("Venezuelan Opposition: If Chavez Loses, FX Controls Wouldn't End Immediately," published at 2:45 p.m., failed to note in headline that stance was that of just one opposition candidate. The correct version follows.)

-Capriles says Venezuela FX controls shouldn't be lifted suddenly

-Changes in currency policies would have to be "gradual"

-Capriles aims to restore private sector confidence, promote competition

-Citing lack of data, Capriles unable to give specific reform prescriptions

 
   By Kejal Vyas and Ezequiel Minaya 
   Of DOW JONES NEWSWIRES 
 

CARACAS (Dow Jones)--Even if President Hugo Chavez is voted out of office next year, Venezuela's strict capital controls would have to stay in place to ensure stability in the bolivar currency, the leading opposition presidential candidate said.

Dollar transactions are currently illegal in the South American nation unless conducted through the government.

Although the system is unsustainable and weighing on private-sector investment in the oil-rich country, it must not be changed immediately, so as to avoid runaway bolivar depreciation and a rise in the already sky-high inflation rate, Miranda state Gov. Henrique Capriles Radonski told Dow Jones Newswires.

"We can't let go of currency controls until the conditions exist in our country for…investor confidence," he said, adding that any changes would have to be "gradual."

Since imposed by Chavez in 2003 to prevent rapid capital flight, Venezuela's currency regime has posed challenges--including repatriation of profits--for multinationals operating in the country. Local importers complain about limited access to the hard currency necessary to do overseas business. That has been among the contributing factors to the creation of a black market for the greenback, where the value of the bolivar is nearly half of the official rate of VEF4.3 per dollar and many see as partially responsible for the country's inflation of nearly 27% annually.

How to manage the system is among the top economic questions facing the handful of candidates angling to face off next year against Chavez, who is also grappling with an economy that contracted in 2009 and 2010 and still faces frequent power shortages. Rampant crime is another leading campaign issue.

Capriles, a 39-year-old former congressman and mayor, is leading other opposition candidates with nearly 40% support in polls ahead of February primaries, according to local polling firm Datanalisis. With the general election scheduled for October 2012, a recent poll showed Capriles presenting a real challenge to Chavez.

Capriles says his vision for the Venezuelan economy is in complete contrast to that of Chavez, who under his "21st Century socialist revolution" has nationalized wide swaths of the economy, including such sectors as energy, power, mining and basic materials producers. He has also seized scores of urban properties and large tracts of rural lands.

But without reliable government information, Capriles says he and his economic advisors are unable to give specific reform prescriptions.

The state-owned oil company, Petroleos de Venezuela, or PdVSA, belongs in government hands, but accords between the country's lifeblood industry and international partners like China and Russia would be reviewed under a Capriles presidency, he said.

"We need to see what is favorable for Venezuela," he stated, suggesting that the agreements are opaque.

A major challenge is that the government does not regularly publish certain economic data and seldom releases details on international deals.

"Neither I, nor you, know how much PdVSA is producing right now," Capriles said.

Indeed, while oil makes up nearly 95% of Venezuela's exports, PdVSA has simply stopped publishing production and export data since June. It also terminated a contract with an auditing company in March.

Oil Minister Rafael Ramirez has repeatedly stated that Venezuela produces 3 million barrels a day while the last numbers to be published by his ministry say production is closer to 2.7 million. Others like the Organization of Petroleum Exporting Countries, of which Venezuela is a founding member, and the International Energy Agency put the output figures even lower than that.

Capriles said he aims to regain private sector confidence with "legal security" and transparency, but it remains to be seen what he will do with property that the Chavez administration has seized during its 12 years in charge.

The governor said he would look for ways to increase competition in the economy to bring down consumer prices.

Venezuelan bonds trading in overseas markets have gone on a volatile ride this year as investors take bets on the future of Chavez, who last week said he has won his battle with cancer.

Though high oil prices are seen cushioning the country's fiscal position and its ability to pay bondholders, the securities have also gained in value on hopes for a change to Chavez's statist policies, a sentiment that could intensify if an opposition candidate poses a serious challenge to the incumbent.

-By Kejal Vyas and Ezequiel Minaya, Dow Jones Newswires; 58-414-249-6821; kejal.vyas@dowjones.com