Black Friday In Venezuela - 1983

Translated from Spanish. View the original post here

#venezuelachallenge Black Friday in Venezuela, refers to Friday, February 18, 1983, when the bolivar suffered an abrupt devaluation against the US dollar, resulting from economic policies assumed by then-President Luis Herrera Campins, which included the establishment of an exchange control, imposing a restriction on the exit of foreign exchange and which were severely objected by the then president of the Central Bank of Venezuela, Leopoldo Díaz Bruzual. [1]
Luis Herrera Campins, president of Venezuela on Black Friday.

Consequently, for Venezuela, Black Friday represents a milestone that changed its economic history. Until that day the stability and reliability that since the second decade of the twentieth century had characterized the bolivar, whose last free price against the dollar was at the fixed value of 4.30 bolivars. Since then, the constant devaluation of the bolivar, complications with the payment of foreign debt, the accelerated deterioration of purchasing power and the introduction of an exchange control called the “Differential Exchange Regime" (RECADI) —which functioned between February 28, 1983 and February 10, 1989 and which had serious corruption cases during the government of Jaime Lusinchi — they made the exchange stability of the Venezuelan currency disappear. [2]

Previous eventsEdit

Black Friday in Venezuela is preceded by events such as Venezuela's exit from the gold standard, the nationalization of oil, as well as the beginning of a stage of descalabre between public spending and government revenues. This situation worsens and is evident with the fall in oil prices that led to oil exports from $19.3 billion in 1981 to nearly $13.5 billion in 1983 (a 30 per cent fall) and the onset of the debt crisis in Latin America. These events resulted in capital flight of nearly $8 billion and thus a corresponding decline in international reserves, which made imminent devaluation.