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Did Tareck El Aissami just announce the end of exchange controls, chavismo’s goose that laid the rotten and profitable eggs?

In a speech before the National Constituent Assembly —weirdly called a “debate,” when there was nothing to debate—, El Aissami announced the repeal of the Exchange Crimes Law and of an article in the Central Bank Law that forbids foreign exchange transactions in the country. Said like that, it appears to be the end of chavismo’s exchange controls, easily the most economically-devastating policy of chavismo.

History has taught us to doubt any exchange policy announcement by this government.

But history has taught us to doubt any exchange policy announcement by this government. In the not-so-distant past, they’ve announced numerous exchange systems in which the rates would be set by “supply and demand” and even the hated “markets.” People would be able to exchange as much as they wanted, they said. Buy and sell, no limits whatsoever. SITME, SICAD, SICAD 2, SIMADI, DICOM, DICOM-Let’s-Try-Again.

In every case, the description of the new system sounded different from the previous iteration of controls, only to reveal another idiotic system with no other purpose than to hide the absence of a system. It was just some red-shirted guys sitting in a table, deciding who got what, taking their cuts (or taking all) and thinking of a number that looked random, but wasn’t.

The decree is vague and doesn’t say what happens with several key parts of the exchange controls. For example, it’s unclear if the Convenios Cambiarios are still in force. These exchange agreements govern how the government sells dollars to the Central Bank, and how the bank, in turn, sells them to people and financial institutions. What’s more, El Aissami said people would be able to “go to a bureau de change and make any exchange transaction.” Well, you can do that already! Albeit at an official rate that’s below the black market rate.

At the moment, it looks like the government is more interested in getting people to sell their dollars legally… and not so much in buying and sending abroad.

Tellingly, he didn’t mention banks, which would be the way you’d send money abroad. At the moment, it looks like the government is more interested in getting people to sell their dollars legally —get their piece of the remittances from the diaspora—, and not so much in buying and sending abroad.

As much as we’d like to see the end of exchange controls, it’s difficult to fathom how the government could kill them now. They don’t have any dollars to sell in an open and free exchange market to keep the bolivar from devaluing constantly, so they’d have to let the market dictate the official rate. If they do, it won’t be pretty: as we have all seen recently, exchange rates devalue rapidly in hyperinflation. The logistics would also be difficult to manage, since the government is finding it hard to make transfers abroad, thanks to FinCEN’s money laundering warning.

So let’s wait until they open the box of whatever they just approved in the ANC before we decide whether the exchange controls are dead. Once they do, you can decide by yourself by answering a simple question: Can I transfer abroad whatever amount of money I want to?

If you can’t, then the goose is alive.

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33 COMMENTS

  1. The exchange control (aka the MONOPOLY) stays the same, they’re simply decriminalizing the enchufados’ exchange houses that will keep STEALING the remittance dollars by buying them at 2.5 million bs (It’s actually at almost 4 million)

  2. On a related topic, can someone explain why the free market exchange has barely moved in the last month, while prices(inflation) are skyrocketing?

    • Exchange houses in the border belong ALL to enchufado garbage.

      Prices keep going up because people know that the bolívar will eventually get more devalued soon.

    • “If you can’t, then the goose is alive.”

      Mrs. Guapo, is that you writing for CC?

      (Mrs. Guapo is always screwing up colloquialisms. Goose is cooked. Schrödinger’s cat? Alive or dead?)

  3. Guapo writes that way to show up. Finally the government is moving in the right direction. Guapo and others will stop enjoying the dollar party that has enriched numerous people, about USD 500 billion have vaporized using the most inescrutable ways.

    • “Finally the government is moving in the right direction” crazy thing to say .
      Heisenberg’s uncertainty principle could also be used .

  4. @Jose, what the heck are you babbling about! Are you accusing El Guapo of enriching himself at the expense of the Venezuelan people??? I guess you have not read any of his posts regarding the trials and tribulations of trying to help his wife’s family escape from the madhouse known as Venezuela. If that is what you are accusing him of then you are completely clueless.

  5. If they finally free up the FOREX market, with no restrictions whatsoever, the immediate consequences will include a substantial appreciation of the Bolívar (whatever Fuerte, Soberano) and this had to be done before releasing the gasoline price control and Aug 20. There will be blood if the ignoring masses realize all they earn is probably a dollar a day, like many countries in Africa. But this is really like a war, there will be direct and collateral damage. Corruption will have to turn back to drug deals or other ways to keep up their life style.

    This is the only way out: let the gasoline not be free anymore, let’s the free market dictate the relative value of everything; they also have to stop taxing both imports and particularly exports, etc.

    Venezuela could be lucky enough to reduce the recovery time from never to a few decades.

    But who will stop the “habla paja” in this blog?

  6. I’m persuaded that Venezuela is full of two people: ingnorants and corrupt. Since long time ago.

    If all what the government is doing is what I think, then be prepared. “El Caracaso” will be nothing.

  7. @Jose…you owe El Guapo an apology. You know it and I know it. I hope you are man enough to give an apology where it is owed.

  8. 😆 😂 the “opposition” is in total panic because the dollar will be free (I don’t believe this will happen) but what are the options left? The government has no credibility in the lending markets. They can only recover some credibility if the two main commodities: gasoline and the dollar are free of restrictions, the gasoline at the new Soberano currency will cost approximately USD 0.5/LTR and the dollar on August 20 will be curiously around 4.30 BSV/USD. This will be chaos for the majority of poor ignorants. But even worst for those living from the ensuing corruption of the present scheme.

