CARACAS:
In central Venezuela, the owner of a mid-size pharmaceutical factory scrambles to obtain dollars to import chemicals and other ingredients for his headache and fever remedies.
But he, like many other Venezuelan business owners, is frequently unsuccessful. The hurdles include an official system for allocating US currency that disfavours small and medium companies and an ongoing shortage of dollars, despite government promises of improvement.
“You don’t know at what cost you’ll be able to restock your goods because you don’t know when you’ll be able to buy foreign currency or at what exchange rate,” the businessman said. “The bolivars you receive from sales keep losing value due to inflation …. In the middle of all this, you still have to try to keep production going.”
The owner, who asked not to be named, said his bids for dollars in official auctions were rejected three times without explanation. So he has had to turn to unofficial markets, where the exchange rate is less favourable. That has forced him to increase the prices of his medications to cover costs. He is not alone. Interviews with 10 people who run Venezuelan businesses or work in the financial sector found these complaints were common. In fact, 58% of medium-sized Venezuelan business owners said lack of foreign currency was an obstacle to production in a survey by private manufacturing trade association Conindustria last month. Using cryptocurrency is another workaround for business owners to buy imported goods. Because of sanctions, Venezuelan banks are largely cut off from the global financial system, making wire transfers and international payment platforms inaccessible.
Instead, dollars earned from the country’s oil exports are auctioned off by local banks with allocations determined by the central bank and foreign correspondent banks. Increased oil sales after the US ouster of president Nicolas Maduro in January, stabilisation of an economy plagued by hyperinflation and potentially greater US investment should make dollars more plentiful. But local analysts calculated fewer dollars are available for auction now than a year ago.
