The director of Econometrica, Henkel Garcia, said today that the government’s insistence on operating three different exchange rates – CENCOEX (Bs. 6.30/dollar), SICAD (Bs. 12.00/dollar) and SIMADI (currently 193.05/dollar) is “incomprehensible”, since there is ample evidence that the systems cause a tremendous amount of corruption and inefficiency.
When asked what his opinion was on the three exchange rates, Garcia said:
It doesn’t make any kind of economic sense, specially when you’re talking about an exchange system that was proven to be a complete failure in 2014. In other words, what Venezuela is doing is maintaining last year’s exchange system.
Garcia also spoke specifically on the SIMADI rate, which the government implemented earlier this year in the hopes of curbing the use of the black market. Garcia said:
I don’t really see SIMADI making a lot of noise because it’s a system that only offers and processes three million dollars. To me, what’s much more important is the exchanges happening at Bs. 6.30 [through CENCOEX], because there’s a point of equilibrium and we don’t know where it is, but it might be between SIMADI [at Bs. 12.00] and [CENCOEX].
Garcia called the CENCOEX rate “a disaster”, and said that as long as it existed the country’s economic crisis could not be resolved. He explained that part of the problem with the rate is that exchanges through that market take place at the discretion of the government. In other words, the government can either approve or reject requests for dollars at that rate. “The corruption that takes place there is well known”, Garcia added.
If Venezuela is to overcome the economic crisis, Garcia argued, it must carefully dismantle the strict currency exchange controls it currently enforces. He also believes that the most effective way to continue to offer economic assistance to Venezuela’s poor is to make the shift to direct subsidies instead of relying on an artificial, harmful exchange rate to import cheap goods.
Oil Workers Flag Possible Labour Violations
The president of the Central Bolivariana Socialista de Trabajadores [Socialist Bolivarian Worker’s Central], Wills Rangel, said today that Chinese and Russian oil firms working in the country’s Orinoco Strip are violating labour laws.
There have been many complaints by oil workers at every level. It stands out that the China National Petroleum Corporation and Russia’s Gazprom, Lukoil and Rosneft do not respect the labour rights established in the Ley Organica del Trabajo. In the majority of their contracts, the established benefits are not stipulated, the creation of unions is prohibited as are collective agreements.
Rangel also said that he understood that Russia and China “have different laws from us”, but pointed out that it should not be unreasonable to expect that the firms, working on Venezuelan soil, should be expected to respect Venezuelan laws.
Millions of Venezuelans on the Move
The number of Venezuelans travelling around the country during Holy Week is estimated to be near the 8.6 million mark, according to Minister of the Interior and Justice Gustavo Gonzalez Lopez. Gonzalez also said that a total of 190,000 police officials from different bodies are involved in security operations in the country.
Speaking directly to Venezuelans, Gonzalez pleaded with travellers to respect the law in order to ensure a safe and enjoyable Holy Week:
Respect the speed limit, don’t drink and drive, use your seatbelt and if you’re going to the beach, wear a life-vest.
PSUV Supporters Working on Huge Flag
Government supporters are currently working to complete a flag that, when finished, will be 1.2 km long and 10 meters wide. The flag is being sown as part of the Venezuela no es Amenaza, es Esperansa [Venezuelan is not a threat, it is hope] campaign against the U.S. sanctions placed on seven Venezuelan officials last month. The plan is to unveil the finished flag on April 12 in Caracas as part of an event against the sanctions.
Minister of Culture Reinaldo Iturriza says that as of yesterday, the flag is 69.3% complete.
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