FX & Treasury in Venezuela
Call date: 5th Mar 2019
Do you think you’ve got problems? – Try running a business in Venezuela – read the experiences of seven treasurers who do.
The call was chaired by Damian Glendinning, whose commentary appears below.
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In CompleXCountries we share experiences to try to help people find solutions. Sometimes, all we can do is provide moral support when faced with a problem which cannot be solved.
Unfortunately, Venezuela has become a place where simply surviving has become the main priority of most people. The comment which came the most often from participants in the call was that companies can’t retain staff, because everyone is emigrating. With MONTHLY inflation of between 180% and 200% – no-one knows the exact figure – it is a struggle to even pay staff a living wage: the cash they receive at the beginning of the month is worthless by the end. The expected inflation for the year is 1,500,000% (yes, 1.5 million percent).
One company has continued making one product, because it only uses local inputs – there is no currency available for imports. This comment was made before the recent days long blackout, which will presumably have made continuing production even more challenging.
One company does everything it can to get revenue in dollars so they can pay staff in dollars, instead of Bolivars – USD 100 goes a long way.
But even that presents difficulties: many banks will not trade US dollars in Venezuela because of US sanctions – so people end up relying on local banks, who may, or may not, be able to trade, and Russian banks.
Several companies used to run international service centres in Venezuela to earn foreign currency to pay for some imports: but many of the trained staff have emigrated, so these centres are no longer viable.
In this environment, the only thing companies can do is to try to survive, waiting for better days. The country has the world’s largest oil reserves and excellent agricultural resources, so the potential is definitely there.
I have left the comments as they were noted in the call – they show the reality people are facing.
Our best wishes go to all the people on the call, and we hope that some day soon, in Venezuela, we will be talking about the usual issues of FX and cash management, and not about how you get from today to tomorrow.