May 10, 2014 / 5:38 PM / in 4 years

Venezuela's Polar finds temporary solution to currency hurdle

CARACAS (Reuters) - Venezuela’s largest private company Empresas Polar said on Saturday it was re-starting production of pasta halted over delays in foreign currency allocations from the government.

Polar’s suspension of its pasta plant in central Maracaibo city last month was symptomatic of both private businesses’ disputes with President Nicolas Maduro’s government over currency controls and Venezuela’s shortages of staples.

The firm said, however, that a temporary solution had been found thanks to the purchase of 6,000 tonnes of wheat from a state corporation, which would last for three weeks.

“The temporary reactivation of production, however, does not resolve Polar Food’s underlying problem, which can only be resolved by the currency authorities’ timely allocation of the foreign currency needed for imports of raw materials and supplies,” it said in a statement.

Companies pay local bolivars to currency board Cencoex, formerly known as Cadivi, to get U.S. dollars for imports.

Businessmen say the process is bogged down by bureaucracy, corruption and delays. Maduro accuses entrepreneurs of exaggerating currency needs so they can flip dollars on the black market for a healthy profit.

There was no comment from the government on Polar’s statement on Saturday.

The company is famous in Venezuela for making the nation’s top-selling beer and a brand of flour used for arepas, the grilled corn dough patty that is another staple food.

It also distributes Pepsi-Cola in Venezuela.

Venezuela introduced currency controls in 2003 under the late President Hugo Chavez, who frequently berated Polar and its billionaire owner Lorenzo Mendoza as part of his trademark anti-capitalist rhetoric.

Mendoza met Maduro in February in a high-profile televised meeting in which he and other business leaders appealed for greater flexibility and space for private enterprise in the running of Venezuela’s economy.

Venezuelans have been suffering severe shortages of basic products from flour to milk for more than a year.

Businessmen say the government has squeezed private enterprise while running state businesses incompetently, while Maduro says a capitalist elite engaged in an “economic war” are causing the shortages through speculation and hoarding.

Venezuela suffers the highest inflation in the Americas, with March’s consumer price rise 4.1 percent and the annualized rate around 60 percent.

The central bank has not published the April rate despite being supposed to do so within the first 10 days of the month.

Opposition leader Henrique Capriles, who has leaked correct figures in the past based on his sources in government, said the April rate was 5.7 percent, taking the 12-month rate to 61.5.

“The worst result for the month of April since 1996. The economic disaster continues,” he said via Twitter.

The Maduro government says three months of protests against him, many turning violent, have exacerbated inflation and also caused other disruptions to the OPEC nation’s economy.

Reporting by Diego Ore and Andrew Cawthorne; Editing by Marguerita Choy

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