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Latino Daily News

Thursday January 23, 2014

Venezuelan Government Restricts Access to “Cheap” Dollars

Venezuelan Government Restricts Access to “Cheap” Dollars

Photo: Bolivars and Dollars

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Venezuela’s government on Wednesday restricted access to dollars at the lower preferential rate, which will be reserved for purposes deemed essential such as purchases of medical supplies, food and industrial machinery.

For non-essential items, individuals and companies now must resort to weekly auctions to acquire dollars at a more expensive rate than the official 6.3 bolivars per dollar, Vice President Rafael Ramirez said.

“If it’s not food, machines, capital goods, if it’s not a turbine, an engine ... if it’s not chemicals for industrial activity, if it’s not in the import plan, go to Sicad,” he said in a press conference.

The change affects Venezuelans planning to travel abroad, who must pay the rate on offer in the Complementary System for the Administration of Foreign Currency, or Sicad, which is currently around 11.3 bolivars per dollar.

Venezuela is on the road to a “new currency exchange system” with a band whose floor is the official rate, Ramirez said, expressing confidence that the new packet of measures will have a stabilizing effect on the economy.

He said it was unjustifiable to continue administering scarce greenbacks at the preferential rate to travelers and people sending remittances overseas, saying people received $8.6 billion last year for those purposes.

“Everyone in this country has the right to travel ... what we’re saying is ‘we’re not able to give a preferential rate to those who travel,’” Ramirez said.

“We’re going to maintain the preferential rate for more than 80 percent of supplies, products and services the country needs,” he said.

Others retaining access to the preferential rate from the Commission for the Administration of Currency Exchange include students going abroad.

Leftist-led Venezuela has maintained strict currency controls since 2003, setting up a system in which the state is the sole supplier of dollars to private citizens and companies.

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