Venezuela

Venezuela fixed and then managed multiple exchange rates for many years within an underdeveloped financial system; the exchange rate was unified and floated in 1989 but managed in the late 1990s, while limited financial reforms were introduced; from 2003 (no IMF consultations) it seems that more exchange rate management and price and capital controls were used, and even more so from 2010.

Years Targets and attainment Classification
1974-82 dual exchange rate system unified 1976, peg to USD with narrow spreads fixed by central bank; 1974 law makes range of monetary policy instruments available to central bank, mainly direct, but heavy reliance on reserve requirements, selective credit controls and interest rates which were administratively set until 1981; recurring monetary financing of budget deficits augmented exchange rate fix AERF
1983-8 multiple (3 or 4 tier) exchange rates plus price, exchange and import controls in response to capital outflows and exchange rate pressure; administered interest rates varied widely in both directions; oil revenues and monetary financing as alternative sources of finance for government spending; central bank uses rediscount facilities and reserve requirements as main instruments, in context of interest rate ceilings and limited open market operations unstructured discretion UD
1989-2002 unified exchange rate floating from early 1989, later more management of exchange rate including from 1996 preannounced crawl (but with repeated changes to central parity and rate of crawl), followed by float February 2002-January 2003; initially some movement towards indirect monetary policy instruments (OMOs in interbank money market) within wider but uncompleted programme of financial reform; redemption of government bonds from late 1997 leads to shortage of effective monetary policy instruments; central bank gets more autonomy in 1992 but monetary financing of deficits continues loosely structured discretion LSD
2003-09 [NOTE: no IMF reports after 2004, no good alternative sources of information, so classification tentative] new exchange rate peg supported by extensive exchange and price controls; devaluations 2004 and 2005; exchange controls more extensive from 2006 and reinforced 2008, 2009 (according to Chinn-Ito index); new currency (bolivar fuerte) 2007; monetary policy relies heavily on OMOs (no effective policy rate) LSD (tentative)
2010-14 [NOTE: no IMF reports after 2004, no good alternative sources of information, so classification tentative] exchange controls strengthened further 2010, involving dual and later multiple exchange rates; devaluations in 2010 and 2013, but significant overvaluation probably remains; monetary policy instruments weak, with ceilings on interest rates; likely that monetary growth becomes more dominated by growing budget deficit, objectives become less coherent UD (tentative)

Selected IMF references: RED 1975 p24; RED 1976 p26; RED 1979 p50; RED 1983 pp41, 66, 68; RED 1984 pp3-4, 39-40, 44-6, 68-70; RED 1987 pp34-7, 58-9; SR 1987 pp22-4; RED 1990 pp30-7, 53; RED 1994 pp23-7, 57-9; SR 1999 pp22, 23-4; SISA 2001 ch V; SR 2001 pp15-16; SI 2004 ch V; SR 2004 pp8-16, 24-5, 30.

Other references: Reinhart and Dos Santos (2015), especially Appendix I; Weisbrot and Ray (2010); Weisbrot and Johnston (2012).

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