[captionpix imgsrc=”https://thecostaricanews.com/wp-content/uploads/2011/11/Venezuela1.jpg” align=”left”]Maracaibo, Venezuela – Coromoto Torres can’t wait for her first trip overseas.
Her bags are packed, her airline tickets are purchased and several years of savings have given her a purse full of bolívares.
All her passport needs is a departure stamp.
But she can’t take her first trip outside South America because she doesn’t have any U.S. currency – the result of the Venezuelan government’s slow process to convert the Andean nation’s currency into U.S. dollars.
“It is a complex process,” Torres, 31, said. “You have to print paper after paper, register online and then take it to the bank. It is a sprint race against time.”
Currency exchange controls were established in Venezuela in February 2003.
The controls, aimed at preventing capital flight, have created a parallel market, where the U.S. dollar sometimes sells for 100% more than its government-set value of $4.30 bolívares per US$1.
“We don’t need to maintain a currency exchange,” said Manuel Díaz, 24, who runs an import-export business in Maracaibo. “The lack of access to foreign currency has increased inflation. We cannot ignore the real depreciation of bolívares.”
Everyone – from students to importers – must abide by the strict rules of the Commission for Currency Administration (CADIVI), the government entity in charge of approving and delivering foreign currency allocations.
The government, through CADIVI, buys and sells dollars at a fixed rate of $4.30 bolívares per US$1.
Those who wish to bypass the infinite red tape to get U.S. currency must use the parallel market, which is fueled by bids on dollar-denominated bonds sold by the government, with a price hovering nowadays around $8.55 bolívares per US$1.
Currency controls are to blame for the shortages of certain food staples and other consumer products in Venezuela, said Miguel Zambrano, president of the Industrial Chamber of Zulia state, of which Maracaibo is the capital.
“The process of requesting [the money allocation] is tedious,” Zambrano, 64, said. “There are many superfluous details that in the end are a waste of time. Eliminating the currency restrictions will ease imports, and that is important because most of the products that are consumed in Venezuela are imported. We can see that in the scarcity of some products, since some of them cannot be produced here because their ingredients are imported.”
But some analysts said the unpopular measure is necessary.
“The country needs the currency control restrictions because an oil-producing country like this needs order in its foreign-denominated assets,” said Armando Pulgar, a professor of economics at Maracaibo’s Universidad del Zulia.
“We cannot have an exchange rate that fluctuates freely because all capital would leave the country,” Pulgar, 59, said.
[captionpix imgsrc=”https://thecostaricanews.com/wp-content/uploads/2011/11/Venezuela2.png” align=”right” captiontext=””]But Zambrano said the currency controls could lead to the downfall of local businesses and industries.
“As they are right now, currency restrictions offer no opportunity of survival to small and medium companies,” he said. “They must buy currency at [parallel] market rates to acquire their products and materials. But if you buy at those prices, then you are not competitive because of inflation, and after that, the government comes and investigates where you got those dollars and who sold them to you.”
The currency controls also represent another hurdle for entrepreneurs looking to do business overseas.
“Because of currency control we [the Venezuelan private sector] have no credibility, nobody gives us credit overseas,” Zambrano added.
The Venezuelan government allocates money for those who travel for pleasure, depending on the destination and the amount of time that’s going to be spent outside the country.
For those who travel to Europe, Africa, Asia and Oceania, the total allocation is US$2,000 if the trip lasts from one to seven days and US$3,000 for a trip of eight days or longer, according to CADIVI.
The allocation for travel to the United States, Mexico, Central America and the member countries of the Bolivarian Alliance for the Peoples of our America (ALBA) goes from US$1,000, if the trip is from one to three days, US$2,000 for four to seven days and to US$2,500 for eight or more days.
And for trips to Colombia, the allocation is drastically reduced to US$300, from one to three days, US$750 from four to seven days and US$700 for trips lasting at least eight days.
“There are always problems when using credit cards outside the country,” said Richard Morales, a 28-year-old Venezuelan entrepreneur who frequently travels abroad for business. “The credit cards are often declined if you buy something that costs more than US$300, and you have to ask the attendant to run them twice for smaller amounts. It’s embarrassing.”
Once they consume their yearly allocation, tourists are forced to buy currency in the parallel market, Morales said.
It’s something Torres may have to experience firsthand.
If the government doesn’t allocate her U.S. dollars, she won’t be able to take her trip because she can’t afford the high rates of the parallel market.
“This is frustrating,” she said. “This is my money. I saved it. Why can’t I spend it as I please?”
