Morgan Stanley has warned that Venezuela may face a demand of USD 61.8 billion in 2010 and USD 65.9 billion in 2011. The investment bank stressed that in an economy that gets 95% of its foreign currency from the sale of oil and byproducts, there is great uncertainty regarding the volume of Pdvsa's oil production and exports, and doubts about the price of such negotiations or whether they are paid in foreign currency.

Morgan Stanley added that as a result of oil exports to countries in Asia, the Caribbean, Central and South America, which represent about 40% of total exports of 2.7 million barrels per day, Venezuelan oil revenues could total USD 50.8 billion in 2010 and USD 55.1 billion in 2011, which would result in a USD 17 billion deficit. Morgan Stanley said that there is evidence that Venezuela would be facing a foreign exchange crisis.

The Transaction System for Foreign Currency Denominated Securities approves USD 40 million per day, an amount that does not meet market expectations. This is the reason why the Venezuelan productive sector has been waiting for Pdvsa bond issue to meet their currency needs.

Economist Mr Ángel García Banchs said that the implicit exchange rate of the issue would be about VEB 6 per US dollar, and it would adjust later to VEB 5.3 per US dollar, after the market absorbs the punishment that would affect the bond when the government starts to pay in foreign currency.

The economist warned that the issue is likely to be bought by the Central Bank of Venezuela and private and state run banks to feed the Sitme and only a small part of the USD 3 billion would be sold to natural persons and companies.

(Sourced from www.eluniversal.com)