Centro Nacional de Comercio Exterior | |
Agency overview | |
---|---|
Formed | 2015 |
Preceding agencies |
|
Jurisdiction | Government of Venezuela |
Headquarters | Caracas |
Annual budget | US$50 billion (2009) US$30 billion (2010)[1] |
Parent agency | Ministerio del Poder Popular de Planificación y Finanzas |
Website | www.cencoex.gob.ve |
The National Center for Foreign Commerce (Spanish: Centro Nacional de Comercio Exterior, CENCOEX),[2] formerly the Commission for the Administration of Currency Exchange (Comisión de Administración de Divisas CADIVI), is the Venezuelan government body which administers legal currency exchange in Venezuela. The official buy/sell exchange rate was initially fixed at Bs.F. 4.28/Bs.F. 4.30[3] per US dollar (USD).
History
Period | System | Classification |
---|---|---|
1964–1983 | Fixed exchange rate | Free capital mobility |
1983–1989 | RECADI | Exchange Control |
1989–1992 | Floating exchange rate | Free capital mobility |
1992–1994 | Microdevaluations | Free capital mobility |
1994–1996 | OTAC | Exchange Control |
1996–2002 | Exchange Bands | Exchange Control |
2002–2003 | Floating exchange rate | Floating controlled |
2003–present | CADIVI and others | Exchange Control |
In 1983, a similar agency called "Differential Change Regime" (Régimen de Cambio Diferencial(RECADI)) was established to manage a system of differential exchange rates and capital controls,[5] and disbanded in 1989 when the differential exchange rate system was abolished.[6] RECADI saw widespread corruption, and became a substantial scandal in 1989 when five former ministers were arrested, although the charges were later dropped.[7]
Exchange controls under CADIVI were adopted on 5 February 2003 in an attempt to limit capital flight.[8]
In 2008, the Chávez government revalued the Venezuela currency by a ratio of 1:1000, thus creating a new currency known as the bolívar fuerte (Eng.: "bolivar") but kept the currency pegged to a higher rate against the dollar than the market value. Since 2003, this has created a scarcity of foreign currency, as confidence in the bolivar declined, and foreign exchange, especially the U.S. dollar, was in greater demand.[9]
Functions
According to the Bank for International Settlements, "The Central Bank of Venezuela (BCV) fixed a monthly allocation of foreign currency to be administered by CADIVI, purchases foreign currency from residents, and sells foreign currency to the public and private sectors subject to approval from CADIVI."[10] Under Venezuelan law PDVSA must sell its foreign exchange to the Central Bank, thereby providing the bulk of foreign currency in Venezuela. The Venezuelan private sector requires more foreign exchange for imports than it generates for exports, and is dependent on the Bank to satisfy the difference.[10]
Exchange rates
The agency makes hard currency available to importers at several rates, with the best rate, CENCOEX, the official exchange rate 1 U.S. dollar for 6.3 bolivars, available to importers of food and medicine. A double rate, Complementary System of Foreign Exchange Administration (Sistema complementario de administracion de divisas (SICAD I)), twice the official exchange rate but still favorable, goes to importers of culturally important items such as Scotch, popular in Venezuela, and Barbie dolls, again, popular with certain demographics. A third rate, Alternative Foreign Exchange System (Sistema cambiario alternativo de divisas (SICAD II)), quite unfavorable at 50 times the official exchange rate, is offered to other importers.[2] The black market rate, as of late December 2014, was 173 to 1 and rising rapidly. Publication of unofficial exchange rates within Venezuela is a crime; rates are published on external sites.[2][11]
Fraud
Fraud is widespread, with importers, regulators, and ordinary citizens stealing billions from the Venezuelan economy using one mechanism or another. Importers, for example, may simply sell the hard currency on the black market and not import anything, only part of what they declared, or at grossly exaggerated prices. A regulator may charge extra for exchange.[12]
See also
References
- ↑ Budget of Venezuela for 2010 "Venezuela's budget for 2010"
- 1 2 3 "Venezuelan Currency Controls and Risks for U.S. Businesses" (PDF). state.gov. U.S. Embassy Caracas. March 25, 2014. Retrieved 5 May 2015.
- ↑ CADIVI Convenio Cambiario 2, CADIVI
- ↑ "Del Recadi al Simadi: 40 años de sistemas fallidos". Prodavinci.
- ↑ George D. E. Philip (2003), Democracy in Latin America: surviving conflict and crisis?, Wiley-Blackwell. p. 143
- ↑ Kevin J. Middlebrook (2000), Conservative parties, the right, and democracy in Latin America, Johns Hopkins University Press. p. 130
- ↑ Damarys Canache, Michael R. Kulisheck (1998), Reinventing legitimacy: democracy and political change in Venezuela. Greenwood Publishing Group. p. 123
- ↑ CADIVI, CADIVI, una medidia necesaria Archived 2008-12-05 at the Wayback Machine
- ↑ "The Use of Foreign Exchange Controls to Promote Economical Stability". earnforex.com. Retrieved 8 July 2013.
- 1 2 Bank for International Settlements (2005), "BIS Papers No 24: Foreign exchange market intervention in emerging markets: motives, techniques and implications", May 2005
- ↑ BRIAN ELLSWORTH AND CORINA PONS (23 December 2014). "Venezuela currency controls make Scotch cheap as milk, syringes go short". Reuters. Retrieved 5 May 2015.
Maduro's government maintains three exchange rates assigned to different types of products: the best rate of 6.3 bolivars per dollar for food and medicine, an intermediate rate of around 12 called Sicad I for less important goods, and a "complementary" third rate of around 50 called Sicad II. The black market exchange rate is 1 dollar for 173 bolivars, and has depreciated 40 percent since the start of November.
- ↑ William Neuman and Patricia Torres (May 5, 2015). "Venezuela's Economy Suffers as Import Schemes Siphon Billions". The New York Times. Retrieved May 5, 2015.
The government's complex currency system has led to exorbitant schemes by importers, who wildly inflate the value of goods brought into the country to grab American dollars at rock-bottom exchange rates. Sometimes, they fake the shipments altogether and import nothing at all.