Caracas Chronicles

Just when you thought the government’s arcane currency control system couldn’t get any weirder, along comes the Complementary System for Currency Administration (officially SICAD, though I still think my acronym is more a propos.)

We’ve already described the way SICAD creates red-tape on a scale Kafka might think up if you slipped some burundanga into his drink.  We’ve marvelled at the government’s determination to push ahead with a system that even the experts can’t make heads or tails of.

But we couldn’t have guessed that the allocation mechanism would be so bizarrely opaque, the published “results” of the first auction overlook one small detail: the actual price auction winners will have to pay for their dollars.

This is, in a very real sense, a devaluation to a secret exchange rate!

This may be down to the fact that the Ilícitos Cambiarios law makes it a crime to publish any exchange rate other than the official (though fantastical) CADIVI rate at Bs.6.30 per US$. As that’s the lowest bid allowed in SICAD auctions, we know the average winning rate must be above that. But it’s a crime to tell us how much above that. Bonito ¿no?

Then again, as commenter CACR notes, these guys are so far gone they’ve started legislating via press release. The first auction’s convocatoria – the official announcement sent out by the Central Bank telling banks when and how they would hold the first auction – set out a new “Fondo Nacional de la Renta Petrolera” – a new spending fund for the extra bolivars above the official rate yielded by these dollar auctions.

But hang on a minute: convocatorias aren’t places to create spending funds. Convocatorias aren’t published in the Gaceta Oficial: they’re not laws, they aren’t even regulations. They’re public notices, something closer to a press release than a statute. And yet that, that’s what these guys are using to create multi-million dollar spending funds these days. No doubt the oversight on that one’s going to be water tight.

Come to think of it, I bet I can guess where the flying checks from that “Fondo Nacional de la Renta Petrolera” are going to be ending up…