Venezuela black market: How Venezuela's black market has REPLACED banks
VENEZUELA has on the brink of a political and social crisis for years but the Latin American country has now been thrust into the mainstream spotlight following the collapse of President Nicolas Maduro’s government. Here is all we know about Venezuela’s economic crisis - and the rise of the black market trade.
Venezuela: Children look through rubbish to find food
Venezuela is on the brink of collapse. Thousands of protestors took to the streets of Venezuela on Saturday in anger over the country’s growing economic problems. President Nicolás Maduro has been criticised by other world leaders for the economic turmoil Venuezela is going through, including food and medicine shortages. And now opposition leader Juan Guaido has declared himself president of Venuezela, backed by the USA as well as several Latin American and European countries.
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Has Venezuela’s black market replaced banks?
In Venezuela, the crippled economy has seen the devaluation of the price of the bolivar (the local currency) and a sharp rice in the cost of essential commodities, such as bread and rice.
Critis of MAduro’s government say the black market is a product of his government’s failed economic policies.
But Maduro blames the 'bachaqueros' - black market stall holders who resell goods at hugely inflated prices.
Essentials like rice and sugar can sell at $2 or $3 dollars on the black market - which would cost a family of five $16 a month - or half the average monthly salary.
In supermarkets, in which prices are controlled by the government, they cost 900 and 380 bolivares - less than £$1.
But because of the high demand for cheap goods as inflation soars, supermarket shelves are empty more often than not, forcing many to the black market just to be able to eat.
The government has been trying to get rid of the black market for years.
In 2015, Maduro’s government declared war on the black market stalls.
Police and the national guard were deployed in a brutal crackdown to try and arrest illegal vendors.
Vendors quickly learned to run when they heard the word ‘aqua’ - water in Spanish, which was used as a code word.
And before this, Hugo Chavez - who came into power at the start of the millennium -and his government created CADIVI in a bid to crackdown on the economic black market.
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The body was created to handle foreign exchange procedures and aimed to control how much people could be offered in terms of foreign currency.
But this limit on foreign currencies to everyday people, many of which relied on currencies like the dollar to trade and work, led to the creation of an comic black market where currencies were sold and bought for inflated prices.
And as Venezuela printed more money to fund social programmes, the bolivar was further devalued.
At the start of last year, the exchange rate was 1 US dollar to 10 Venezuelan bolívar.
Now, in the black market, a dollar costs 2,500 bolivars, according to MonitorDolarVz, compared with 3,295 bolivars at the government rate.
A last report on shortages by the government revealed 22.4 percent of essential goods are not in stock.
But no reports have been done over the last few years, as the central bank does not post the scarcity index anymore.
This has sparked rumours the government is not admitting it cannot control the economy.
Empresas Polar, which is the country’s largest food producing company, admitted it could be forced to stop some production as they owe foreign suppliers $463 million.
