A woman gets on a bus, gives the driver a dollar bill and returns a bundle of bolivars, in a scene that summarizes the situation in Caracas, as residents resort to private city buses to supply cash due to the acute shortage of local currency liquidity.
“We turned into currency exchange centers!” Says Marcelo Morett, who drives a bus he owns.
Because of the absence of a public transport company, small cooperative companies provide transportation services in the Venezuelan capital. This is the only sector that still uses the local currency in cash due to the absence of an alternative.
“The Bolivar only provides a ride on the bus (…) you can’t buy anything else with it,” Lisbeth Lyell, 39, told AFP.
This exchange of currencies is a profit for the driver as well as the passengers.
When a passenger pays for a bus ticket of 150,000 bolivars (9 cents from a dollar), he receives the equivalent of 1.3 million bolivars in cash, with which he guarantees dozens of trips on the bus and avoids endless waiting in front of the banks.
Banks give cash only 400,000 bolivars a day in a city where ATMs often do not operate.
For drivers, given the difficulty in obtaining the bolivar, their exchange rate for the dollar, about 30% of the official price, is a bargain.
Behind the wheel, however, Marcelo Moret fears that sooner or later the lack of cash will make his business impossible.
The Venezuelan currency lost 38.14% of its value in early 2021, after it had deteriorated by 95.7% in 2020.
In the face of this continuous decline in their currency and out of control inflation, Venezuelans are resorting more and more to the use of the dollar.
This crisis of confidence in the local currency was reinforced by the worst economic crisis in Venezuela in its modern history. The gross domestic product of the Latin American country, which was among the continent’s most prosperous countries, halved between 2013 and 2019.
Faced with this informal link of the economy to the dollar, merchants are forced to use electronic payment methods exclusively for all bolivar sales, even if it is for a loaf of bread only.
In domestic transportation in the country, buses between cities charge their fees in bolivars through all electronic payment methods, especially via smart phones.
But this type of money transfer, which requires a person to write his identity number and then a password, seems impossible in the capital’s crowded buses, as the number of people traveling on them is still large despite the outbreak of the Covid-19 epidemic.
President Nicolas Maduro, who personally considered pegging the economy to the dollar as a “safety valve” against US sanctions, pledged to put in place an electronic payment system for buses in the capital.
However, economist Jess Kacik believes that this “does not cure anything.” He added in an interview with France Press, “The basic problem remains: the central bank continues to address the deficit with cash (…) and the government, and instead of correcting imbalances in the economy, it increases their complexity.”
The EcoAnalytica office notes that half of the population does not have access to dollars periodically, although 65.9% of commercial transfers in Venezuela are made in dollars.
This phenomenon exacerbates the social gap, according to Cacic, knowing that four out of five Venezuelans do not get enough revenues to buy food, according to a study prepared by the main universities in the country.
“Some of the passengers barter,” says driver Marcelo Moret. “They give a kilo of rice to pay for the ticket and get the difference” in the bolivar.