CARACAS, Thursday May 14, 2009 | Update
Venezuelan authorities are preparing to take steps to further restrict the annual USD 2,500 quota Venezuelans are allowed to use to travel abroad. Venezuela's economy has been hit by a sharp reduction of foreign exchange income.
Financial sources said that during a meeting with the banking sector, Manuel Barroso, the chair of the Foreign Exchange Administration Committee (Cadivi), announced that starting July or August this year, a new system –under which each individual will have access to a given amount of US dollars that will depend on the destination and duration of the trip– will be implemented.
For instance, the US dollar quotas for weekend travels to nearby Aruba will be lower than the quotas for trips to Europe exceeding one month.
It is understood that Venezuelans will be allowed to use the USD 2,500 quota only during very long trips or trips to remote destinations.
Although during the last two days Cadivi has injected foreign exchange to small and medium financial institutions, the delay in the allocation of foreign exchange has put pressure on the rest of the banking system. In some cases, this situation has forced some banks to discontinue the use of credit cards abroad or limit payments exclusively to lodging and food.
Until last year, the use of credit cards by Venezuelans abroad was as follows: people would buy a product or a service abroad and pay for it with his/her credit card. That same day, Visa or Master Card deducted the money from an account held abroad by the relevant Venezuelan bank. The next day, the bank sent a file to Cadivi and within five working days, Cadivi instructed the Central Bank of Venezuela to repay the foreign exchange to the relevant bank.
At the present time, Cadivi's authorizations are issued one month and a half after the date the purchase was made. Bank officers have voiced concern about this delay.
Basically, bankers fear that, at some point, the government could suspend the quota of US dollars for travels abroad, devaluate the currency and refuse to recognize outstanding charges, thus forcing the financial institutions to use their own dollars to repay debts to Visa or Master.
Cadivi's delayed payments of credit card consumptions amount to some USD 400 million.
Translated by Gerardo Cárdenas
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