Yet another devaluation

One of the big problems of the devaluation of February was that the SITME, the lone system to obtain foreign currency for those shun by CADIVI, was eliminated. So, for example, non essential imports as decided by the regime, who could not use CADIVI, still had a shot at SITME but for a higher price.  Today the SITME substitute was announced.

Still very foggy, but we can gather a few things already.


It will be an auction system so it means that the currency will slide progressively towards a more realistic exchange rate. Yet, the speed of that slide will be politically controlled so do not expect any time soon a more realistic cost structure for the economy. Let's say that for the start the regime will probably go to a 20% above the current official 6,3, which means for all practical purposes that the regime admits that 4,3 to 6,3 devaluation was not enough.

We assume that the regime will simply offer some of the PDVSA income directly to auction. In theory this could be a long term way to get out of currency exchange control. But you can be sure that this is not the long term objective of the regime. Still, if Capriles wins on April 14 it is a tool for that he will have already in hand.

It will be absolutely discretionary as the regime will decide in full who gets what. At least in CADIVI, if you got through all the hoops, met all criteria, you were assured an approval, though not a payment. With this new system it seems that the regime will not need to explain who gets what and when. That means more corruption to have access to foreign currency through that system. Ah! And in SITME you and I could try to get some foreign currency on our own, that option is not included, at least for the time being,.

In short, the regime is seeking more controls on economy as a way to deal with the disasters that abuse of controls have already created. The economic team that has been failing so badly for the last decade remains in place as Maduro has not dared to change Giordani at the helm, who we fail to understand why he wants to remain at the helm now that his pupil is dead. The only rational explanation was that Giordani objective all along was to destroy private business and that as a first step it was required that some of that wealth be transferred to pro Chavez bolibourgeois millionaire through corruption. But that group is much more susceptible to political blackmail in the future when even the Polar group has become a non entity. Giordani is and has been Havana's man all along