CADIVI
Encyclopedia
CADIVI is the Venezuela
n government body which administers currency exchange in Venezuela. Exchange controls were adopted in 2003 to limit capital flight
, in the aftermath of a two-month strike/lockout aimed at toppling the government, which saw GDP fall 27% during the first four months of 2003.
According to the Bank for International Settlements
, "The Central Bank of Venezuela
(BCV) fixes a monthly allocation of foreign currency to be administered by CADIVI, purchases foreign currency from residents, and sells foreign currency to the public and private sectors subject to approval from CADIVI." Under Venezuelan law PDVSA must sell its foreign exchange to the Central Bank, thereby providing the bulk of foreign currency in Venezuela. The Venezuelan private sector requires more foreign exchange for imports than it generates for exports, and is dependent on the Bank to satisfy the difference.
A similar agency, RECADI, had been set up in 1983, to manage a system of differential exchange rates and capital controls, and disbanded in 1989 when the differential exchange rate system was abolished. RECADI saw widespread corruption, and became a substantial scandal in 1989 when five former ministers were arrested, although the charges were later dropped.
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
n government body which administers currency exchange in Venezuela. Exchange controls were adopted in 2003 to limit capital flight
Capital flight
Capital flight, in economics, occurs when assets and/or money rapidly flow out of a country, due to an economic event and that disturbs investors and causes them to lower their valuation of the assets in that country, or otherwise to lose confidence in its economic...
, in the aftermath of a two-month strike/lockout aimed at toppling the government, which saw GDP fall 27% during the first four months of 2003.
According to the Bank for International Settlements
Bank for International Settlements
The Bank for International Settlements is an intergovernmental organization of central banks which "fosters international monetary and financial cooperation and serves as a bank for central banks." It is not accountable to any national government...
, "The Central Bank of Venezuela
Central Bank of Venezuela
The Central Bank of Venezuela is the central bank of Venezuela. It maintains a fixed exchange rate for the Venezuelan bolívar.-External links:*...
(BCV) fixes a monthly allocation of foreign currency to be administered by CADIVI, purchases foreign currency from residents, and sells foreign currency to the public and private sectors subject to approval from CADIVI." Under Venezuelan law PDVSA must sell its foreign exchange to the Central Bank, thereby providing the bulk of foreign currency in Venezuela. The Venezuelan private sector requires more foreign exchange for imports than it generates for exports, and is dependent on the Bank to satisfy the difference.
A similar agency, RECADI, had been set up in 1983, to manage a system of differential exchange rates and capital controls, and disbanded in 1989 when the differential exchange rate system was abolished. RECADI saw widespread corruption, and became a substantial scandal in 1989 when five former ministers were arrested, although the charges were later dropped.