* PDVSA to channel more dollars to central bank
* Move could delay need for another devaluation
* Controversial Fonden fund to receive $3bln less
By Marianna Parraga
CARACAS, Jan 28 Venezuela unveiled changes to
its windfall oil tax system on Monday that will channel more
dollars to the central bank to address a lack of hard currency
and could delay the need for a devaluation.
With President Hugo Chavez recovering after his latest
cancer surgery in Cuba, Vice President Nicolas Maduro said late
on Saturday that the socialist leader had taken a series of
important economic decisions to strengthen exports.
Maduro's comments stoked speculation that in Chavez's
absence his socialist government might be preparing to announce
a devaluation of the local bolivar currency - which the private
sector argues is long overdue - or other measures.
The changes to the complex windfall tax system will boost
state oil firm PDVSA's contributions to the central bank by $3
billion, Energy Minister Rafael Ramirez said, as well as add
$1.4 billion to the often cash-strapped company's books.
"By selling those dollars to the central bank, we are going
to have more resources and be able to cover our commitments," he
told reporters. "There is enough foreign currency to sustain the
Under the changes, Ramirez added, PDVSA would reduce its
contributions to Fonden, a controversial off-budget state
investment fund, by almost $3 billion this year if oil prices
remained stable. He said more money would go into the national
budget and regional allocations.
Fonden, which has in the past accounted for half of public
investment, received more than $15 billion from PDVSA last year.
Critics say it is secretive and has funneled tens of billions of
dollars projects with little or no oversight from lawmakers.
'TWEAKING AT THE MARGIN'
Eurasia Group said the moves suggested officials were
worried about the political costs of shortages of goods and
rising inflation, but were unwilling or unable to make any major
economic reforms, including a significant devaluation, due to
the political uncertainty created by the president's absence.
"Beyond supplying more liquidity (to the state's forex
system), the measures imply that the government has no political
incentives to make any material economic adjustments and instead
will maintain the current system, potentially tweaking policy at
the margin," it said in a research note.
Ramirez showed the signature of Chavez on the proposed
legislation, which still needs parliamentary approval.
"Tomorrow we are going to send the bill to the National
Assembly. We must comply with procedure," the minister said.
Changing a previous sliding scale, PDVSA and its foreign
partners will have to pay the state 20 percent of income from
sales of oil between $55-$80 per barrel, 80 percent between
$80-100, 90 percent between $100-110, and 95 percent over $110.
Chavez first introduced a windfall tax in 2008 of up to 60
percent on revenues from oil prices over $100 per barrel, based
on the ideas of Nobel Prize-winning economist Joseph Stiglitz.
In 2011, the taxes were ratcheted up to a maximum of 95
percent for oil over $100, bringing in timely extra revenue
before last year's presidential election which Chavez won.
Venezuela's oil sector has been the financial motor of
Chavez's socialist reforms, contributing funds to a wide array
of education, health, housing, sports and other programs.
Venezuelan business leaders have complained about growing
economic imbalances that they say are caused by insecurity,
uncertainty amid Chavez's prolonged absence, and bad policies.
A devaluation would make exports more competitive by
lowering local production costs and spur domestic industries by
making imports less competitive with locally-produced goods.
It would also improve state finances by providing more
bolivars per dollar of oil exports. But it would also push up
consumer prices in a country that already has one of the highest
inflation rates in the region.