CARACAS: Venezuela’s all-powerful Constituent Assembly was set to legalise money exchange operations on Thursday, in an attempt to relax the strict socialist-led currency controls that have throttled the oil-rich nation’s economy.

The measure’s reach was not immediately clear and previous moves to tweak the socialist-led economic model have had little impact. It is unlikely President Nicolas Maduro’s government would do away completely with currency controls, first introduced by his predecessor Hugo Chavez in 2003 to curb capital flight.

But the proposal appears to be a sign that Maduro’s government recognises the damage the controls have done to Venezuela’s economy, which is in its fifth year of recession with inflation expected to hit 1,000,000 per cent this year.

Vice president for the economy, Tareck El Aissami, proposed the assembly revoke the law that criminalizes money exchange and eliminate an article from the law governing the Venezuelan’s central bank to allow the sale and purchase of foreign currency.

El Aissami, in a speech at the assembly, said Venezuelans would be able to go to state-authorized exchange houses to exchange money in a “transparent, legal and safe manner.” “This is a big opportunity, it is a fresh start,” said El Aissami. He did not provide details on how the rate would be determined. The pro-government Constituent Assembly was due to vote on the proposal later on Thursday.

The reform would be in stark contrast to years of prosecution of Venezuelans who operated in a parallel market for dollars, bypassing the official currency exchange platforms which give far less advantageous rates.

The government still fixes sales of dollars at an official rate of around 172,800 bolivars per dollar, well below the black market rate of around 3.8 million bolivars per dollar.

Venezuela’s bolivar currency has fallen 99.99pc against the dollar on the black market since Maduro came to power in April 2013. A $100 purchase of bolivars then would now be worth just less than a single US cent.

Maduro blames the crisis on a “economic war” led by opposition leaders with the help of Washington, which last year levied several rounds of sanctions against his administration.

The government has also said it plans to remove five zeroes from the bolivar currency later this month in an attempt to keep up with inflation.

Published in Dawn, August 3rd, 2018