Venezuela’s authoritarian government has arrested dozens of people, including a former finance minister, for crackdowns on black market dollars and independent economists.
The country’s Bolivar currency lost about two-thirds of its official value as President Nicolas Maduro abandoned its fixed exchange rate in October as the dollar reserves needed to support the currency fell.
In an obvious attempt to stop the Bolivar slide, the administration has charged at least 58 terrorism and other financial crimes to run a website listing black market exchange rates.
“The government doesn’t want to admit that there aren’t enough dollars to meet demand, and as a result, a parallel market with much higher rates is inevitable,” said Jose Guerra, economist at Venezuela’s Financial Viewer (OVF) think tank.
The government is also targeting people and organizations who criticize or reveal economic struggles such as OVFs. The data shows that annual inflation rates skyrocketed from 51% in October to 229% in May.
At least two economists who consulted OVF and former finance minister Rodrigo Cavezas were arrested this month, but they have not been charged and their whereabouts are unknown.
A powerful pastor under Maduro’s predecessor and leader, Hugo Chavez, Cabezas opposed the administration in 2017 and worked with the OVF.
“Rodrigo Cavezas says he has information about the financial people who run the website used to destabilize the dollar’s exchange rate,” Home Minister Diosdado Cavero said Wednesday.
Since October, Maduro has started aggressive audits on businesses and hiked taxes.
Analysts say these moves could erase the profits achieved in recent years by loosening implicit dollarization and economic restrictions. The result, they say, could potentially return to hyperinflation and widespread misery that ran out of control in 2016.
Aaron Ormos, professor of economics at the Central University of Venezuela, said:
Maduro – Sold in for his third term in January, Maduro lost a key economic lifeline last month when Major Oil Chevron’s license to work in the country expired by Trump administration orders after claiming victory in a widely regarded election last month.
The exemption license is worth around $4.5 billion last year to the Maduro government, analysts say that Chevron alone puts around $200 million a month in the exchange market.
Washington is increasing its stance towards Maduro. Maduro challenged him after competing in last year’s election victory. His government said it had arrested hundreds of people who protested the outcome.
As the dollar was exhausted after heavy spending for elections, government-controlled central banks abandoned the fixed exchange rates that helped the country stabilize its finances. Instead, it “choose a mini-devalization system,” Jose Guerra said, but said they didn’t meet black market rates.
The official exchange rate was listed to $1 at 104.5 volv. 104.5 volv. Friday, roughly tripling the price at which the central bank stopped defending its currency. According to one monitor, the black market rate on Friday is about 10% lower, at 115.4.
Around the time the currency policy was changed, the central bank stopped releasing official inflation numbers. This publishes tissues such as OVFs that publish such data as stimulants.
“Measurement of prices is not a crime. It’s necessary in Caracas,” OVF said Monday. “OVF is not responsible for drafting and applying economic policies that will cause price increases.”
More than 50 websites tracking parallel rates were closed last month, according to Ve Sin Filtro, the internet rights watchdog.
19-year-old Barbara Vitoriago was on his way to a shopping centre in the Venezuelan city of Malacay earlier this month when authorities arrested her and charged her with terrorism and financial crimes allegedly involved in one of those websites.
“She has nothing to do with what she blamed,” said her mother, Jocelyn Rodriguez. “My daughter is innocent.”
Years of hyperinflation and price control led Venezuelans to use greenback as their preferred currency, with prices listed in dollars, while US banknotes circulating nationwide.
Rosa, a public sector worker who won 130 bolivars ($1.26) a month, said the government’s crackdown is unlikely to have any consequences, saying that he will only punish people like her.
“We workers are most affected because the government hasn’t improved the economy, whether there is speculation about the dollar or not,” said Rosa, who gave her a pseudonym to protect her identity. “If they’re going to jail people, it won’t solve anything – I still earn 130 volivars and the dollar will continue to rise.”
