UN DATA: The bolivar continues to command payments

It is common to hear that Venezuela "is dollarized" and that the bolivar "no longer paints anything" in the economy. Many prices of formal and informal trade are denominated in dollars, although the products can be paid both in bolivars and in foreign currency. The Government, however, maintains that in Venezuela there will never be a dollarization of the economy and that what exists is a set of "mechanisms of an economy of war and resistance that seeks in other currencies and cryptocurrencies the way to exchange products."

What is the proportion of this phenomenon? Sometimes what is "in plain sight" does need glasses in order to be more properly observed and understood. For this reason, at ÚN Data we decided to explore how people make their payments to get a better idea of ​​how much our currency has been displaced. We carry out a digital survey on our web portal, latestnews.com.ve, and social media accounts, with the following question:

"What payment method do you use most frequently in your purchases and transactions?"

The options were: bolivars per point of sale, bolivars for bank transfer, bolivars for mobile payment, bolivars in cash, dollars in cash, dollars for Zelle or similar, other currencies. Between Monday, April 26 and Thursday, April 29, we obtained 2.950 observations and the results were as follows:

Its alive!

The vast majority of users who responded to our survey affirm that what they use the most to pay are bolivars per point of sale. We are talking about 64,5%, that is, almost two thirds of the responses. From the outset, it is clear that the bolivar lives and has a very important weight in economic life.

In second place, the dollar in cash appeared, with a ratio of 13%. The greatest expression of so-called "dollarization", greenbacks, turns out to be only slightly larger than a tenth of people's payments. To better appreciate it, let's look at the following data: the third place is occupied by bolivars for mobile payment, with 2%. We can say that the number of people who pay mostly with cash dollars is almost equal to those who use mobile payment the most. Bank transfers represent 12,8% when paying. On the other hand, payments in dollars with mobile applications such as Zelle, as well as payments in currencies other than the dollar, represent 4,7% in each case.

In last place are payments with bolivars in cash: only 1,4% of the responses.

If we group the data, we obtain that payments in bolivars reach 83,4% of the observations, while foreign currencies represent 16,6%.

Mastery of the digital

President Nicolás Maduro affirmed in an interview with Ignacio Ramonet on January XNUMXthat during XNUMX "XNUMX% of commercial transactions in the country were made in bolivars by digital payment methods." In our survey, that figure rises to XNUMX%, grouping payments in bolivars by card, mobile payment and bank transfer.

The Government has also said that it plans to move towards "100% digitization of the economy". And it is worth highlighting here the data obtained in our survey about bolivars in cash. If we only take into account the use of bolivars, cash represents 1,75% compared to 98,25% of digital forms of payment. Although it was put into circulation an enlargement of the monetary coneEverything seems to indicate that the country is seriously heading towards the abandonment of physical payments and their full replacement by digital ones. For example, progress has been noted in the implementation of electronic collection mechanisms for urban passages, which apparently is the area where bolivars are most used in cash.

Contrasts

We looked for other data to contrast our survey and we found that the private consultancy Econanalítica published in its social media accounts the result of a study carried out in March on this same topic. They affirm in an Instagram post that commercial transactions by type of currency, at the national level, are: 57,3% dollars, 32,9% bolivars, 5,1% Colombian pesos, 2% euros and 1,9% cryptocurrencies. They obtained "67,1% of the payments were made with a currency other than the bolivar."

It is evident that the results of both studies differ greatly, the phenomenon is presented almost in the opposite way. To help us understand these results, we consulted the economist Pablo Giménez, professor at the PFG of Political Economy at the UBV.

The academic pointed out that, in the first place, it is necessary to attend to the type of survey carried out and that these consultants usually sample merchants. Indeed, Ecoanalítica clarifies in its publication that its survey included "10 cities, 360 establishments, 7 items and more than 21.600 transactions." It would be necessary to see, as Giménez says, which cities of the country they chose, within those cities it would be necessary to see which sectors of those cities and what type of establishment: if they are food establishments, if they are establishments of vehicle spare parts, still lifes, etc.

And he continued with his analysis:

“On the other hand, the merchant when he talks about transactions, he is also looking at or thinking about their costs. It is not only about the final purchase and sale operations, but also about the operations it has with its suppliers: other distributors, with wholesalers, who provide the goods it sells. So he is looking at a broader set of operations, and he is probably covering or calculating those costs in dollars and surely many of those operations do occur in currencies or occur in banking operations, currency transfers. While the final consumer is seeing the salary, and the salary in Venezuela is still mostly paid in bolivars ”.

So we have two different perspectives on business transactions. Our survey asked the general public, without discriminating on which side of the trade they are on, but we can assume that the majority are end consumers. The specialist points out that the differences can be explained by this type of bias in the surveys. However, he believes that "if they are final transactions, sales to the public, indeed, most of them should take place in bolivars", as our study shows. He says that the best thing would be to corroborate this information with the Superintendency of the Banking Sector (Sudeban) "to know the volume of daily transactions that occur in Venezuela, either by points of sale, either by Mobile Payment and by bank transfers to businesses."

But that information is not available, at least on the Sudeban web portal, which we consulted at the time of writing this paper.

Social differences

The perception of the so-called "dollarization" in Venezuela may vary according to the perspective from which it is viewed. As is evident here, the common people, the working class, still use the national currency to a greater extent, although they also handle dollars to a certain extent. Meanwhile, it is possible to find other social sectors where “dollarization” is greater and the use of the bolivar is strongly diminished. This may be the case in the business and commercial sector.

So, we would have to be more careful when talking about a “dollarized economy”, or even just plain “dollarization”. There are those who speak of the "dollarization process", as if this were a fatal fate. Nor would it be appropriate, since, as we pointed out at the beginning, the Venezuelan government has categorically denied that the bolivar is going to be replaced here by the dollar or any other foreign currency.

What it is about is unequal dynamics and processes, typical of the situation in which our country lives. Although the bolivar continues to dominate transactions in volume, the dollar has taken center stage due to the role it has played in economic dynamics. This is how Professor Pablo Giménez explained it to us:

“I like the term trade liberalization better, or trade opening, which I think better describes what is happening in the country. This opening requires the setting of a much more objective exchange rate, by market forces, as has been happening since May 2019 with the banking tables. This has effectively allowed a greater volume of transactions in dollars and foreign exchange flows, whether in cash or bank transactions via transfer. So it is a matter of transactions that occur in dollars, and given the crisis of the bolivar, the dollar maintains its value more and serves as a unit of account for economic transactions ”.

This allows people to solve their everyday problems. But the impact of this varies according to the class situation and also according to the productive area or the economic sector in which one operates. Workers who can access even a small volume of foreign exchange can better protect their income; and the commercial sector can maintain a volume of transactions that allows a certain dynamization of the economy in the current context of Venezuela. “As we know, we have already been 6 years of continuous decrease in the Gross Domestic Product; from December 2017 to May 2019 in a situation of hyperinflation; drop in oil prices in 2014; and since 2015, we have progressively become a blocked country in commercial and financial terms ”, explains Giménez.

He adds that, given this situation, this transactional volume of foreign exchange allows the economy to function, in commercial terms, as well as the manufacturing sector and also the agricultural sector, for example. Workers in these sectors "are gradually seeing an improvement in their income as a result of precisely these operations; some have already been paying their workforce directly in foreign currency."

Our analyst concluded with a proposal that we share. It would be interesting, to broaden this perspective and complement the analysis on this issue, to carry out a study, "in which it would have to be very objective, about how the workforce is being paid in Venezuela."

 

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