| Back to InterAmSM Directory / Venezuela / Banking & Credit / Supplementary Materials - Materiales Suplementarios |
José A. Giral (Caracas)
Tel: (58-2) 276-5111
Fax: (58-2) 264-1532
Decree No. 1,292 of 17 April 1996, and Exchange Agreement No. 1 of 17 April 1996 were published in O.G. No. 35,941 of 17 April 1996. Decree No. 1,292 restored free currency exchange throughout the national territory and ordered the ceasing of all restrictions or controls on exchange operations, with the exceptions set forth in the Decree. Therefore the purchase and sale of foreign currency is free at the rate set by the market. The restrictions mentioned in the Decree are related to the obligation to sell to the Central Bank of Venezuela all foreign currency obtained by the oil industry, by the Republic from Public Credit operations, and by the Venezuelan Investment Fund and persons mentioned in Article 2 of the Organic Law on Public Credit.
Decree No. 1,292 provides that the Ministry of Finance shall create an Administrative Unit by resolution, with the following duties:
(a) To establish the procedures for dismantling the exchange control system.
(b) To direct and coordinate matters and procedures pending before the Exchange Administration Board and the Technical Exchange Administration Office.
(c) To assume the liquidation process of the Unit for Registration of External Private Debt, ascribed to said Ministry.
(d) To enforce the rules issued by the Ministry of Finance for the completion of the external private debt registration in cases where advances have been granted, solely for purposes of confirming compliance with the abrogated exchange system or foreclose the relevant guarantees and impose penalties.
(e) To comply with the process for liquidation of the Exchange Administration Board and the Technical Exchange Administration Office. Order and indicate to the officials in said agencies the procedures, relationships and reports to be prepared. Receive the relevant reports of delivery and reports to be submitted by said agencies. During this process, the personnel of the Technical Exchange Administration Office must complete the review, justification of use of foreign exchange and audit of operations controlled by them, for purposes of determining compliance with the abrogated exchange rules.
(f) To withdraw or rescind the employment contracts, as the case may be, with personnel of the Exchange Administration Board, the Technical Exchange Administration Office and the Unit for Registration of External Private Debt.
(g) To be responsible for the preservation and custody of electronic and statistical files and supporting documents of the agencies that cease operations.
(h) Any others ascribed by the Ministry of Finance.
The Decree provides certain exceptions to the sale of foreign exchange at the free market rate of exchange. Those relating to the reimbursement or sale of foreign exchange to the Central Bank of Venezuela are the following:
(a) Persons who have pending obligations to sell foreign currency to the Central Bank of Venezuela, under the abrogated exchange system, were required to do so before 31 May 1996, at the rate of exchange set forth in the Exchange Agreement that was in force at the date the obligation became due and payable.
(b) Persons, including exporters who have adopted the Special Optional System for Exporters (REFE), who must sell foreign currency to the Central Bank of Venezuela pursuant to the abrogated exchange system, and whose obligation to sell was not due on the date the Decree became effective, must do so within ten banking days following the maturity of their obligation, at the rate of exchange in force on the date of the sale.
(c) Persons who must reimburse foreign currency to the Central Bank of Venezuela under the abrogated exchange system must do so at the rate of exchange set forth in the Exchange Agreement in force on the date they acquired the foreign currency. Said reimbursement had to be made before 31 May 1996, or within 10 banking days following the date on which the obligation to reimburse is determined, if the date is after the effective date of this Decree.
(d) The Ministry of Finance and the Central Bank of Venezuela may agree upon the treatment to be applied to special cases or cases not contemplated in this Decree.
Foreign currency exchange operations requested to the Central Bank of Venezuela by exchange operators and by the Public Sector agencies prior to the coming into effect of the Decree shall be liquidated at the rate in force on the date the request was made to the Central Bank. Foreign currency sale operations made pursuant to generic authorizations set forth in Decree No. 714 shall be liquidated at the rate of exchange in force on the date the exchange operators made the sale.
Exchange Agreement No. 1 confirms the preceding provisions. It should be noted that according to the Exchange System Law, the National Government may impose restrictions and controls on the free conversion of currency when it deems it advisable, whereas the abrogation of former Decree No. 714 and Exchange Agreement No. 1 does not imply a repeal of the powers over exchange matters that have been conferred by the Exchange System Law to the President of the Republic in Council of Ministers. Therefore, the National Government may reinstate any kind of exchange control whenever it deems advisable because the Exchange System Law still in force would empower it to do so without need of an Enabling Law or a decree suspending constitutional guaranties.
The National Law Center is a non-profit 501(c)(3) Research and Educational Corporation