Who leads a life of luxury and comfort with dollars in a Venezuela in misery and how they do it
Many find it hard to believe that in Venezuela there are bubbles of comfort and luxury as opposed to a society hit by a social and economic crisis never seen before. In 20 years of socialist revolution, the gaps between rich and poor are widening. The ruling political class, increasingly isolated from the world because of the political and economic sanctions imposed by much of the Western democracies, is entrenched in the main cities: Caracas, Maracaibo, Valencia, Barquisimeto and Puerto Ordaz. They live and trade in foreign currency, they buy cars and luxury houses, they exhibit themselves in shops full of imported merchandise.
The rest of the country is grappling with shortages in public services, fuel, transportation as well as lack of food, medicine and well-paid jobs. The impoverished Venezuela depends on its local currency, the bolivar or on the good will of a relative who, from abroad, sends money. Not everyone has that fortune.
This year 2019 has marked the trend towards the informal dollarization of the economy; many areas of trade with foreign currency and there are those who pay in cash. There is also the option of transfer to international accounts.
One of the bodegones that sell liquors and other imported items in dollars that have blossomed in Caracas.
For economist Asdrúbal Oliveros, the Venezuelan market is segmented into three groups: 15% of Venezuelans generate large amounts of foreign exchange and are the ones who can spend large amounts of money in cash or through transfers. There is another sector that is between 30 and 35% that generates income in dollars: hotel or restaurant workers who receive tips in cash or professionals who provide some kind of service, to cite two examples. This group does not cover all their needs but at least has some extra income that can help them live in hyperinflation. These two segments are 50% of Venezuelans. The other half of the country does not receive foreign exchange and depends on its income in bolivars, on government social programs such as the allocation of bonuses and the purchase of food at subsidized prices.
He explained to Infobae that the fact that there are sales movements in some shopping centers in the main cities of the country does not indicate a recovery in consumption or that the figure of 80% poverty in Venezuela has been reversed. There is no bubble at all because this is a minority group.
A rented car for a wedding of families who can afford it
The analyst calculated that the stock of foreign currency in cash circulating in the country may be in the order of 2,500 to 3,000 million dollars. On the origin of these funds there are several theses: They come from the smuggling of gold and gasoline, drug trafficking, over-invoicing and the exchange subsidy, he says. He adds that a country that suffers hyperinflation ends up migrating to a hard currency, because it is easier. It allows you to maintain value and prices in bolivars suffer extremely sharp changes.
Oliveros revealed a very recent study by the firm Ecoanalítica, where he is director, which found that Maracaibo became the first city in Venezuela where more than half of commercial transactions are paid in dollars.
In the country the figure is 53.8% and in Maracaibo (west) 57% In the rest of Venezuela four out of 10 transactions are paid in dollars.
The remittance factor
Another source of income for Venezuelans is remittances from the diaspora to the country. In this case, the money does not arrive in cash but in bank transfers. Data indicate that 63% of Venezuelans have a close relative living outside the country. A high percentage economically supports the one who stayed in Venezuela.
The ONU has estimated that there are currently approximately 4.8 million Venezuelans living abroad.
A study by another consulting firm, Ecoanalítica, found that in 2018 migrants sent their families an average of $75 a month. For this year the figure reached 105 dollars because every day more money is needed to survive and cover the purchases of food and other products in luxury stores, valued in foreign currency.
Market analysts have estimated that remittances provide Venezuela with some $5 billion a year and have become an important source of resources for the middle and lower classes.
Infobae was in several bodegones, a new business modality where the consumer can locate delicacies, high target foods and liquors. Prices are set in dollars and if the buyer wants to pay in bolivars, with credit or debit cards, must do so at the rate set by the exchange rate in foreign currency.
Maduro's government gave the green light to the installation of bodegones under a special import regime that minimizes bureaucratic procedures. Some do not pay taxes and the invoicing is not connected to the Venezuelan tax authority.
Business union leaders have pointed out that this type of business competes with formal businesses that pay national and municipal taxes.
Imports do not go through sanitary controls and have many advantages over formal ones. In no way will it reverse the decline in the commerce sector that we estimate at 35% by the end of 2019. The economic crisis continues, Felipe Capozzolo, president of the National Council for Trade and Services - Consecomercio, told Infobae.
To the southeast of Caracas there are several bodegones. They are new or remodeled structures, with luxurious furniture. Jorge R. is a liquor salesman and assured Infobae that his best customers come from the military sector. They carry a lot of boxes of whiskey or Chilean wines and they don't skimp on expenses. When we bring Spanish cured pork loin, they are the first to buy them. There are no limits between the military who command Venezuela, he told Infobae.
In another warehouse, imported sweets are sold. I buy large quantities of chocolates for myself and my family, in Venezuela you get everything but you have to have a lot of money available. I have paid with bills of 1, 5 and 10 dollars and they have given me the change, that indicates that there are enough bills to do business, says Nubia J. He warns that these stores are safe. There's a lot of surveillance and I like that. Not everyone who wants to come in can do it. If they are not dressed properly or if they want to beg immediately, they are taken out of the premises.
For the end of the year season there is the option of buying or renting Christmas trees. In this case, the client must pay in foreign currency. It's a store policy. Anything that is a seasonal item has to be paid with dollars or euros in cash," concludes the manager of the business.
Meanwhile, the other Venezuela tries to survive with a minimum income that every day suffices for less.
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