CARACAS: Venezuela’s government has told the country’s food industry that it is limiting dollar disbursements for food imports so that it can pay down foreign debt amid low oil prices.
The government of socialist President Nicolas Maduro administers most of the country’s dollars through a currency ggcontrol system and must pay $8.4 billion in debt service on foreign bonds by the end of the year.
Restrictions on dollars for imports have already caused shortages of basic goods including meat and olive oil, and the scarcity is weighing on the government ahead of parliamentary elections.
At the same time, concerns Venezuela could default on foreign debt have pushed its yields to the second highest of any emerging market nation, despite government assurances it is committed to servicing the bonds.
“Some government spokesmen have said in meetings that there are not enough dollars and that they have to reduce allocations because they have to pay off foreign debt,” said one of the sources, who asked not to be identified.
The government met with food industry groups as part of a round of meetings in recent weeks between state officials and business leaders to address the country’s economic difficulties.
Planning Minister Ricardo Menendez disputed the sources’ version the government was prioritizing debt over food, but acknowledged an overall decline in dollar disbursements as part of an effort to streamline use of hard currency.
“We are looking to clean up the distribution of currency,” he said in an interview, adding this included seeking to limit corruption by firms that buy dollars on the cheap and resell them for a profit.
Exchange controls created by late socialist leader Hugo Chavez sell dollars to food importers for 6.3 bolivars per dollar, the most favorable of a three-tiered system that also sells for 12 bolivars and for around 190 bolivars.
