An announcement about nothing

Merentes on the tambora The Expectation-Disappointment cycle around Venezuela exchange-mechanism announcements is so well established by now, we barely get our hopes up any more. Today was no different. There was little about today’s press conference that the public didn’t already know or that wasn’t already so. Much like that well-loved sitcom, today’s event with Rodolfo Marco Torres and Nelson Merentes was an announcement about nothing. Anabella, with her sharp eye for numbers, has the cliff notes ready for those of you who missed it:

1. 6,30 Bs/US$ rate for food and health is still a go, including the resources needed for manufacturing in these sectors.

2. Sicad 1 and Sicad 2 have been rolled into one to form new and improved Sicad, which will start at 12 Bs/US$ per the price held at the last auction. This exchange rate “will be raised or lowered according to the economy’s needs”, and it will be the marker for the almighty cupo viajero and cupo electrónico (which survived the widespread rumor of its disappearance).

3. All new “SIMADI” enters the picture (Marginal Currency System), as a third method with an exchange rate that will fluctuate according to the market forces -just like in the real world. How free is it? Not that free. There’s a daily limit of 300 US$ for purchases in this system, and the money must be transferred to dollar-denominated accounts in domestic banks. Businesses and private individuals, we’re told, will be able to buy or sell either currency at some 3.792 venues, such as banks and brokerage firms.

What impact, if any, will the continuation three-tiered system have on the economy? Unless you have no idea what’s been going on in the country in the last few years, you can imagine. If previous announcements are any indication, there’s little chance results will vary. That means more bachaqueo, inflation and scarcity. It’s a great opportunity to remember that less than a year ago, Sicad 2 was presented as the solution to the imbalances in the economy. Rafael Ramírez himself said in March 2014 that the sequel to Sicad would feature a free floating dollars with no price bands or fixed rates. The same goal was set out for Sicad 1 and for Sitme (remember Sitme?) back when they were new. What’s remarkable about today’s announcement is how similar it is to the one last March. As one regular put it on Facebook, the announcement gave us “pen déjà vu”: esta pendejada ya la hemos visto.  Are we jaded? How could we not be? Stop bothering us with announcements: wake us up when (and if) the system is actually put into practice.

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