Despite having devalued more than 80% in the last year, the use of the bolivar in Venezuela has increased, and according to a review by the Venezuelan portal Banca y Negocios, according to studies carried out by the firm Ecoanalítica In 10 of the main cities in the country, currencies went from representing almost 66% of transactions, at the end of 2021, to 45%, while the bolivar increased its presence in commercial operations from 34% to a 55% since then.
They also pointed out that Jesús Palacios, economist and university professor, in an interview with the EFE news agency, explained that even companies that, at the beginning of 2022, charged 70% in dollars, now 80% do so in bolivars. , or in sectors, such as household appliances, electronics or spare parts, which “were very dollarized”, now payments in bolivars have “a very important weight”.
The main cause
As explained from Banking and Business, The main factor that has caused the reduction in the use of foreign currency has been the application, since March of last year, of the tax on large financial transactions (IGTF), which taxes payments in foreign currencies at 3%, which consumers avoid paying in bolivars.
However, Palacios, for his part, assured that the Executive took additional measures that also led to a reduction in the use of foreign currency, including the “suspension of bank transfers in dollars” and, additionally, the increase in the withdrawal commission to 3.80%, a percentage qualified as “quite expensive”when before “it was below 1%”.
To dollarize or not to dollarize?
In this sense, in the economist’s opinion, the Executive implemented these measures “so as not to lose the ability to make monetary policy”in which the Central Bank of Venezuela (BCV) acts as a “financier” through the exchange interventions that it continuously carries out.
“If the government allowed dollarization to advance infinitely, it was going to lose that power to use the bolivar as a lifeline, as a lender, in the last instance…, and avoid that by giving the bolivar more space”he explained.
According to the economist, the intention of the Executive is that “limited dollarization is maintained”without ending it, since it allowed the existence of a “dynamism of the economic activity and, above all, the commercial one, which is the one that has had the main upturn”.
“Limited means, probably, below 50 or 40% (of transactions), and, above all, not allowing much progress in the financial system, not granting loans in dollars and suspending transfers in foreign currency,” concluded.
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