Geert Bekaert and Campbell R

	Geert Bekaert and Campbell R. Harvey's
	Chronology of Economic, Political and Financial Events in Emerging Markets
	Venezuela
	Major Political and Economic Events
Date
760701	Multiple exchange rate system abolished. Single rate introduced.^a
8005	20% reserve requirement was imposed on overseas deposits of Venezuelan banks and on 25% on deposits of multinational firms.^a
8208	Beginning of Mexican debt crisis - impacts most of Latin America
8300	Foreign exchange controls and a two-tier official exchange rate system imposed; restrictions on imports.
830228	Three-tier exchange rate system was established.^a
840224	Another tier added to the three-tier exchange rate system.^a
840224	Within the newly established four-tier exchange rate system, the conversion exchange rate for capital receipts and payments of petroleum and iron ore companies was changed from Bs 4.30 to Bs 6.00 per US$1, while that for all exchange proceeds from official foreign borrowing and funds brought into Venezuela by the Venezuela Investment Fund was modified from Bs 4.2925 to Bs 7.4925 per US$1. ^{a3(first entry)}
841204	The limit on registered private external debt not subject to seven-year rescheduling was raised from US$100,000 to US$250,000.^a3
8500	Public sector debt restructuring agreement.^a
850118	Certain public sector utilities and financial institutions were made eligible to service their registered external debt at the preferential exchange rate through purchase of "zero coupon" foreign bonds.
850306	The Differential Exchange System Office was authorized to buy immediately foreign exchange at the preferential rate for repayment of registered private external debt related to public sector work contracts held with the government, autonomous agencies, and state enterprises due on or before Dec. 31, 1985; or debt guaranteed by foreign export promotion agencies with original maturity not exceeding 1990.
8602	Bank debt restructuring agreement.ⁱ
860717	Various modifications were made to the regulations governing the amortization of private sector external debts. Access to the rate of Bs 4.30 per US$1 was limited to 2 categories of debts. For the remaining registered debts, the new system provided for the issue of U.S. dollar-denominated bonds (with a maturity of at least 15 years and an annual interest rate of no higher than 5%) at the rate of Bs 7.5 per US$1.^a3
860901	The bond scheme introduced in July was withdrawn and FOCOCAM was eliminated. Principal payments previously under that scheme remained suspended until the definition of a new scheme.^a3
860929	The foreign investment code was amended, resulting in a substantial liberalization of the system.^a3
861206	An optional exchange rate guarantee scheme was announced for the servicing of private sector external debts previously registered under the five-year amortization schedule. No restrictions continue to apply to debt service payments through the free market.^a3
870424	The legal framework for the conversion into equity of public sector external debt, complementing the debt capitalization scheme existing under the new foreign investment code introduced in September 1986.^a3
880201	Foreign investments with joint ventures in certain industries that export at least 80% of their production were permitted to remit abroad dividends and capital without restriction and were required to surrender export proceeds that are needed only to finance local cost.^a3
880222	Foreign banks were authorized to open letters of credit directly with Venezuela importing firms rather than only with Venezuelan banks.
881020	Foreign investors were authorized to execute at the free market exchange rate debt-equity swaps for the financing of investments in the export sector, subject to a limit of 40% of the total investment not exceeding US$100 million, or of 60% if the total investment exceeds US$100 million.^a3
8812	Buckberg Liberalization date.^d
8903	Brady plan (adjustment packages that combined debt relief and market-oriented reforms).
890315	A new framework for debt-equity conversions were established.^a3
890906	Regulations governing an auction-based system for the conversion of public external debt into equity were issued.^a3
