TheDaily Journal (0. 9.

1989
. I ECONOMIC
I
Week in Review
By Daily Journal Staff
Private sector leaders presented their proposal for a
solution to the unrecognized letters of credit problem
to Central Bank President Pedro Tinoco Thursday to
try to ease the burden of having to pay off some of
those letters at the free market exchange rates.
The proposal asks the Central Bank to approve
payment of the exchange rate losses of importers in 36
equal consecutive monthly payments and the
establishment of a conversion mechanism that guaren-
tees the acceptance by commercial banks of promisory
notes issued by the Central Bank at 100 percent of
their equivilent in bolivars on the date the note was
signed
The business leaders who met with Tinoco said he
was very receptiv to the proposal. The document was
:signed by Conin stria President Ernesto Navarro
Ruiz and Conse mercio President Edgar Romero
Nava. .
million
· annual ceiling for debt-equity swaps
is not a "magic gure," the Central Bank's studies
director said at seminar to clarify the details of the
government's ne debt conversion program. Pedro
Rosas explained at the government established a low
ceiling because o the inflationary effects of the such
debt-swap programs, but if the government believes
the economy can support more swaps, the ceiling could
be raised.
Rosas also stressed the importance of synchronizing
the debt negotiations and the debt swap program,
adding that Venezuela is the first nation to try to
establish a debt-for-equity swap program while at the
same time tryingto achieve a significant reduction of
the nation's $20.7 billion public foreign debt.
■The debt negotiating team left last week for New
York for meetings Monday with the deputy chairmen
of four of Venezuela's creditor banks on the
17-member Bank Advisory Committee. The meeting is
an attempt to simplify the debt negotiation process by
meeting with smaller groups of creditors. The debt
team, headed by Planning Minister Miguel Rodriguez,
will present a revised "menu of options" to the deputy
chairmen, who will then relay it to the full committee.
Venezuela announced it would ease off its insistence of
a 50 percent reduction of its debt after the banks twice
rejected the proposal.
■The government last week declined to extand a
six-month-old firing freeze, permitting financially
strapped companies to lay off workers once the freeze
ends Wednesday. President Carlos Andres Perez in-
stead issued a decree to establish an unemployment
insurance system by Nov. 30. In interim, com-
panies are permitted to fire their w kers for economic
and technical reasons after consul ·ng with workers
through the unions.
Venezuelan Workers Confederation (CTV) Secretary
General Cesar Olarte said the labor organization is
pleased with the government labor easures, especial-
ly the government's employment Ian, which is ex-
pected to create 170,000 new jobs.
■CTV President Antonio Rios a nounced a truce
between the national business and labor sectors to
solidify concertacionplans. The tw sectors agreed to
decentralize the concertaci6n poli y, meaning that
Fedecamaras and the CTV will in ·ate negotiations
without the direct participation o the government.
Rios said the truce will produce conditions to surpass
the period of difficulties the country· facing.
■Commercial banks decided to lowe interest rates on
their own without waiting for the Central Bank to
lower the maximum rates allowed. Two weeks ago
banks lowered interest rates to between 30 percent
and 32 percent. Central Bank figures show the average
interest rate for loans dropped almo;t two points from
39.53 percent Aug. 9 to 37.83 percent Aug. 23. The
ceiling fixed by the Central Bank i 39 percent. The
rate for deposits in commercial ha dropped slightly
from an average of 37.52 percent to 7.06 percent but
other financial institutions dropped their rates from
34.34 percent to 31.83 percent . l
■The president of the Venezuelan Construction
Chamber announced that there are more than 100,000
unemployed construction workers in !the country. Jose
Serrano said that if the debt problem of the construc-
tion industry is not solved, no construction company
will do business with the government in 1990. The
government owes construction businesses close to
Bs:20 billion,he said