Venezuela to halt sending of remittances to Colombia

Posted on Feb 11 2014 - 1:54pm by Editor
dollars

The Venezuelan government announced Tuesday that it will be temporarily suspending the sending of remittances to Colombia in an attempt to stop the outflow of dollars from the country.

Colombians living in neighboring Venezuela regularly send money back to their families, but the practice will now be frozen until ”the necessary measures have been put in place which adhere to the new conditions of such practices,” according to the Venezuelan state-run Gaceta Oficial media company.

The ban comes only days after Colombian Foreign Minister Maria Angela Holguin traveled to meet her Venezuelan counterpart, Elias Jaua, to discuss a variety of topics from smuggling to the manipulation of the foreign exchange rate.

MORE Colombia and Venezuela to crack down on smuggling

The problem at hand pertains to Venezuela’s state-imposed exchange rate controls, in effect since 2003. Currently, there is a relatively common practice that involves sending state-subsidized dollars to Colombia and later re-exchanging the converted Colombian pesos in Venezuela at a favorable rate, gaming the artificial currency controls.

In order to combat this exchange rate manipulation, Jaua and Holguin have agreed to a temporary ban of the practice that will remain in effect until a more comprehensive measure can be formulated. The country’s are expected to pass a law that would forbid the remittances from being sent in dollars, requiring them to be exchanged into Colombian pesos in Venezuela before being sent.

A meeting has reportedly been scheduled for next month to discuss the efficacy of the remittance suspension and devise a more lasting solution.

Sources

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