900116	Decree 727 opened foreign direct investment for all stocks except bank stocks.
9001	IFC Liberalization date.ⁱ
9001	Bekaert/Harvey Official Liberalization date. [Final and NBER version].
9001	Kim and Singal Liberalization date.
9003	Agreement with commercial banks to restructure almost two thirds of external bank debt under Brady Plan.
9011	Andean pact renewed (Bolivia, Colombia, Ecuador, Peru and Venezuela) (Chile refused).^p
9012	Bank debt restructuring agreement.ⁱ
910410	The regime for converting external public debt into equity investment was amended.^a3
9107	Standard and Poor's upgraded Venezuelan debt from B+ to Ba1.ⁱ
9108	Venezuela returned to Euromarkets with $500 million five year bond.ⁱVencemos (private cement) launched a two tranche offering of two year and five year bonds.ⁱVenezuela's credit rating upgraded from Ba3 to Ba1.ⁱ
9108	First ADR announced.^aa
9109	VIASA (Airline) privatized, $145 million.^p
911101	ADR effective date. (Company=CERAMICA CARABOBO COMMON SHARES, Exchange=OTC)^a11
9111	CANTV (Telecommunications) privatized, $1,885 million.^p
9111	First exchange-traded overseas listing.^a9
9100	Interest rate controls and foreign exchange controls were liberalized. Mehrez and Kaufmann Liberalization date. ^a1
9202	The escalation of political unrest for several months culminated in an attempted coup d'etat. Venprecar (steel) was the first Latin American equity offering in which all shares including those trading in Caracas were listed in dollars.ⁱ
920325	A new Direct Investment Regime came into effect.^a3
9204	President reshuffled cabinet. Taxes on luxury items, and price controls on energy were implemented. Merrill Lynch issues warrants on Venezuelan debt/equity conversion bonds. This marks the first public offering of warrants on Latin American sovereign debt.ⁱ
9207	Caracas exchange requires listed companies to provide quarterly reports.ⁱ
920928	Decree No.2530 providing for conversion of certain external public debt into equity came into effect.^a3
9211	A 2nd coup attempted.
9212	An automated transactions system was implemented at the Bolsa de Valores de Caracas. The municipal and gubernatorial elections saw large turnouts of voters with the ruling party winning only 8 out of 22 states.
9300	Banking crisis.^y
9303	Venezuela becomes first Latin American nation to launch interregional international bond offering simultaneously in Colombia and internationaly.ⁱ
9304	Standard and Poor's lowered Eurobond outlook to negative from stable.ⁱ
9310	A 10% value added tax on wholesalers and importers was implemented on Oct. 1.^p
931028	The new banking law was approved. The law will come into effect on 01/01/1994 and allow foreign participation in the financial sector.^a3
9311	Legislation was passed in early November which opened the Venezuelan banking sector to foreign investment, effective January 1, 1994.
9312	On Dec. 5, Rafael Caldera, the populist independent candidate, won the presidential elections with 30% of the votes.
9401	A 10% value added tax on retail sales was approved to start on January 1. Bank stocks opened to foreign investors.
9402	President Caldera officially assumed the office of the presidency on Feb. 2.
9404	April 26, resignation of central bank President Ruth de Krivoy.
9406	Exchange and price restrictions imposed. Government fixed exchange rate. This action effectively prohibited repatriation of capital.
9411	Resolution 41 passed attempting to alleviate restraint of the fixed exchange rate on the repatriation of foreign capital. In practice the resolution has little impact.
9412	The central bank moved to suspend sales of zero-coupon bonds during two consecutive weeks. Congress also authorized the government to sell Bs 160 billion (10% of the 1994 budget) in Treasury notes to enable Venezuela to complete the 1994 payments on its non-restructured debt.
9400	Banking crises (1994-1995): insolvent banks accounted for 30% of financial system deposits. Causes: (1) liberalization of financial system without adequate strengthening of regulatory and accounting framework as well bank supervision; (2) poor lending decisions, deficient bank management; (3) collapse of bolivar; (4) overbanked system.^a2
9504	The listing of Brady bonds on the Caracas Stock Exchange on April 7 proved to be a significant event for equities. Two days after the Brady listing, the Exchange Control Board ruled that Brady bond trading in Caracas was illegal.
9506	The Venezuelan cabinet allowed Brady bond trading to resume, fueling fresh demand in equities. The approval of Brady bond trading has the de facto effect of allowing foreigners to repatriate capital earnings and implies effective currency convertibility.
9507	Restoration of political and economic rights for Venezuelan citizens encouraged investors to return to the stock market.
9510	President's decision to seek emergency loan from the IMF caused confidence in the market to increase substantially. On Oct. 27, Venezuelan officials passed a new law relaxing exchange controls for tourists, who can now exchange their dollars at the market rate drawn from Brady bond trading.
9511	On Nov. 29, the IFC replaced Venezuela's official exchange rate (fixed at BS70 per dollar) with the implied exchange rate derived from Brady bond trades (then about BS344 per dollar) for dollar calculations of the IFC index.
9512	On December 11, the government announced a long-awaited devaluation of the official bolivar exchange rate, reducing its value by 41% to BS290 per dollar. State oil company, PDVSA, concluded its auction of ten potentially oil-rich tracts.
9604	New foreign exchange regime implemented on April 22, when the government liberalized the exchange rate and substituted the fixed rate BS290 to the dollar with a floating market rate. The rate was BS498.6 on the first day close.
9500	1994-95 insolvent banks accounted for 30% of financial system deposits, estimated losses put at over 18% of GDP. Causes: (1)liberalization of financial system without adequate strengthening of regulatory and accounting framework as well as bank supervision; (2)poor lending decisions, deficient bank management; (3) collapse of bolivar; (4)overbanked system. Government's resolution mechanism: (1) government provided financial assistance by state run guarantee fund to over 15 institutions; (2) Banco Latino was reopened after a 313 bn bolivar government bailout.
