In Venezuela the central bank is looking got ways to expand the supply of bolivars at the weaker of two official exchange rates in a bid to attract more dollars into the economy. (AP Photo/Leslie Mazoch)

CARACAS, Venezuela — Venezuela’s central bank is considering ways to expand the supply of bolivars at the weaker of two official exchange rates in a bid to attract more dollars into the economy and to avoid a full-blown devaluation that economists say is needed to narrow its budget deficit.

The central bank may expand the purchase of dollars at a rate of 5.3 bolivars to persuade foreign companies to bring more greenbacks into the country, said the official, who spoke on condition of anonymity because no final decision has been made. Today, most companies have to sell dollars at the 4.3 rate because there isn’t enough supply at the weaker rate.

The government isn’t considering a devaluation at the moment given its strong balance of payments, the official said. The goal is to improve the supply of dollars while keeping in place existing currency controls, he said.

Though it is South America’s biggest oil producer, Venezuela faces shortages

Last week the government took its first step to increase the supply of dollars in the economy by channeling more of its oil exports revenue to the central bank. South America’s biggest oil producer is facing shortages of goods ranging from diapers to cars as the lack of dollars crimps imports. In the black market, the bolivar has weakened 53 percent to 18.39 per U.S. dollar in the past year, according to Lechuga Verde, a website that tracks the rate.

The changes that will allow the central bank to supply bolivars through the Sitme will need to be approved by Congress, the official said. Rules today allow the central bank to trade only with dollar-denominated bonds.

Analysts surveyed by Bloomberg expect Venezuela to devalue its 4.3 per dollar rate in the second quarter by a median 33 percent to 6.4 per dollar.

Chavez illness prompts delays

The move, initially expected to happen in the first three months of the year, will be pushed back as President Hugo Chavez’s battle with cancer delays economic decision-making, according to a survey with 12 analysts.

A devaluation of 40 percent would narrow the country’s budget deficit by 4 percentage points of gross domestic product, Ben Ramsey, an analyst at JPMorgan Chase in New York, wrote in a Feb. 1 research note. The measure would help trim the gap by increasing the amount of bolivars the government gets for taxes on oil revenue, he said.

Venezuelans use the black market when they can’t get access to the central bank’s Sitme exchange, which sells dollars to businesses for 5.3 bolivars, or the so-called Cadivi system that sells dollars at 4.3 bolivars for priority imports.

About 70 percent of products consumed in Venezuela are imported or assembled from raw material that is imported, Emilia Peraza, an adviser at the Consecomercio trade chamber in Caracas, said yesterday in a telephone interview.