CADIVI AUTHORIZATIONS SHARPLY DOWN

UNCLAS CARACAS 001758 SIPDIS HQ SOUTHCOM ALSO FOR POLAD TREASURY FOR RJARPE NSC FOR JSHRIER COMMERCE FOR 4431/MAC/WH/JLAO E.O. 12958: N/A TAGS: ECON VE SUBJECT: CADIVI AUTHORIZATIONS SHARPLY DOWN ¶1. According to statistics published December 22, the Government of the Bolivarian Republic of Venezuela's (GBRV) foreign exchange authority, known by its Spanish acronym CADIVI, sharply reduced its foreign currency authorizations over the first three weeks of December. While in past years December authorizations spiked sharply, this year, through December 18, CADIVI's average daily authorizations for December were down almost 40 percent compared to the 2008 year-to-date average (USD 115 million vs. USD 187 million per working day). ¶2. Comment: This sharp drop suggests the GBRV and the Central Bank of Venezuela, which sets CADIVI's monthly allocation, have comprehended the severity of the external (foreign currency) shock hitting Venezuela as a result of declining oil prices and are beginning to take action. It is possible CADIVI authorizations will pick up in the second half of December, thus bringing the monthly average in line with the yearly average. We doubt this for two reasons, however. First, daily authorizations for November dropped somewhat at the end of November. Second, Minister of Finance Ali Rodriguez indicated December 19 there would be cuts to CADIVI's allotment of dollars to Venezuelans traveling abroad, suggesting the GBRV is moving to contain CADIVI authorizations across the board. We will discuss the economic implications of this move septel. End comment. CAULFIELD