CARACAS, Venezuela — Eugenio Escobar is waiting outside an ATM in Caracas hoping to get some cash. His car has been stuck for hours in a parking lot, and he needs 2,000 bolivares in cash to pay the parking fee. But he, like many Venezuelans these days, doesn’t have a single note inside his wallet.
“I’ve visited at least five ATMs today,” the 73-year-old pensioner said. “All of them were empty.”
Venezuela's extreme cash shortage is creating serious problems in the daily lives of its citizens. To find cash, people have to wander for days from ATM to ATM, and queues are growing longer every day. On average, Venezuelans can only withdraw 10,000 to 20,000 bolivares a day, equivalent to just $3 to $6 at black-market exchange rates. A cheap meal in Caracas currently costs about 30,000 bolivares, so simply paying for daily food intake can require carrying a backpack full of bills.
This is not the first time Venezuela has endured a lack of cash. Less than a year ago, President Nicolás Maduro removed the country's biggest bank note, the 100-bolivar note, from circulation, claiming that “international mafias” were trying to harm his socialist government by hoarding the bills and sending them over the border into Colombia.
The official narrative hasn’t changed much since then. In a recent statement, Venezuela's regulatory agency for banks, called Sudeban, blamed the mafias for the scarcity of cash, claiming that some 30 percent of Venezuelan bank notes are diverted toward the border by currency traders. Meanwhile, the 100-bolivar notes were supposed to become invalid in December, but they have remained in circulation, and the production of new, higher-value bills has taken longer than expected.
But economists say the real reason for the cash shortage is probably Venezuela’s runaway inflation, which the International Monetary Fund expects will reach 720 percent by the end of the year. “Bills arrive into the country, but inflation moves faster than the bank note printing process,” said Armando Gagliardi, a Venezuelan economist working for the local consulting firm Ecoanalítica. “Printing and sending the notes can’t catch up with the pace of inflation pace.”
The shortage is an economic disaster for many Venezuelans. Nearly one-third of the population does not have a bank account, making cash essential for survival.
Yorgeliz Mata, the owner of a motorcycle repair shop in the Caracas slum of Petare, said she has lost many clients because of the lack of cash. “Many of my clients don’t have a bank account,” the 40-year-old woman said. “Nobody has enough cash to pay me.”
Pablo Díaz, 26, is in a similar situation: he drives a motorcycle taxi in Caracas to earn a living, but clients no longer carry enough cash to pay an average fare. “They tend to ask me if they can wire the money, but I don’t have a bank account,” said Díaz, who hasn't been able to make many trips recently and is now worried about earning enough to feed his child.
There is one group that is still able to get its hands on large amounts of cash, though: those who are willing to “buy” it. Venezuela has developed a strong black market for cash, and some businesses have sold their supplies of bills to buyers in exchange for small fees.
A month ago, in a burger restaurant in the city of Barquisimeto in western Venezuela, a man walked up to the counter and asked the owner, whom he didn't know, whether his cash was for sale. "At that moment we had 3 million bolivares,” said the 30-year-old owner, who spoke on the condition of anonymity out of fear of reprisal. “He wired me the 3 million, plus a 3 percent fee, and left.” The owner did not ask the man what he planned to do with the cash.
After months of waiting, the new bills — in denominations from 500 to 20,000 bolivares — are finally circulating. But economist and opposition lawmaker José Guerra says the notes arrived too late; they have already lost 70 percent of their value because of the 249 percent inflation between January and July. And the only solution, says Gagliardi, is to print even newer and bigger bills, hoping production finally catches up with reality.
“The 20,000 bolivares note is worth just $1.30 at the black market,” he said. “So, either the government leaps ahead of inflation by introducing bills in denominations up to 500,000, or the cash shortage is going to get worse.”