A vendor serves customers in a market in Caracas, Venezuela.Leonardo Fernández / Getty Images
In Venezuela it takes more than a million bolivars to buy a dollar.
And it is the second time in the last two years.
Hyperinflation finished devouring the local currency and the fire in the precarious Venezuelan economy is still active.
The worrying indicator is among the longest lasting inflationary crises in modern economic history, surpassed only in the region through which Nicaragua lived between 1986 and 1991. In November, it was three years since the oil country began to register, month by month , rates of more than 50% of inflation that have brought behind a catastrophic increase in poverty.
After a few months of an apparent slowdown in the rise in prices due to the reduction in consumption, during the confinement decreed by the coronavirus pandemic, inflation again takes hold due to the pressure of spending to pay special bonuses that the Government of Nicolás Maduro He usually enters at the end of the year and of the electoral campaign for the contested parliamentary elections this Sunday, in which Chavismo is preparing to regain control of the National Assembly.
The indicator went wild again in November.
“The Government was left without income, because the oil industry is destroyed, because it is not collecting taxes and does not have access to international markets.
Any initiative you have, you will have to finance it with money from the Central Bank of Venezuela.
It does not have legitimate sources of financing and what is left is to issue that amount of money, ”explains economist Omar Zambrano from the firm Anova.
This rebound in the rise in prices is felt in the streets, where the relaxation of the quarantine ordered by Maduro for the Christmas holidays has not meant a significant increase in consumption either.
In the last week of November, the price of food rose almost 40%, according to the measurements of the Finance Commission of the National Assembly.
With a monthly minimum wage - which was tripled last month, to just over a dollar - you only buy a kilo of rice.
The vertiginous rise of the dollar is just the daily headache of Venezuelans, especially of those - a vast majority - who receive wages in bolivars and have difficulty accessing the US currency, whose circulation is not official and is not agreed with Washington.
Álvaro Muñoz is a computer engineer and university professor.
On a daily basis, he records the depreciation of his income as a teacher with doctorates at the highest level of a public university.
He is clear about the unmanageable zeros behind the bolivar, with two reconversions in twenty years: Hugo Chávez's in 2008, which removed three zeros from the currency, and Maduro's in August 2018, in which another five were subtracted.
In everyday conversations this December, many are heard saying that, in reality, a dollar is equivalent to 100 trillion bolivars, with its 14 zeros, if you add the eight that have been taken away in those two large devaluations.
The abysmal numerical expression shows how impoverished a country that at the end of the seventies was one of the richest nations in Latin America.
“A full-time senior lecturer at the highest level earns $ 7.5 per month.
The salary of a teacher just starting his career is four dollars.
From yesterday to today, my salary was devalued 14% due to the jump in the dollar, ”Muñoz said a few days ago.
In three years, hyperinflation has not only slashed his salary, it also caused him to abandon a second doctorate in Spain because he could not continue paying tuition.
The 54-year-old professor survives in Barquisimeto, in the west of the country, along with his mother with the help of a sister who sends remittances from Chile and the harvest that another farmer brother shares.
“My salary is not enough to pay for the Internet service.
The last time I bought shoes was four years ago ”.
In November 2017, when the National Assembly indicated that the country had entered this situation, his monthly salary was equivalent to 62 dollars.
In 2018 it was reduced to 46 dollars, last year it was only 20 dollars and this 2020 it does not reach 10.
The fall in the purchasing power of the currency has led to another even more dramatic loss: that of the value of work and profession.
In practical terms, Muñoz explains, a person who makes
delivery
on bicycle earn three dollars per delivery, which is what a teacher can get in a month.
For Zambrano, the country began an economic transition without political change.
“The political decision was made to let the economy be reduced to its minimum expression, without production engines, where certain movements and transactions are seen to sell final products that are imported directly from a Costco [a large area] to Caracas.
This is an economy that leaves very little to the country and it is only a fraction of what it once was ”.
The economist points out that if it is an oil country, the size of the Venezuelan economy is more similar to that of a Caribbean island or a Central American country like Honduras.
"This will continue subjecting a large part of the population to adverse socioeconomic conditions and will continue to expel people, because there is no bed for so many people, there is no capacity to absorb the country's labor force."
At the end of 2020, Venezuela will have an economy 67.6% lower than that of 1999, according to calculations by the Ecoanalítica firm, an inflation of 6,500% and an unemployment rate of 54%, according to the October projections of the Monetary Fund International.
The profits of
the
oil
boom
that occurred between 2006 and 2012 were completely dissolved from the recession that has been experienced since 2013, when Maduro came to power after the death of Chávez and the political and economic crisis hit the accelerator.
Dollarization?
A few weeks ago, the Bloomberg agency revealed that the Government was evaluating with a group of private banks the possibility of formalizing the de facto dollarization that exists, driven by hyperinflation that leads people to get rid of the bolivar.
Today, bolivar tickets only circulate on public transport buses.
For the rest, the dollar is the current currency in Venezuela in 2020, after spending 15 years with a tight exchange control during which it was forbidden to buy foreign currency.
“The dollarization that exists now is incipient and is limited to certain circles.
But there is no financial system in dollars, nor contracts in dollars.
This limits the capacity it could have to make the economy grow and stop the hyperinflation of the bolivar, ”says Zambrano.
When the hyperinflationary episode began, economists were divided on dollarization as an escape route.
Now, having done nothing to contain the depreciation of the Venezuelan currency, there seems to be no other option.
"The repudiation of the bolivar is total," says Zambrano.
Implementing it, however, is an uphill process for a practically bankrupt government, without a source of income in dollars and that has a huge burden of public employees and retirees - a large payroll that even with forced migration could be around five million people - who would have to take their salaries to dollars.
This would reduce the social gap that has been created between those who receive income in dollars and those who do not, which various unions have demanded in protests in recent months, but which seems unfeasible for Maduro's economy.
As part of the dramatic system of distortions and controls that have driven the country into the ditch, in recent days the government has also given contradictory signals about progress towards dollarization and a shift towards more economic freedoms, announcing a new tax on transactions in currencies, in a desperate attempt to revive the bolivar.