December 16, 2013 / 6:00 PM / 4 years ago

Venezuela says revamping currency control system

CARACAS, Dec 16 (Reuters) - Venezuela is boosting the use of the foreign exchange system known as Sicad to increase the amount of local currency it receives from oil revenue, tourism and gold sales, the country’s oil minister Rafael Ramirez said on Monday.

The government’s Sicad system was created to sell dollars through auctions to importers and travelers at a rate weaker than the official fixed rate of 6.3 bolivars. Though the government has not made the Sicad rate public, participants have said it has ranged between 12 and 14 bolivars.

The change would give the government a greater number of bolivars for each dollar of oil sales, which could help boost the supply of hard currency to the economy and ease shortages of imported goods and services.

Ramirez said in a press conference the government would gradually phase out the use of the country’s main currency board Cadivi, which has been the OPEC nation’s principal currency control agency over the last decade.

He said the country should begin a discussion about boosting the highly subsidized price of fuel, which is the currently cheapest in the world.

The fuel subsidy generates losses of $12.5 billion per year, he said. Authorities have been reluctant to raise prices because of riots in 1989 that were partly trigged by a fuel price hike.

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