Venezuelans Send $19 Billion out of Country

Capital flight out of Venezuela established a record during 2007, the Central Bank of Venezuela has reported, despite strict currency controls adopted in 2004 by President Hugo Chávez's government to limit the outflow of money.

Much of the money landed in the United States and especially Florida, a former Central Bank official and a Miami academic said.

According to recent Central Bank statistics, nearly $19 billion in private Venezuelan capital was transferred offshore during 2007 -- a record since Chávez was first elected president in 1998.

Financial analysts said the capital flight was primarily stimulated by the issue of Venezuelan dollar bonds -- designed to help countries such as Argentina and Ecuador lessen the burden of their foreign debts -- that created a loophole through which Venezuelans could dodge the currency controls.

Experts said there's also a sum of capital that could have left the country illegally but is impossible to trace.

''This is only the official figure,'' said José Guerra, the Central Bank's former chief economist. ``There is an escape of capital investments that the Central Bank cannot account for.''

Guerra said the capital flight indicates that ''there is a strong mistrust of the national currency'' and ''a great uncertainty'' on the future of Venezuela under the leftist Chávez.

A significant percentage of the money went to the United States, and especially Florida, through various means such as bank accounts, financial investments and asset purchases, said Guerra and Antonio Jorge, an economics professor at Florida International University.

''Miami is a natural destination for the escape of Venezuelan capital,'' said Jorge. He estimated that at least 60 percent of the $19 billion ended up in the United States, given that nearly 70 percent of Venezuela's international commercial exchange is with the United States.

According to the Central Bank statistics, the most active months of offshore transfers in 2007 were April, May, and June, which coincided with five issuances of bonds destined to cover public debts and part of which were offered directly in dollars for international markets.

Another period of intense outflow occurred between July and September, due to the insecurity generated by the radical constitutional reforms proposed by Chávez. They were defeated in a Dec. 2 vote.

Source: Miami Herald

The Venezuelans with money do not seem enamored of the Hugo Chavez economic plans, particularly if they suspect that he will get around to nationalizing all profitable companies in Venezuela in time.