PDVSA, Venezuela's state-owned oil company, is expected to issue a bond for at least $2bn this month, easing its mounting cash flow crisis and stemming a heavy depreciation in the black market exchange rate.

Buffeted by declining oil revenues, PDVSA's ability to pay contractors and the government's ability to satisfy demand for dollars - which it has regulated since introducing capital controls in 2003 - have been seriously weakened.

Although Venezuela's currency, the bolivar, has been fixed at 2.15 bolivars to the dollar since 2005, its value on the parallel market has fallen from about 3.4 last August to a low of more than 7 bolivars late last month as the government has cut back supply of official-rate dollars in an attempt to protect its dwindling oil revenues.

This has forced companies in this import-dependent country to resort to the parallel market to buy dollars at as much as triple their official price, aggravating runaway inflation.

In spite of the costs for the government of maintaining a greatly overvalued currency, with inflation increasing 125 per cent since it was fixed at its current rate in March 2005, authorities are not likely to implement an official devaluation any time soon.

For one thing, analysts say that PDVSA has been using the parallel currency market to receive the much higher unofficial rates when exchanging its dollars earned from oil sales for bolivars, which it needs to pay a large backlog of invoices - perhaps more than $10bn - to oil service suppliers and contractors.

The forthcoming bond will effectively enable PDVSA to pay about $4bn of invoices by selling just $2bn of debt.

That is because the bond is likely to be denominated in dollars but payable in bolivars at an implicit exchange rate of roughly double the official rate.

Analysts with knowledge of the bond issue, expected to be a two-year zero-coupon bond yielding about 16 per cent, say it will not be available to international investors and thus will not affect yields on existing PDVSA or sovereign debt - one of the best performers in emerging markets this year.

After a big sell-off last year, investors are beginning to appreciate Venezuela's relatively benign debt profile, with a default considered unlikely.

Nevertheless, the bond will only be a short-term solution to the pressures in the parallel currency market.

By denying more and more Venezuelans access to official-rate dollars and forcing them to use the parallel market, economists argue that this implies a de facto devaluation.

The government insists that devaluing the official rate would aggravate already high inflation.

Asdrúbal Oliveros, an economist at Caracas-based consultancy Ecoanalitica, argues that, without a more consistent strategy to satisfy demand for dollars on the parallel market, the prognosis is bleak.

Not only will inflation quicken but businesses will import less and the problem of shortages will become more generalised, while the parallel exchange rate will simply continue depreciating.

"The sky's the limit," he says.