Ceci n’est pas une devaluation

magritte-la-trahison-des-imagesWith the advent of Magrittenomics, Maduro’s economic strategy enters its high surrealist phase.

If I understood right, the main bulk of foreign exchange operations will now be done through SICAD, a mechanism that  uses an exchange rate that is not actually published, nor the same between one dollar buyer and another, and inhabits an ambiguous netherworld between what’s private and what’s secret where the only thing we can say for sure is that it’s utterly, utterly discretional.

To be clear, CADIVI isn’t being abolished – banish the thought! – it’s merely being confined to its core roles: allowing food and medicine importers to develop their interest in the art of creative over-invoicing, and bankrolling the giveaway-to-the-parasitary-bourgeoisie also-known-as el raspaito by Venezuelans abroad.

Zut alors…

25 thoughts on “Ceci n’est pas une devaluation

  1. Je ne compreds rien!!

    When they say tourism, do they mean tourists that come to Venezuela or Venezuelans who travel abroad?
    Also, what about CADIVI for students?!

    At any rate this is not good news. SICAD is such an aweful system..

    • I think they mean to say:

      Venezuelans traveling abroad will get 1 USD for every 6.30 VEF using CADIVI.

      Froreign tourists traveling to Venezuela will get maybe 11-12 VEF for every 1 USD using SICAD as a reference. It’s a way encourage foreigners to use their credit cards so those USD go to BCV accounts, instead of having those foreigners buy dirt cheap VEF on the black market. (R)Izarra has had that in the works for quite some time (http://www.elmundo.com.ve/noticias/economia/politicas-publicas/dolar-turistico-fluctuara-a-la-tasa-del-sicad.aspx)

      • There is another way or reading this typically confusing govt announcement :
        1.- gov imports and essential food stapples and medical supplies will go through cadivi and recieve a 6.30 per $ exchange rate.
        2. Oil Investors and tourists will be able to sell their dollars (ultimately to feed the Sicad system) at a somewhat higher rate ( so as not to drive them away )
        3.- All others will have to buy their dollar through the Sicad Auction system which really is a system in which the govt case by case decides ( based on its own priorities and availabilities) what exchange rate it will apply for different types of buyers . This assures the govt total control over an always moving exchange rate which it sets in absolute discretion and which allows it to maximize the yield on its dollar sales and ration dollar allotments as the circumstances demand.
        As already pointed out this translates into a devaluation of the bs which ceases to have any known set or fixable value .

  2. They are going to run the exchange business the same way they appear to be doing to the inflation rate.

    Hide the numbers!
    That way there is no inflation & no devaluation.
    Pretty clever I’d say.

    It is now Dec.16 & still no inflation number for November.
    What happens if they have decided to just not publish the number?
    Does this end inflation? :-)

    • To paraphrase the age-old philosophical question on a tree falling in the forest … “If inflation rises or falls, and no one knows about it, it never happened.”

    • This almost always happens in hyperinflationary economies. But, only right at the end. I think Venezuela is far from the end. 16 Days is a low inflation developed-world time schedule for publishing previous month´s inflation data.

  3. Is there any information regarding the SICAD bureaucracy, i.e. how many workers, it’s budget, how much it costs, on average, to process each application?

      • I don’t think it takes too much people.
        * They set the arbitrary amount of dollars they want to burn, 100 million USD, for example.
        * Then they set up an arbitrary set of people who will be able to “bid”. (Students, travellers, car makers, bike makers, toy stores, Christmas tree merchants, etc).
        * Then people put their “bids” in local banks.
        * At the end it’s a game of “the price is right”. The people who got right the secret minimum and maximum cut off points with their “bids” get dollars. Those who dared offer too much money for dollars get nothing.

        Seems like the kind of thing that can be run using software and setting the parameters at will.

  4. OT: anyone have details about the new govt decree that requires tourist travelers to or from venezuela to buy mandatory health and luggage loss insurance for certain specific amounts and coverage lasting the whole duration of their trip which to be collected together with the fare by the provider of the tickets and which the latter to buy only from insurance companies approved by the relevant govt agency. I smell a big stinking ‘Cheese’ in this new measure !! Of course it also makes the cost of travel for Venezuelans even higher than it already is discouraging them from traveling and consequently from asking the govt for foreign currency the govt can no longer provide. Way to go Maduro , Life is better now than it ever was !!

  5. OT: et tu, LL?

    Leopoldo Lopez says that the government should stop gas smuggling BEFORE raising gas prices.


    Obtructionism is the new game in town (oposicionista as Chavistas say). Apparently the government should stop smuggling without rationing (eliminating the chip was a campaign promise of HCR) and without increasing prices. Is there a MUD approved mechanism to curb gas smuggling I’m missing?

  6. The genius of Marxist-inspired economics always shines through. Thank heaven we have these financial wizards to protect us from the wicked capitalists. They are bankrupting the European Union, too and seem so proud of themselves. Zimbabwe, Cuba, North Korea, all shining examples of economic success. Now Cubazuela joins the inner circle.

  7. I suppose there is always the suspicion each of us has that what is happening in our own neighborhood is only happening in my own neighborhood. That strategu can only work if you can’t know what is happening in other neighborhoods!

    This could only be possible if what is happening in other neighborhoods is not reported publicly… to protect the children, of course!

  8. the giveaway-to-the-parasitary-bourgeoisie also-known-as el raspaito by Venezuelans

    Shouldn’t that be “el raspadito”?

    • Raspadito is the correct spelling and pronunciation, but raspaíto is the most common pronunciation used by the people in an informal context.

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