Lack of dollars being felt throughout Venezuela

www.miami.com Posted on Wed, Mar. 19, 2003
By MARIKA LYNCH mlynch@herald.com

CARACAS - Jose Luis Rosal fell off the back of a pick-up truck, scraped his cheek, and needed 15 stitches in the crown of his head. Three days later, though, the 20-year-old waited seven hours outside a Caracas hospital for an X-ray to see if he had a skull fracture.

The hospital in his hometown, located an hour outside the capital, turned him away because they didn't have the materials to make an X-ray, his sister said.

Venezuela's chronically strapped hospitals have been further pinched since the government stopped selling U.S. dollars needed to import supplies, medicine and other goods.

The government imposed the currency controls two months ago, after a national strike that failed to oust President Hugo Chávez and all but shut down the oil industry -- the country's primary source of foreign exchange. With the national currency, the bolivar, dropping in value and fearing capital flight, the government imposed the controls to keep dollars in the country.

But since Venezuela relies on imports for most goods, imports bought with U.S. currency, the lack of dollars is being felt throughout the country.

Pharmacists say they have a stock for three more weeks, and then ''the Venezuelan health system could collapse,'' Edgar Salas Jimenez, president of the Venezuelan Pharmaceutical Association, said.

Manufacturers and distributors are running through inventory, but goods from toilet paper to electronics could become scarce, they warn. Meanwhile, farmers say their crops will be thinner this year, without the proper imported fertilizers. Then they'll have to scrounge for packaging material to wrap what is produced.

Big business, shopkeepers, and street sellers like Fortunata Humani, who sells bikinis and lace panties from a sidewalk stall, expect to be affected. Wholesalers already warned Humani their imported inventory is sparse. Humani, 46, says she may have to start sewing her own clothes from home, if she can find the material.

The Venezuelan economy, private analysts say, could shrink up to 30 percent this year, and the currency controls will be a factor.

''They are destroying the entrepreneurial fever of the Venezuelan people,'' economist Orlando Ochoa said of the controls. ``What little there is left.''

The effects also could reach Florida. Close to $3 billion in Venezuela-bound exports -- from machinery to medicines and clothing -- passed through Miami-Dade and Tampa's ports in 2001, according to business development group Enterprise Florida. Also, under the measure, Venezuelans aren't allowed to use credit cards abroad, which curtail shopping in South Florida malls. Business travelers will be allowed to get dollars, but only $1,000 a trip, allowed three times a year.

This week, the government said it will start selling $645 million a month, to go toward a list of priority goods, mostly foods and medicine. The government is also artificially setting their prices, to keep them down.

But a newly created government agency will decide who gets the greenbacks, and only a fraction will actually be given to private importers, said Jose Piñeda, head economist for the Venezuelan American Chamber of Commerce and Industry. The government will use some, he said, to import food and distribute it to the poor at markets, he said.

Venezuela has imposed currency controls twice in the past two decades, and both periods ended with high inflation, Piñeda said. This time, though, the economy has already been weakened by the two-month strike, and the effects could be worse.

Business leaders want a parallel dollars market, where they can buy currency at a higher rate than the established 1,600 bolivars to the dollar. So far the government has avoided the idea. Some businesses are already turning to the black market, where one dollar is sold for 2,800 bolivars.

Business leaders, most of whom are opposed to President Chávez, also fear the government currency agency will use its power to punish people who supported the country's strike. The worry isn't without warrant. Chávez has said that ''Not one dollar'' will go to the ''coup-plotters,'' his name for those who tried to force him out through the strike.

First elected in 1998, Chávez was briefly ousted by a coup last April. A coalition of union, oil and business leaders failed to push him out, or call new elections, through a strike that ended in February.

Venezuela's newspaper owners fear that newsprint will not get on the import list, for political reasons. Their newspapers have been highly critical of Chávez. Newsprint first appeared on the list for a day, then was quickly removed. But officials have since said it will be restored.

On average, local newspapers have enough in stock to keep printing through April and into May.

But if that doesn't come through, ''we're going to be the first country in the world without a newspaper,'' said Miguel Henrique Otero, publisher of the daily El Nacional.