https://devilexcrement.com/2016/07/07/myths-and-realities-of-the-distorted-venezuelan-economy-part-iiMyths And Realities Of The Distorted Venezuelan Economy Part IIexcerptAnd the private sector can do very little to help, because it has been minimized, it has become for lack of a better word, miniscule. There were over 600,000 employers in Venezuela in 1998, there are around 260,000 now.
That’s how bad it has been decimated…
But to understand why shortages can not be reduced by the private sector let me give you an example: Assume for a second, that you are a private meat importer/distributor. A meat cargo ship carries somewhere around 15,000 Tons of meat. (About a two day supply for the whole country). Depending on the type of meat, this would cost around US$ 25 million to US$ 35 million to import.
Let’s say it costs US$ 30 million, simply as an example.
There is NOT A SINGLE COMPANY IN VENEZUELA that has enough Bolivars in the bank to pay for this ship at the Dicom rate of Bs. 600 per US$., as this would be Bs. 18 billion. (0.36% of M2)
In fact, not a single private or public bank could lend any company this amount, as the largest banks have capital of about Bs. 50 billion and they are not allowed to lend more than 10% of their capital to a single customer (Which mostly don’t do anyway, it is just too risky, suppose the Government nationalizes that company). It would take a syndicated loan of all banks to bring a ship that carries all of two days of meat for the whole country.
Get the picture?: Even if the Government gave a company dollars to import meat at the Dicom rate, no company could pay for a single ship (two days supply). This applies to wheat, corn, rice and many of the basic staples needed for the population. And the Government is not willing to give foreign currency at any other rate to the private sector. It reserves the Bs. 10 rate for itself.
Yes, the Bolivar is so worthless that no foreign entity accepts it, and the government is the only place to trade for foreign currency and it would probably not let them do this anyway.
