The uncertain economy in venezuela

I do not consider myself political and I have never omitted opinions for the purpose of harming any person or government either local or foreign, as I said I am just a bit of an analyst of what is happening and my opinions are based on reality, the things I experience daily and how they affect me directly.

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Venezuela is one of the few places, if not the only one, where the $ has different values and this December that has made itself felt with a new onset of inflation that still does not seem to have peaked.

This may be common for Venezuelans (the different prices of the dollar) because we have been dealing with it for many years while our economy is being pulverized by the consequences it causes. But it may be something uncommon for people from other countries that do not experience this. So in this article I will share with you my opinion about the agitated state that the country's economy is currently going through.

During the first decade of the present century/millennium I never knew what the price of the dollar was in local currency, in fact it did not matter because our economy seemed to have a certain stability and that eliminated the need to worry about such things.

Around 2013 when the current official president took office the minimum wage in the country was equivalent to $300. For some reason that is still not clear to me the president decided that the State was going to manage different prices for the dollar. A very cheap price for pharmacies and companies that supplied food to the country and a higher price for the common user. That system was called SICAD and established several prices for the purchase of dollars in the country.

These prices even doubled, which allowed many pharmacies or agents with access to the cheapest dollar to buy it and resell it at the most expensive price, obtaining inflated profits, repurchase it with these profits and repeat the cycle, draining an enormous amount of foreign currency from the national economy

At a certain point the Central Bank ran out of foreign currency that it could offer at any price, the bad decisions and actions were felt in the following years with shortages and extreme poverty in the country. The government could no longer fix the price for the dollar because it could not satisfy a demand at the price it fixed. Then the "Parallel Dollar" was born, I do not know how or who determined it but it is not linked to the price issued by the government and represents a value that is always above the one dictated by the government

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The problem is that if you go to the Central Bank to buy dollars at the price they demand should be the official price they will tell you that there is no availability, and when you find an unofficial channel they will sell it to you at the unofficial price. This generates an imbalance in the economy because 2 prices for the dollar move according to the convenience of the merchant.

Even in the markets where you buy products with local currency you feel this effect because the prices are marked in dollars (even if you pay in local currency) but the detrimental thing happens when you decide to pay.

If you ask for the price in local currency they will give you the value in local currency corresponding to the unofficial price, as at no time they are talking about the price of the dollar but the price of the item in local currency they do not incur in any crime by giving you high prices.

If on the other hand you decide to pay in dollars they will calculate the lower price so that you need more dollars to cover the cost of the product. In either case the existence of two different prices for the dollar ends up hurting the buyer no matter what currency they use to buy.

These problems would not exist if the Central Bank could meet all the demand for foreign exchange at the prices they set. But not being able to do so creates chaos.

Currently the minimum wage is 130Bs. If we calculate it in Dollars taking as reference the lowest price (the official one) a Venezuelan with minimum wage currently receives less than 10$ a month (it is not worth calculating it with the highest price of the parallel dollar). I do not know of any other country where this happens and even less with the wealth that ours has.

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The saddest thing is that all this chaos is coming up again when contracts are being signed with CHEVRON and sanctions are apparently being eased. Wasn't easing sanctions supposed to bring about improvements in the economy? Why is the opposite happening?

What is certain is that for whatever reason the economy is heading in the same direction as the terrible years of 2015-2016. For now everything is uncertain.