Ricardo Villasmil, Henrique Capriles’ main economic adviser, is quoted as saying that a Capriles administration would legalize Venezuela’s parallel exchange rate, and would gradually move toward eliminating all currency exchange controls.
The Capriles camp had already announced that it would not do away with Venezuela’s nefarious currency exchange controls at the outset. Rather, they said they would maintain it with the hopes of creating the conditions for a future phase-out.
This reluctance to pledge an all-out dismantling of Cadivi created quite a debate when it was first reported.
Villasmil is now being quoted as pledging to legalize the secondary market. Venezuela would then move toward a formal, multiple exchange rate system, with more transparency and clearer rules. He says this would be a powerful signal of where things would be headed, and that they view it as a first step toward the end of CADIVI.
We have long argued on this blog that CADIVI is at the heart of Venezuela’s economic and moral decay. The opportunities for arbitrage by just playing the system are enormous for the well-connected and out of reach for ordinary Venezuelans. It may not be an exaggeration to say that Cadivi is the main reason why we have wasted away the massive oil boom we have been living through.
With oil going down the toilet, any administration that comes in after October 7th may very well have to do away with Cadivi. Regardless, it’s nice to hear our camp say it has to go as a matter of principle.