the private sector as long as the companies comply with our constitution, laws and interests of the Venezuelan people,” Jaua said. “Thank you for your patience in this process.”
Since President Hugo Chavez installed currency controls in 2003, companies have had to turn to the foreign exchange board, known as Cadivi, to request dollars at the official exchange rate to repatriate earnings to headquarters. Cadivi began to restrict the transfer of dividends in 2008 after oil prices plunged, prompting the government to ration its hard currency.
Chavez has also nationalized key industries in the oil producing nation since 2006, including the seizure of assets from Exxon Mobil Corp., Cemex SAB, Owens-Illinois Inc. and Ternium SA.
Cadivi President Manuel Barroso said today in an interview that the total amount of dividend requests at the moment is about $2 billion.
Venezuelan Finance Minister Jorge Giordani, central bank President Nelson Merentes and representatives of foreign companies in the South American country attended the event in a hotel in Caracas.
“This is a positive sign from the government that we hope continues for foreign companies operating in the country,” said Juan Carlos Dao, president of Bancaribe, a local bank which counts Canada’s Bank of Nova Scotia as a minority shareholder.
Venezuela has devalued its currency twice since the beginning of 2010, which has caused some foreign companies to report foreign exchange losses for their operations in the South American country.
Besides Cadivi, companies used an unregulated currency market until May 2010, when the government shuttered the market and blamed its participants for fueling inflation and setting artificial exchange rates.
Now companies must wait for the government to sell dollar bonds in order to repatriate earnings or request money for imports through the central bank’s currency market known as Sitme, which allocates funds for imports at an exchange rate of 5.3 per dollar.
While the government will look to speed up the repatriation of dividends, part of the earnings in local currency should be re-invested into the country, Jaua said. The government also wants to form joint ventures with private firms, he said.
“We’re going to work toward keeping your companies in Venezuela so that earnings are not only repatriated but also re-invested to support the development of the country,” he said.