Hugo Chávez
Currency controls

In the first few years of Chavez's office, his newly created social programs required large payments in order to make the desired changes. On 5 February 2003, the government created CADIVI, a currency control board charged with handling foreign exchange procedures. Its creation was to control capital flight by placing limits on individuals and only offering them so much of a foreign currency. This limit to foreign currency led to a creation of a currency black market economy since Venezuelan merchants rely on foreign goods that require payments with reliable foreign currencies. As Venezuela printed more money for their social programs, the bolívar continued to devalue for Venezuelan citizens and merchants since the government held the majority of the more reliable currencies.

The implied value or "black market value" is what Venezuelans believe the hard bolívar is worth compared to the United States dollar. The high rates in the black market make it difficult for businesses to purchase necessary goods since the government often forces these businesses to make price cuts. This leads to businesses selling their goods and making a low profit. Since businesses make low profits, this leads to shortages since they are unable to import the goods that Venezuela is reliant on. Chavez used exchange rate subsidies to underwrite imports; this policy was not welfare-maximizing, but rather benefited special interests.
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