In impoverished Venezuela, the dollar is king
Credit to Author: eestopace| Date: Tue, 05 Mar 2019 07:22:24 +0000
CARACAS, Venezuela — Whether paying for a manicure, an evening gown or a liter of milk, in Venezuela the dollar can buy anything, so long as you’re discreet.
“Of course we take dollars, we can even try your credit card, if it works there’s no problem,” said a restaurant owner in Caracas, keen to be both welcoming and pragmatic, and to remain anonymous.
Given the South American country’s economic crisis there’s no question about turning away a customer.
Venezuela’s own currency, the bolivar, has been crippled by hyperinflation.
Back in August, President Nicolas Maduro devalued the bolivar by 96 percent as one of a raft of economic reforms he hoped would boost an economy in meltdown.
But the bolivar has lost 98 percent of its value since. A dollar is now worth around 3,000 bolivars and the rate is changing every day.
It has left the salaries and savings of millions practically worthless.
The International Monetary Fund says inflation will hit a mind-boggling 10 million percent this year — it ended 2018 at 1.3 million percent.
Since 2003, the government has tried to enforce a monopoly on foreign currency reserves.
Its detractors have accused top officials of exploiting the misery of the wider population by acquiring foreign currencies at official rates and then selling them for a huge profit on the black market at a wildly inflated exchange.
‘Under the table’
“We started doing it under the table,” said the restaurant owner.
“We started taking dollars two or three months ago, but if it was known it could hurt our business because we’re supposed to declare everything in bolivars.”
Asked if it was illegal, he added with a smile: “I don’t know, but it’s not authorized.”
Madeleine runs a small clothing shop with shiny dresses and sparkling shoes aimed at the middle classes that have some money to burn.
All prices are listed in dollars.
“Of course! And if anyone asks, I calculate (the price) in bolivars at the day’s rate,” she said.
“Otherwise I lose too much money. I import everything from Los Angeles. I’ve got to keep the business going.”
She knows it’s illegal but says she has little choice. With the bolivar losing value every day, it’s not possible to set prices in the local currency.
“To buy a liter of milk you need this,” she laughed, imitating an eight-inch high stack with her hands.
Like the restaurant owner, Madeleine doesn’t want to give her true name, nor that of her shop, nor be pictured or filmed.
“I could have done like countless others and left the country, but I preferred to stay and work here,” she said.
“But at any moment, the government could come and close my business,” which only opened in mid-December.
It’s not even a luxury store but the dresses she sells cost around $50, eight times the minimum monthly wage of 18,000 bolivars — around $6.
Those who earn that much can just about buy two kilograms of rice and as much flour.
The nouveau riche
A manicure in an elegant Caracas shopping mall costs $4 — the owner asks only that customers avoid paying with large bills as she wouldn’t be able to find enough change.
Even shops selling Venezuela’s prime local produce — cocoa and coffee — accept the greenback. A small bar of chili chocolate costs $3.
While supermarkets in Caracas display aisles of empty shelves, there are no such shortages at the covered market in the middle-class Chacao neighborhood.
The stalls offer fruit, meat, fish, fresh produce and a delicatessen — for those that can afford it.
A liter of long-life milk costs 8,000 bolivars: half the monthly minimum wage.
Not everyone is struggling to make ends meet, though.
Venezuela may be facing a humanitarian crisis and rising poverty due to the lack of basic necessities such as food and medicine — meaning people need dollars to survive — but there’s another side to the country.
“There’s a lot of money in Venezuela,” said one person who wished to remain anonymous.
“I went to a VIP restaurant on Saturday lunchtime, it was full and it cost $150 for two,” she said.
She says there’s a nouveau riche in Venezuela, the “Chavista elite” who prospered under president Hugo Chavez, who died in 2013, and “who continue to make money” under his successor Maduro.
While they prosper, others have had to resort to desperate measures.
The United Nations estimates that 2.7 million Venezuelans have left the country since 2015 and support their families back home with remittances.
A recent study by three Caracas universities found that half the country’s households are at risk of food insecurity.
And although the government has shown signs of loosening its foreign currency rules, the dollar remains king and access to it is fundamental for those merely trying to get by. /ee