The government announced today that it was drastically reducing the amount of foreign currency Venezuelans can apply for and receive when travelling abroad. Venezuelan citizens who request foreign currency for trips abroad will receive the following maximum amounts per year:
- For a trip to the U.S.: $700 (down from $2,500)
- For a trip to Africa, Asia or Europe:
- From 1 to 7 days: $1,000 (down from $3,000)
- From 8+ days: Between $1,125 and $2,000.
- For a trip to Canada, Chile, El Salvador, Guatemala, Honduras, and ALBA countries:
- From 1 to 3 days: $700
- From 4 to 7 days: $1,063
- From 8+ days: Between $1,063 and $1,500 (down from $2,500)
- For a trip to Aruba, Belize, Bonaire, Colombia, Costa Rica, Curazao, Guayana, Mexico, Panama, Peru, or Suriname:
- From 1 to 3 days: $300
- From 4 to 7 days: $500
- From 8+ days: $525 (down from $700)
The new annual maximums are outlined in the Gaceta Oficial No. 40.636, published today.
For travellers to the United State, the new maximum amount represents a reduction of 72%.
The news comes at a time when the country’s foreign currency income is drastically lower than at any time in the recent past. Venezuela obtains the overwhelming majority of its foreign currency from oil, the price of which has plunged by roughly 50% in the past six months.
Only Public Banks May Process Applications
In Venezuela, currency exchange is strictly controlled by the government. In North America, people who need foreign currency are able to go to a bank or exchange to convert their money. In Venezuela, people have to apply to a government agency (called CENCOEX) for foreign currency. As of today, people will only be allowed to apply for CENCOEX dollars through state-owned banks, of which there are 4. Previously, private banks could process requests. The new law gives Venezuelans 30 days to switch over to one of the approved public banks to make future requests.
The application process is full of bureaucratic hurdles, and there is no guarantee that an applicant will receive the full amount of their request.
Changes Also Involve Cash Amounts
The same Gaceta announced that cash applications will only be granted for children and teenagers. In other words, adults who apply for foreign currency for a trip abroad will not receive cash; instead, they will receive a pre-paid credit card from which they may only withdraw 200$ in cash from an ATM.
Officials Praise CENCOEX Changes
Minister of the Economy and Finances Rodolfo Marco Torres took to Twitter today to praise the CENCOEX changes, claiming that they will help Venezuela “ensure the proper use of foreign exchange”.
We are working towards a transparent process to mitigate distortion over the use of country’s foreign currency, and therefore avoid fraud.
The vice-president of the National Assembly, Elvis Amoroso, spoke in an interview on Globovision and had similar words regarding the changes:
This new reduction in the allocation of foreign currency for trips abroad corresponds to measures applied to safeguard the country’s foreign currency (…) we have to applaud any kind of modification.
Economists Not Impressed
Venezuelan economists reacted to the CENCOEX news on Twitter, saying that the measures could do little to help alleviate the country’s problems.
Asdrubal Oliveros, the president of Econanalitica, said:
I understand that [this issue] causes anxiety. But the problem facing Venezuela is worse.
The government only takes isolated measures… that don’t get to the root of the problem. This is why the crisis gets worse.
Henkel Garcia, the director of Econometrica, said that the point of contention should not be that the maximum amounts have been reduced, but rather that a system like CENCOEX “that only benefits a small group” exists at all. Garcia also took a jab at the government’s nationalistic rhetoric, saying:
You are free and sovereign as long as you don’t even think about travelling abroad. You’re free and sovereign as long as you don’t even think about buying something (online) that costs $105.
The exchange slashes announced today can only mean one thing: the government is running out of foreign currency, and it’s getting desperate. For the past six months, oil prices have been at their lowest in nearly a decade. Since Venezuela receives 96% of its foreign currency from oil sales, it only stands to reason that its cash intake has been suffering tremendously. Rather than looking to itself to cut waste and corruption, the government has decided to take the easiest – and most harmful – path.
The move reeks of desperation, and I do not believe that it will buy the Maduro government much time. On November 29 of last year, Maduro promised that he would cut his own salary and that of his ministers should the country ever find itself strapped for cash. This did not happen, and so instead Maduro has chosen to punish Venezuelans so that he and his sycophants can continue to live in extravagant luxury for just a little while longer.
Maduro and his government have built a decadent palace on the backs of ordinary Venezuelans as the foundation. That foundation has been showing cracks for years. Every unjust arrest, every murder, and every insult to the dignity of the Venezuelan serves only to undermine the structural integrity of that foundation. It is only a matter of time before it gives way; when it does, the depraved charade Venezuelans call their government will collapse in a heap of melancholy and regret.
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