950422	Exchange controls were eliminated.^a3
9607	Floating exchange rate ended with creation of foreign exchange band system.
9608	Sale of Banco de Venezuela scheduled for Aug 29.
9609	Inflation rate topped 115% in September. Government delays sale of Banco de Venezuela.
9611	Successful partial privatization of the government's remaining 49% in the national phone company, CANTV, lent credence to the government drive to implement market reforms.
961126	Banco Provincial was the first commercial bank authorized to operate as a universal bank.^a8
9612	Stocks rose following the successful government sale of Banco de Venezuela, which lent credibility to the government's economic reform plan.
9701	The new exchange rate system that was initiated in early January did not cause a great change in sentiment in the equities market. Foreign interest diminished amid a rise in labor unrest.
9704	Investors looked to the government's planned privatization, including the sale of state-controlled aluminum companies.
970416	(Controls on derivatives and other instruments) Regulations related to the derivatives market were introduced.^a3
9705	Venezuela due to auction operating contracts for 20 oil fields in June in its 3rd round of oil sector liberalization.
9707	The 23% gasoline price hike.
970731	(Controls on personal capital movements) Financial institutions were required to report to the Superintendancy of Banks transactions made by the clients in foreign currency.^a3
9708	The reserve requirements for commercial banks will be increased from 15% to 17% effective August 11.
9709	$1 billion worth of 30-year bonds would be issued. Venezuela's Futures and Options Market began trading stock futures.
9710	Drop in Hong Kong's Hang Seng index.
9711	No-confidence vote against Finance Minister Luis Rual Matos Azocar. The collapse of Yamaichi Securities in Japan.
9712	Finance Minister Luis Rual Matos Azocar resigned.
9800	The introduction of the Insider Trading Laws.^a4
9801	A decline in oil prices to their lowest level in two years. The central bank sold at least $80 million to prevent the currency from sliding.
9802	Government sold up to 89 billion balovars worth of certificates of deposit. Approval of sale of four state aluminum companies by the Venezuelan Congress.
9803	An agreement by nine countries to cut production by 1.15 billion barrels per days resulted in the biggest one-day gain in crude oil prices in seven years.
9804	The central bank posted an 18% year-to-date drop in its foreign reserves. An electricity rate freeze. A 28-day certificates of deposit rose to 37%, the highest levels in two years.
9805	Two leading privatization officials resigned.
9806	Oil price decreased to 12-year lows.
9809	The government announced $540 million in deficit-cutting measures.
980909	(Controls on capital and money market instruments) CNV suspended the issue of commercial paper by nonresidents.^a3
9811	The government agreed to grant rate increases to the telephone and electric companies.
9812	Hugo Chavez won the president election on December 6. He suggested that he would reduce crude output in accordance with OPEC targets as well as tackle the gaping fiscal budget deficit by laying-off civil servants and clamping down on tax evasion.
9903	Congress granted President Hugo Chavez unprecedented legislative powers for a six-month period, empowering the president to legislate by decree on a wide range of subjects, from taxation to government spending.
9904	The government announced a 0.5% financial transactions tax on April 29.
9905	Congress acquiesced, passing the "Enabling Laws", which empowered the president to legislate by decree on a wide range of policies, from taxation to government spending.
9907	Chavez called elections for a newly created Constituent Assembly charged with the task of drafting the new constitution in the hopes of resuscitating Venezuela's political and judicial system. The newly-elected Constituent Assembly immediately usurped power from the existing legislature.
9908	The legislators were prevented from occupying congressional chambers and the Assembly took over many of the legislature's powers.
9909	The president traveled to the U.S., reassuring officials and investors that he remained committed to meeting debt repayment schedules as well as OPEC production limits.
9912	The government won popular support for the new constitution. But catastrophic floods left up to 50,000 people dead or missing. The new constitution renamed the country the "Bolivarian Republic of Venezuela", expanded the government from three to five structures including a "civic" and "moral" power, and abolished the bicameral legislature in favor of a unicameral National Assembly.
200002	President Chavez announced a set of tax breaks to boost foreign investment, including an end to the financial transaction tax and a reduction in the value-added tax. But the central bank governor talked of capital controls to ease pressure on the bolivar. Francisco Arias, a former allay of the president, emerged as his opponent in the upcoming presidential elections.
200006	The U.S. power giant AES completed the purchase of Electricidad de Caracas.
200007	Hugo Chavez was re-elected with a reduced mandate in the July presidential elections.
200009	Venezuela oil basket averaged US$30.30 per barrel, up about 49% from the year before. The central bank used the strong bolivar to keep an anchor on nominal prices.
200011	CANTV would lose its telecommunications monopoly after November.
200103	Petroleum workers and schoolteachers went on strike.
200104	President Hugo Chavez took steps to move closer to integrating into regional trade blocs. Venezuela, Colombia, and Mexico relaunched the G-3 trade bloc, originally established in 1994. The Central Bank cut its bank loan rate by 6% points to 32%.
