February 26, 2020 / 10:23 PM / a month ago

In Venezuela's major cities, over 50% of goods are sold in hard currency

FILE PHOTO: General view of the sunset in Caracas, Venezuela January 26, 2020. Picture taken January 26, 2020. REUTERS/Manaure Quintero

CARACAS (Reuters) - More than 50% of basic goods sold in Venezuela’s major cities are paid for in hard currency, a local economic consultancy Ecoanalitica said on Wednesday, amid a broad liberalization campaign by the government of President Nicolas Maduro.

Some 52% of goods such as food and clothing are sold in euros or dollars in the capital of Caracas, a figure that is closer to 90% in the border cities of San Cristobal and Maracaibo near Colombia, Ecoanalitica said in a report.

Dollar transactions have soared in Venezuela since Maduro relaxed price and currency controls at the end of 2018 following 15 years of socialist regulations that put the government at the center of many basic business transactions.

The use of hard currencies such as the dollar and euro, with stable exchange rates, have become commonplace in Venezuela after years of hyperinflation and recent broad U.S. sanctions meant to push Maduro from office. It has broadly boosted the availability of products, but left many unable to obtain basic items.

In the country’s 10 major cities, 62% of food payments were made in hard currencies with the average purchase being made for $26, Ecoanalitica said. A monthly mininum wage together with bonus food ticket reaches a combined total of around $6.

Dollar transactions have become increasingly important in Maracaibo due to chronic blackouts that cripple point-of-sale operations. Due to long-running shortages of cash, those terminals are essential for transactions based in the local bolivar currency.

“Maracaibo is more dollarized due to the collapse of public services,” said Ecoanalitica director Asdrubal Oliveros told reporters. “Point of sale terminals do not work when the power fails.”

The World Food Program said this week that 59% of households do not have enough money to buy food and four out of 10 households face daily electricity interruptions.

Maduro has said that dollar transactions in Venezuela are an “escape valve” for the economy, although he maintains that he is “aware of the inequalities that arise.”

Reporting by Brian Ellsworth; Editing by Richard Chang

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