Mérida, 1st October 2013 (Venezuelanalysis.com) – Venezuela’s Central Bank will establish a new exchange rate for foreign visitors to Venezuela in a presumed bid to tempt tourists away from selling dollars on the black market.
Currency controls have been in place in Venezuela since 2003 to prevent capital flight, with citizens and businesses granted dollars at the official rate of 6.3 bolivars = US $1 for purposes such as travel, study and imports.
However outside of this official market dollars are currently sold for over 50 Bolivars = US $1, which is causing several distortions in the Venezuelan economy.
The government is currently implementing a range of measures to try and close the gap between the two rates and eliminate the need for the black market, such as by selling more dollars through an auction system and designing new mechanisms for official currency exchange.
Under the tourist exchange rate scheme currency exchange points will be set up in airports and ports, where incoming tourists can buy bolivars and have these loaded onto special cards for use in cash and card machines. Foreign credit cards will also use the special rate when swiped.
Upon leaving the country travelers will be able to buy back up to 25% of the dollars originally sold.
While the exact exchange rate the transactions will be processed at is yet to be published, it is considered likely that it will be around or above the rate of the Sicad currency auctions, whose average is thought to be 11 bolivars = US $1.
The move seeks to regularise currency transactions for tourists and develop a mechanism so that foreign visitors are not pushed into using the black market. Nevertheless, some argue that as long as tourists are able to sell their currency for a higher rate at the black market, the scheme will not achieve the desired effect.
“While the problem of the gap between the official and parallel dollar isn’t resolved, the new agreement is nonsense,” said Asdrubal Oliveros, director of the financial consulting firm Ecoanalitica, which is critical of the government.
Combating currency fraud and corruption
Authorities are also combating instances of fraud and corruption around the country’s currency exchange laws.
The Venezuelan government argues that the rising price of the dollar on the black market, along with the country’s 49.4% inflation rate and shortages in some basic foodstuffs, are the result of an “economic war” being waged by business sectors aligned with the conservative opposition.
The opposition meanwhile argues that “government mismanagement” and interventionist policies are to blame for the situation.
Two Lebanese nationals were arrested on Wednesday for allegedly making fraudulent requests for official-rate dollars for family remittances.
Their cases join several others under investigation, such as five motor sport drivers suspected of defrauding the state of US $60 million, and importers of fake medical equipment who kept the dollars granted for themselves.
The ministry of justice and interior affairs has put out an order for the arrest of the former president of the state’s National Urban Transport Fund, Miguel Angel Rojas, who is suspecting of misusing public funds in the processes of awarding contracts, while also serving on the board of a property company with a branch in Miami.
The investigations also form part of the government’s renewed fight against corruption, launched by President Nicolas Maduro after his election in April.