Few in Venezuela Want Bolívars, but No One Can Spare a Dime

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1 Americas Few in Venezuela Want Bolívars, but No One Can Spare a Dime By WILLIAM NEUMAN and PATRICIA TORRES OCT. 18, 2015 All the meat freezers were empty last month in a grocery store in Caracas, Venezuela, part of a long list of shortages. Meridith Kohut for The New York Times CARACAS, Venezuela Pity the bolívar, Venezuela s currency, named after its independence hero, Simón Bolívar. Even some thieves do not want it anymore. When robbers carjacked Pedro Venero, an engineer, earlier this year, he expected they would drive him to his bank to cash his check for a hefty sum in bolívars the sort of thing that crime-weary Venezuelans have long since gotten used to. But the robbers, armed with rifles and a grenade, and sure that he would have a stash of dollars at home, wanted nothing to do with the bolívars in his bank account. They told me straight up, Don t worry about that, Mr. Venero said. Forget about it. 1

2 The eagerness to dump bolívars or avoid them completely shows the extent to which Venezuelans have lost faith in their economy and in the ability of their government to find a way out of the mess. A year ago, $1 bought about 100 bolívars on the black market. These days, it often fetches more than 700 bolívars, a sign of how thoroughly domestic confidence in the economy has crashed. A man slept in his car at dawn last month outside a car-battery shop in Caracas. He was one of more than 80 drivers lined up overnight to buy a battery from the limited supply the next day. Meridith Kohut for The New York Times The International Monetary Fund has predicted that inflation in Venezuela will hit 159 percent this year (though President Nicolás Maduro has said it will be half that), and that the economy will shrink 10 percent, the worst projected performance in the world (though there was no estimate for war-torn Syria). That would be a disastrous drive off the cliff for a country that sits on the world s largest estimated oil reserves and has long considered itself rich in contrast to many of its neighbors. Yet the real story goes beyond numbers, revealed in the absurdities of life in a country where the government has refused for months to release basic economic data like the inflation rate or the gross domestic product. Even as the country s income has shrunk with the collapsing price of oil Venezuela s only significant export and the black market for dollars has soared, the government has 2

3 insisted on keeping the country s principal exchange rate frozen at 6.3 bolívars to the dollar. That astonishing disparity makes for a sticker-shock economy in which it can be hard to be sure what anything is really worth, and in which the black-market dollar increasingly dictates prices. A movie ticket costs about 380 bolívars. Calculated at the government rate, that is $60. At the black-market rate, it is just 54 cents. Want a large popcorn and soda with that? Depending on how you calculate it, that is either $1.15 or $128. The minimum wage is 7,421 bolívars a month. That is either a decent $1,178 a month or a miserable $ Either way, it does not go far enough. According to the Center for Documentation and Social Analysis of the Venezuelan Federation of Teachers, a month s worth of food for a family of five cost 50,625 bolívars in August, more than six times the minimum monthly wage and more than three times what it cost in the same month a year earlier. Dinner for two at one of this city s better restaurants can cost 30,000 bolívars. That is $42.85 at the black-market rate or $4,762 at the official exchange rate. Inflation has gotten so bad that auto insurance companies have threatened to issue policies that expire after six months, to minimize the risk from the soaring cost of car parts. Employees at a grocery store in Caracas attended last month to shoppers who had waited three hours for the store to open to buy hard-to-find cooking oil, corn flour, sugar and toilet paper. Meridith Kohut for The New York Times 3

