Venezuela's government is taking steps to capture hard-currency remittances from a growing diaspora, as its traditional revenue from oil exports dries up.
On 2 August, the national constituent assembly (ANC), a rubber stamp body controlled by autocratic president Nicolas Maduro, repealed a 2010 law that outlawed foreign currency transactions except through the central bank and government-run exchange mechanisms.
The repeal of the illicit exchange law will attract a wave of new investment, economy vice president and national industry and production minister Tareck El Aissami said.
He said a reform of the law will be published along with the 20 August launch of a new currency called the sovereign bolivar, which will have five fewer zeroes than the strong bolivar that will be withdrawn from the market later this month.
Anyone with hard currency deposited abroad, including companies and individual citizens, will be allowed to repatriate it, receiving new sovereign bolivars at any commercial bank or exchange house in Venezuelan territory.
The law was originally intended by the government of late president Hugo Chavez to tighten exchange controls in what ultimately was a failed attempt to tackle inflation and halt the national currency's depreciation. When the law was enacted in 2010, the black market exchange rate was about 14 bolivars per US dollar compared with today's current black market rate of nearly 3.7mn bolivars to the dollar.
The measures are part of the Maduro's plan to resuscitate the ailing economy, which is forecast to contract by up to 22pc in 2018. Another element in the package is a vehicle census apparently aimed at restricting scarce fuel supply to government loyalists. Critics say none of the measures will succeed in addressing the Opec country's economic debacle.
Maduro was discussing the economic recovery plan at a national guard anniversary ceremony in Caracas on 4 August, when a drone-related incident the government deemed an assassination attempt took place.
Five eyewitnesses told Argus they saw two drones emerge from a vehicle tunnel that runs underneath the national courthouse behind the stage where Maduro was addressing a large formation of national guard troops.
One of the drones exploded above the troop assembly at a height of about 150m and the second crashed and exploded on the terrace of an apartment building about 500m from the presidential entourage. Seven national guard officials including a colonel suffered injuries in falls when the troop formation broke ranks and fled the scene. Contrary to official assertions, which in some cases have been contradictory, no one was injured as a direct result of the explosions, the eyewitnesses say.
State-owned VTV was operating four drones to film the president's speech from the air. It is unclear whether the two drones that exploded were VTV units.
Earlier claims that the incident was caused by a propane cylinder blast have now been dismissed. A Twitter claim of responsibility by a group calling itself the T-shirt Soldiers could not be verified.
Critics say the incident, whatever the cause, gives ammunition to Maduro to further stamp out dissent and consolidate political control. Among those in his inner circle are new central bank president Calixto Ortega, a former financial adviser to state-owned oil company PdV's board of directors and former vice president of PdV's US refining unit Citgo. Ortega was expelled from the US in May after the State Department ruled that he fraudulently misrepresented his oil industry experience in his application for a US work visa.
A central bank official who has seen the original draft of the new exchange law says the freedom to repatriate hard currency is capped at $10,000 per transaction.
The proposed new exchange law "will have no impact in terms of attracting new foreign capital investment for the oil industry and other strategic sectors like aluminum and steel," the bank official said, adding that the move could facilitate money laundering from drug trafficking and corruption.
Central bank economists estimate unofficially that remittances in 2018 could total over $3bn. Some 4mn Venezuelans have fled the country's economic devastation in recent years, including an estimated 1mn to Colombia.
The bank's declared international hard currency reserves currently total about $9.4bn, suggesting that foreign currency remittances to Venezuela presently account for about one-third of the government's total official hard currency assets.