200106	The country formally applied for associate membership in the Mercosur trade bloc.
200107	Minister of Finance Jose Rojas resigned.
200111	President Chavez appears on TV to hail 49 reform laws which his government has introduced in the past year. The laws - including land and oil industry reforms - were passed under powers which did not require them to be approved by the National Assembly. Chavez says the laws will help the nation's poor; critics say they will put jobs and the economy at risk.
20011114	OPEC announced its decision to cut 1.5 million barrels per day of oil output starting Jan. 2002. The government ran into conflicts with private sector over the land reform bill and hydrocarbons bill.
20011211	Venezuela's main business association calls one-day strike in protest against Chavez's controversial economic reforms, especially a new land law that gives the government the power to expropriate estates and agricultural land deemed to be unproductive.
20020214	Venezuela's national currency, the bolivar, plummets 25% against the US dollar after the government scraps five-year-old exchange rate controls
20020225	Chavez appoints new board of directors to state oil monopoly Petroleos de Venezuela in move opposed by executives.
20020409	Trade unions and the Fedecamaras business association declare general strike to support Petroleos de Venezuela dissidents. Chavez vows to crush strike.
20020411	Some 150,000 people rally in support of strike and oil protest. National Guard and pro-Chavez gunmen clash with protesters - more than 10 are killed and 110 injured. Chavez shuts down coverage of violence by TV stations. Military high command rebels, demands Chavez resign
20020412	Armed forces head announces Chavez has resigned, a claim later denied by Chavez. Chavez is taken into military custody. Military names Pedro Carmona, one of the strike organisers, as head of transitional government.
20020414	Chavez returns to office after the collapse of the interim government.
200210	Chavez says security agents foil another plot to topple his government. Workers stage national strike to press Chavez to step down or call early elections. Group of senior officers goes on TV calling for civil disobedience, alleging government is corrupt and has impoverished the nation.
200212	Opposition strike cripples the oil industry. Organisers demand that Chavez resign. The weeks-long stoppage leads to fuel shortages.
200302	Shops, factories and universities re-open after nine-week general strike.
200305	Government, opposition sign deal brokered by Organisation of American States (OAS) which sets out framework for referendum on Hugo Chavez's rule.
200308	Opposition delivers petition with more than three million signatures demanding referendum on Chavez's rule. Electoral body rejects petition saying it fails to meet technical requirements.
200312	Second petition demanding referendum on rule of Hugo Chavez is delivered. Opposition says it contains 3.4 million signatures.
200403	Several people are killed and many are injured in clashes between opponents and supporters of President Chavez.
200406	Election officials say opponents of President Chavez have gathered more than enough petition signatures to trigger a referendum, set for 15 August, on his term in office.

Year	Regulations on Foreign Investors
1995	Restrictions: 1. There are no additional restrictions on foreign investors, but they are regulated in TV and radio broadcasting; Spanish language newspaper ;or professional services regulated by national laws. 2. Portfolio investments in domestic companies must be reported annually to the Superintendency of Foreign Investment (SIEX). 3. While dividends and capital gains can be repatriated, the foreign investor must first register with the SIEX and then before the Technical Office of Foreign Currency Administration (OTAC). Taxation: There is no tax on dividends and capital gains. But a 1% tax is levied when selling securities.^{a5(first entry)}
2001	The Venezuelan political and business classes have gradually become more pro-foreign investment as the decade has progressed. Legislation by the Constitutional Assembly promised a better framework for foreign investors in general, but the arrival of President Hugo Chavez caused a great deal of uncertainty, particularly after the so-called enabling laws enacted by decree in 2001. Amongst other things these measures strengthened state control over oil exploration and drilling and reformed land laws in order to redistribute idle privately owned rural estates to the poor, raising concerns over property rights. In reality, however, and despite the rhetoric, the Chavez government has taken a pragmatic line, welcoming foreign investment
2003	No changes through 2003

last updated 7/8/04 by Jerome Mo, Duke Univ.

The Venezuelan political and business classes have gradually become more pro-foreign investment as the decade has progressed. Legislation by the Constitutional Assembly promised a better framework for foreign investors in general, but the arrival of President Hugo Chavez caused a great deal of uncertainty, particularly after the so-called enabling laws enacted by decree in 2001. Amongst other things these measures strengthened state control over oil exploration and drilling and reformed land laws in order to redistribute idle privately owned rural estates to the poor, raising concerns over property rights. In reality, however, and despite the rhetoric, the Chavez government has taken a pragmatic line, welcoming foreign investment

2003 No changes through 2003

last updated 7/8/04 by Jerome Mo, Duke Univ.