4 A gallon of white paint cost almost 6,000 bolívars on a recent Tuesday. At the same store on the following Friday, it cost more than 12,000 bolívars. With crucial legislative elections scheduled in December, the government has begun to make refrigerators, air-conditioners and household appliances available to government workers and the party faithful at rock-bottom prices. One government worker said he had bought a Chinese-made 48-inch plasma television for 11,000 bolívars, or just $15.71 at the black-market exchange rate. Mr. Maduro blames an economic war waged by his enemies, foreign and domestic, for the problems. But most economists say the problems are caused by the fall in oil prices and the government s policies, including strict controls on prices and foreign exchange for imports. As the crisis has unfolded, Mr. Maduro has hesitated to make changes even top officials say are needed, like raising the price of gasoline, which is so heavily subsidized that it is virtually free perhaps because he is fearful of a backlash before the elections. Things get stranger by the day. Need a new car battery? Bring a pillow, because you will have to sleep overnight in your car outside the shop. On a recent night, more than 80 cars were lined up. Want a new career? Plenty of Venezuelans have quit their jobs to sell basic goods like disposable diapers or corn flour on the black market, tripling or quadrupling their salary in the process. Need cash? O.K., but not too much. Some A.T.M.s limit withdrawals to the black-market equivalent of about 50 cents. Given the chronic shortages of basic goods, supermarkets and pharmacies fill long rows of shelves with a single product. One store recently had both sides of an aisle lined with packages of salt. Another did the same thing with vinegar. A pharmacy had row after row of cotton swabs. But among all the shortages here, one of the most notable is a shortage of paper money, especially the coffee-colored 100-bolívar notes that are the largest in general circulation (black-market value, about 14 cents) and feature a portrait of Simón Bolívar. 4

5 Juan Suaréz, 43, and his wife, Carmen Lara, 38, at their home in a government housing project in Caracas. Mr. Suaréz is a waiter for a catering company and earns 40,000 bolivars a month on average, more than five times the minimum wage, but he and his wife struggle to feed their family of five in a country where official and black-market prices diverge widely. Meridith Kohut for The New York Times You want to understand why there s a lot of money and there s no money? Ruth de Krivoy, a former Central Bank president, asked with a rueful laugh. She said the main problem was that the government had failed to respond to rapidly rising prices by issuing larger-denomination bills, like a 1,000- or 10,000-bolívar note. So people need many more bills to buy the same goods they bought a year ago. Also, as people resort to the black market to buy more goods that cannot be found in stores, transactions that could once be made with debit or credit cards are now conducted with cash. That creates logistical problems, as banks must move around huge amounts of paper money and A.T.M.s empty out more quickly. Mr. Maduro is certainly aware of the symbolic impact of issuing larger bills with more zeros and the inevitable comparison it would strike with his predecessor and mentor, Hugo Chávez. In 2008, Mr. Chávez issued new bills and knocked off three zeros from a currency that had long suffered from devaluation and inflation, renaming it the strong bolívar. Today, the bolívar is anything but strong. The other day, Jaime Bello, an airline mechanic, visited his bank, the government-run Banco del Tesoro, only to find that its three cash machines were out of money. He recalled an earlier visit when he went to withdraw 2,000 bolívars and stood listening to the whirring 5

6 sound as the machine spit out a great stack of 5-bolívar notes, each worth less than an American penny. He pulled out the stack of 200 bills and then waited while the machine counted out 200 more. It s crazy, he said. We re living a nightmare. There s nothing to buy, and the money isn t worth anything. The crisis has also meant opportunity for those willing to stand in long lines to buy cheap government-regulated goods that they can resell at a profit. I said to myself, I can make more doing this, and I quit my job at the hair salon, said Geraldine Cassiani, who left her job as a manicurist in February for a career on the black market. She said she now earned four to five times what she had before. On a recent trip to the supermarket, she used contacts at the store to skip the line outside and bought four packages of disposable diapers, even though shoppers were limited to two each. Ms. Cassiani already had a client lined up to buy the diapers for almost three times what she paid: a nurse who could not take time off to stand in line. Mr. Maduro regularly goes on television to denounce black marketeers and to blame them for shortages and high prices. Partly, I think that what I m doing is bad, Ms. Cassiani said, adding that she raised prices less than some black marketeers. A single mother, she said she had to provide for her child. Necessity has a dog s face, she said. María Eugenia Díaz contributed reporting. A version of this article appears in print on October 19, 2015, on page A1 of the New York edition with the headline: In Venezuela, Even Thieves Prefer Dollars. 6