Venezuela on the brink: a journey through a country in crisis, by Jonathan Watts – The Guardian

Fuente: The Guardian

The proud face of the revolutionary hero Simón Bolívar gazes from a stack of banknotes dumped in a grubby box on the floor of a supermarket that doubles as a foreign exchange bureau in a small border town in the Amazon.

No disrespect is intended: there is simply not enough space in the till for the thick wads of cash. Nor is it practical to treat the 100 bolivar bills with more care: they are worth barely more than the paper napkins stacked rather more attentively on the shelves.

This, however, is Venezuela’s highest denomination, a note that once represented Latin America’s most powerful petro-economy – but is now a near valueless symbol for one of the most dramatic reverses in a country’s fortunes.

With greater oil reserves than Saudi Arabia, Venezuela should be at least moderately prosperous. Instead, it has the world’s fastest contracting economy, the second highest murder rate, inflation heading towards 1,000% and shortages of food and medicine that have pushed the poorest members of its 30 million population to the edge of a humanitarian abyss.

To get a snapshot of the fast-changing – and sometimes tragically surreal – socio-economic landscape, the Guardian travelled 870 miles across the country from the Amazonian border with Brazil to the capital, Caracas.

Santa Elena de Uairen – where money comes in suitcases

For most of its history, the frontier town of Santa Elena de Uairen was considered an underdeveloped outpost deprived by distance of the goods and services available on the coast and the interior. Today, however, it is seen as a relatively safe and prosperous sanctuary from the crime and chaos found elsewhere. Thanks to the proximity of Brazil, food is not in short supply and there is a brisk border trade in grain.

It takes just five minutes to cross from the porous border at Pacaraima. Locals say the government in Caracas lifted food import tariffs from Brazil two months ago in a sign both of its desperation to ease shortages and its weakening control over the economy. There is now a steady stream of traders buying sacks of rice, sugar, wheat and spaghetti for resale in Venezuela.

People here rely on cash because Santa Elena is so far from the rest of the country that communication networks are too unreliable for debit or credit cards. That means they probably spend more time and effort counting and carrying money here than anywhere else.

Life could be made easier if the authorities printed notes with higher denominations than 100 Bolivars, which is worth less than 8p, or 10 cents. But the central bank appears reluctant to make a move that would confirm a level of hyperinflation not seen in Latin America since the crises in Brazil and Argentina in the 1980s and 1990s. As a result, locals have to pay for everything in the equivalent of dimes. Even when made of paper, that can be cumbersome and heavy.

“When I go to the market I have to carry such a big bag of money that I get a backache,” said Carmen Ramirez, a local hotel manager. Her friend Wanda Wojtowitcz, a lawyer, said she went shopping with her cash in a toiletry bag because it would not fit in her purse. “At the bank you see people with suitcases full of notes to deposit,” she says.

The increasingly secretive central bank does not reveal how much it costs to print each bill, but based on international parameters, José Manuel Puente, an economist and professor with the Institute of Higher Administration Studies, estimates that the cost of paper, ink and printing of each note is about 20% more than their face value. “They are not worth what they cost. It’s a joke. But that’s the way things are,” he said.

Read the entire report here.