Venezuela's exchange control commission posts list of goods that can be imported

yahoo.com ^ | March 11, 2003 | AP

[Cincinatus' Wife]

CARACAS, Venezuela - Venezuela's government will not grant U.S. dollars for the importation of electronic equipment, clothing, footwear and some fruits, according to a list posted by the nation's exchange control commission on Tuesday.

The list of 6,000 items deemed essential by the exchange control commission, or Cadivi, includes various food products, medicines, personal hygiene items and industrial raw materials. The list was posted on Cadivi's Web site.

Most of the items on the list are not produced in Venezuela, which imports more than half of the goods it consumes, including almost all the medicine used by Venezuelans. U.S. dollars must pay for those imports.

Restrictions on imports form part of a new currency exchange control system that President Hugo Chavez's government is gradually implementing.

The controls are meant to protect the bolivar currency, which lost a quarter of its value during a two-month general strike seeking to force early elections. The strike, which cost Venezuela an estimated US$6 billion, ended last month without achieving its objective.

Due to delays in implementing the new approach, the government hasn't sold any dollars for two months. The lack of dollars has led to scarcity of some goods, including medicine.

This month the government plans to sell US$645 million, which will go toward expenses like supporting students abroad and paying for business travel.

Cadivi decides on an individual basis how much and how often foreign currency will be sold to importers.

Opponents of Chavez fear he could use the controls to punish his adversaries, including opposition-led newspapers that must import newsprint. But newsprint appeared on the list of essential goods.

Imports averaged a bit more than US$1 billion a month last year and are expected to fall by roughly half that amount as a result of the new foreign exchange controls system.

Opposition leaders are demanding Chavez agree to early elections, blaming his left-leaning policies for the country's deepening economic crisis.

The economy contracted almost 9 percent in 2002. Unemployment stands at 17 percent according to official government statistics, but economic analysts argue close to one out of five Venezuelans is actually jobless.

The bolivar currency lost a quarter of its value this year before currency sales were halted on Jan. 21.

Under the new exchange controls scheme, the bolivar is set at a fixed rate of 1,598 to one U.S. dollar. The bolivar trades as high as 2,800 to the dollar on the black market.

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On the Web: www.cadivi.gov.ve

[Cincinatus' Wife]

Hugo Chavez - Venezuela

[Blackyce]

They're fast on the way to the Cuban Paradise(see: hellhole) that the people wanted. Economics in action.

[Free the USA]

http://www.freerepublic.com/perl/bump-list

[waxhaw]

This is deja vu all over again. Especially the black market Bolivar rate. What will happen is that the wealthy (who always have access to dollars) and Chavez's cronies, will buy their "B's" on the black market and then sell that currency back to the government at the official rate for dollars. They then buy more Bolivares on the black market, etc. etc. When Caldera was president in the mid 90's and imposed currency controls he, his family and his cronies went from millionaires to multi-millionaires doing the above. And the poor, of course, suck it in.

[Cincinatus' Wife]

Bump!