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Leftist Venezuela's central bank creates 'millionaires,'

Jun 19, 2018 10:51 AM GMT+0530 | 0 Comment(s)

AFP - Elizabeth Torres is outraged, but as a Venezuelan she takes the affront in her stride. "We are a country of millionaires," she says ironically, eyeing a carton of eggs in the market. Price? Three million bolivars.

"You are a millionaire because you have to pay that much, and for that you get 36 eggs, but the minimum salary is 2.6 million! With what you get every month, you can't buy them," she says.

It's the great irony of the country's cruel decline. Sitting atop the world's largest reserves of crude, Venezuela -- once Latin America's richest country -- is now a state of millionaires, but the millions are in bolivars and practically worthless.

According to the country's leading universities, 87 percent of the population is now officially poor.

In the market in the eastern Caracas suburb of Chacao, Torres, a 64-year-old retired accountant, isn't the only one to grumble.

Between stalls of vegetables, meat and imitation leather shoes, people complain loudly about the cost of living.

Torres' salary is equivalent to 32 dollars at the official exchange rate and barely one much-coveted black market dollar.

Venezuelans have to pay seven-or-eight digit sums to buy staples like flour, rice, bread or some other reasonably nutritious and filling carbohydrate.

Carmen Machado, 57, was fired a few days ago from her job at an office cleaning company. They gave her 5.8 million bolivars as severance pay after four years of service, she said. Enough to buy a kilo of meat.

Venezuelans are forced to keep up with crazy prices that rise two or three times a week.

The accumulation is staggering. The opposition-majority parliament says hyperinflation was nearly 25,000 percent in the last 12 months, meaning the price of an item now costs 250 times' what it did a year ago.

- 'Not living, surviving' -

At a pet shop Olga Aviles, 53, is torn between buying a tin of food for her cat and a kilo of meat for the family.

"There always has to be a certain quota of sacrifice. If I spend on one thing, I don't spend on the other."

"In Venezuela, we are not living, we are surviving," she said.

"If you buy fruit, you cannot buy vegetables. If you buy grains, you do not buy cereal."

Though the government sells some subsidized foods in poorer neighborhoods and electricity, water and gas cost a pittance, many goods and services are priced on the value of a "dolar negro" or black market dollar -- worth 30 times the official one.

Only a small sector of society has access to dollars.

"We have to ask family members outside to send something back. With what we get here we cannot eat," says Aurora Gonzalez, 71, whose son emigrated and sends home remittances to keep his family going.

President Nicolas Maduro, whose controversial re-election in May will keep him in the presidency until 2025, argues that Venezuela's inflation is the result of speculation and an economic war designed to cripple the country and force a transition.

But Venezuelan economist Luis Vicente Leon blames the crisis on the state monopoly of foreign currency and strict price and exchange controls.

- 'Millionaires of lies'-

In March, Maduro announced a re-denomination of the bolivar, lopping off three zeroes from its value to counter hyperinflation. The launch has been postponed as the electronic banking system wasn't ready and nor were the promised new banknotes printed.

Leon dismisses the measures are "an ephemeral work of art".

"Removing zeroes from the currency does not extinguish the fuse that causes hyperinflation," says the economist.

Many Venezuelans are already lopping off the zeroes automatically, "for convenience and for the psychological effect. For instance, when something costs 4.5 million we say 4,500," says Olga.

In 2017, Maduro announced a new 100,000 bolivar bill, which would now no longer buy an egg. Now, the highest value will be 500 bolivars, which might buy you a coffee.

For Elizabeth Torres and many like her, it's a surreal, unfunny joke.

"We are millionaires of lies. What we are is poorer."


 

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