Venezuela may allow foreign companies operating in the country to repatriate some of their profits in exchange for increased investment in the Latin American nation, said Pedro Cortez, head of Telefonica SA’s local unit.
Cortez made the comments to reporters in Caracas today after a “positive” meeting with Finance Minister Nelson Merentes. Merentes declined to give a timetable for any changes.
“Once we come to an agreement, we’ll draw up a timetable for payment,” Merentes told a news conference at the central bank.
The government has tightened currency controls over the past 10 years as dollars became increasingly scarce in a country sitting on the world’s largest oil reserves. That has left companies such as Telefonica holding about $12 billion in dividends that they can’t repatriate, according to Caracas-based research firm Ecoanalitica. Those funds lose value with every devaluation and pick-up in inflation.
Merentes said today that the government has enough dollars to meet demand, without giving further details.
Telefonica, which expanded in Venezuela with the 2004 takeover of Bellsouth Corp.’s Latin America wireless business, accumulated dividends valued at 18.8 billion bolivars ($3 billion) over the past seven years, according to a company presentation seen by Bloomberg News. The dividends have lost about $1.4 billion in value, taking into account the February devaluation of the bolivar to 6.3 per dollar from 4.3.
The government has held meetings with more than 1,500 business owners to address foreign currency short falls that are stoking inflation and generating shortages of goods on supermarket shelves, Merentes said.
Telefonica’s Venezuela unit has an eight to 10 month delay in paying providers because of the shortage of foreign currency, Cortez said today.
Venezuela introduced a new currency system this year that auctioned $200 million on March 27. The system, known as Sicad, has not auctioned any foreign currency since.
Fewer dollars for importers have exacerbated shortages of staple goods including chicken, corn flour, sugar and toilet paper. The central bank’s scarcity index, which measures the amount of goods that are out of stock on the market, rose to 21.3 percent last month, the highest since it started tracking the measure in April 2009. Food prices, which account for 37 percent of the bank’s inflation index, climbed 6.4 percent in April from a month earlier.
State oil company Petroleos de Venezuela SA is finalizing terms with China for a $4 billion loan to increase production at the Sinovensa oil field in Venezuela’s Orinoco Belt, Oil Minister Rafael Ramirez said today.