    Did you all know that you can fill up your tank for nothing, almost 0.00005 USD/gallon. A fish-the boat can fill in 1000 liters of gas and sell it in Aruba at half the local price and will make in a single trip $4000. Go back to Venezuela and do this over and over again. The boat owner will be bloody rich in a few days.

  9. Yes, I apologize to el guapo. Sincerely sorry about my enthusiasm running wild because I see for the first time a way out. Sorry Guapo for picking up on you.

  10. @Jose…eres un hombre! We all know that things are terrible and getting worse and we all hope that somehow, in some way, an answer will be found that will lead out of this horrible mess. Unfortunately, it will probably get even uglier, maybe much uglier before it better. Good luck to you.

  11. There is not a single thing the ANC decides…

    Not one…

    That should be open for discussion.

    They are an illegitimate body whose decisions should NEVER be accepted as a positive step towards democracy and a free Venezuela. Every fucking member should be lined against a wall and shot.

    But that’s not what evil Imperialists do, do they? That’s the realm of communist bastards like Castro, Mao, Stalin and others.

    The ANC has to be IGNORED. They’re illegitimate.

    • Cool. Let’s say they do eliminate the exchange controls (unlikely, I know, but let’s dream for a minute). Should Venezuelans refrain from using the now legal wire transfers abroad just because the measure was approved by the ANC? They shouldn’t use the free, floating exchange rate?

      Similarly, let’s say the ANC lifts price controls. Should Venezuelans demand in supermarkets to be charged the old controlled prices because the news prices are the result of a decree from the ANC? Should store owners keep selling at the old prices, and use the formula from the old price control law, in defiance of the ANC?

      Come one man. Get a grip.

      • Forget the controls, Venezuelans love control. If the markets are free again, the supplies are enough to keep up with the demand at the right selling price (Gross Profits include a market-driven benefit), it’s going to be very hard for 90% of the population so that they’ll soon find the smallest currency denomination is BVS 0,50 (BVF 50000), in other words, nothing will cost less than 0,50/unit. Ie a litter of gasoline will cost at least 0,5 BVS (You may want to purchase half a litter but the seller will still charge 0.5 as there is no way he can collect 0.25. This sounds crazy. The point is if gasoline is priced at BVS 50 cents/Liter this almost 10000 times the current price 6 BVF/liter (= BVS 0.0006). Then if I assume nothing changes and controls remain in place, a full of gas would cost BVS 0.036. This is an impossibility, how would I pay this amount with the smallest denomination BVS 0,50? Please help

      • You’re the one who needs get a grip:

        You’re the reason Chavismo doesn’t have an opposition. Sheer stupidity.

        You keep getting sucked into giving the government more power, as opposed to removing the power they shouldn’t have.

  12. @Tom in Oklahoma: I’m safe. I’m a US citizen since 20 something year’s ago. Before that a French. Why do I worry: because of I miss the opportunity to become hyper-rich but my father was against it, so I decently live from my job.

    Guys I don’t care about ANC or AN, this government has the unique opportunity to solve everything by Aug 20. Gas will be around USD 0,5; dollar around 43 BSV/USD, and 🥘, etc accordingly. If they free up those markets, then I bet the dollar will fall to $25 BSV/USD. Even more. The government will require credibility to attract foreign companies again, 10 to 20 years. But there will be blood. There is no way out whatever bloggers here say

    • Jose you say,
      “The government will require credibility to attract foreign companies again, 10 to 20 years.”
      As i have said many times on this blog for 2 years, the financial landscape will mirror Zimbabwe, including the eventual dolarization.
      Foreign investment will not enter this country with this government in place, and they, will not free the markets.
      Direct investment will only come once a new government(non chavista) takes power, PDVSA is destroyed and Western companies start to run and finance the oil industry, only then, once their due diligence is finished, will independent companies look at the risk v reward of investing here.
      Thinking that things will be solved by their (Chavista) actions by Aug 20th is ridiculous, there is no credibility around internationally for this country, you must seriously live in a bubble of fluffy toys and rainbows.
      Infact do you still have your nappy changed? a fair question from reading your other comments.

  13. Even if they removed exchange controls tomorrow it would not fix the core issues ailing Venezuela – A titanic budget deficit of 20% of GDP being financed by money printing, extreme regulations, nationalizations and the complete lack of property rights and the rule of law.

    Investments a.k.a. fresh dollars, will not be arriving to Venezuela anytime soon as long as a tyrannical government that has lost all credibility is still in power. The dollar will keep skyrocketing as long as the money printers are running and the bus driver remains in the seat.

    It is ironic, because auterity in Venezuela today should be extremely easy to implement. There is nothing left to destroy. The State has basically collapsed and needs to be rebuilt from scratch. Firing public employees will not result in economic hardship, for the hardship is already there. The situation is so dire the state workers are deserting their jobs on their own.

    The only obstacle to a Venezuelan recovery is a crony “bolivarian” elite which is siphoning off the little remaining oil wealth for their personal gain. Perhaps nowhere in the world is this exploitation so blatant and obvious than in modern Venezuela. A literal mafia state built on slavery and open cronysm.

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