Political Risk Latin America Blog @PolRiskLatam

Venezuela currency rationing hits home

Posted in News and Articles, Political Risk by politicalrisklatam on September 7, 2010

by Benedict Mander for Financial Times, September 7th, 2010.

Marxists believe in the determinism of economics, so it should come as no surprise that Hugo Chávez ’s economic vision of “21st-century socialism” is wreaking unusual effects in Venezuela. One is the possibility that even government officials may struggle to make mobile phone calls when working abroad.

Movistar, the Opec country’s second-largest mobile phone provider and a subsidiary of Spain’s Telefónica, has suspended roaming on some international calls as it said it lacked enough foreign currency to pay international operators.

This is just one more unfortunate side effect of May’s tightening of foreign exchange controls, ostensibly intended to prevent capital flight and currency speculation.

Unable to access enough dollars, local importers are feeling the pinch across a wide range of goods, from Scotch whisky, the nation’s favourite drink, to luxury foods and swanky cars. Although Mr Chávez deems these unnecessary to his socialist revolution, other companies importing more ordinary items are experiencing problems too. (continue reading… )

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