TL;DR: Letters from Venezuela is an exclusive CoinSpice series, an inside look from a reporter on the ground, documenting the South American nation’s last stand among sanctions, political unrest, international condemnation and concern, economic collapse, and the specter of cryptocurrency possibly demonstrating its main use case. In this installment, Venezuelans face trouble getting to cash sources as banks close amidst coronavirus fears, and quarantines are being enforced upon all businesses.
Banks Close Doors Amidst Coronavirus Fears
The coronavirus pandemic is a global event, and Venezuelans are not exempt from suffering the consequences. While the impact of the virus has not been felt as strong as in European countries, for example (ironically in part thanks to how difficult it is for an average Venezuelan to travel to other countries), official numbers offered by the Venezuelan government account for more than 60 cases spread across the nation in less than a week since the first case was confirmed. However, authorities acted swiftly, issuing orders to try and stop the disease from spreading.
Nicolás Maduro, President of Venezuela, ordered a national quarantine that involves closures of non-essential companies and stores in the country, and restriction of transport to only essential vehicles. This quarantine also reached the banking sector, with banks being ordered to close doors and only keep the minimum personnel to allow ATMs to function. The measure, in effect since March 15th and communicated by the national banking superintendence (SUDEBAN), impacted the access of many Venezuelans to sources of cash that are indispensable for transport purposes.
The ATM network, that is now responsible for bringing cash to more than 20 million people, experienced a constant decline in the few last years, with the number of cash machines being cut in half since July 2017. According to Luis Barcenas, a Venezuelan economist, banks now have just one ATM per every 3,000 people, and 33% of these ATMs are concentrated in Caracas, the capital of the country, making them a wholly insufficient measure against cash scarcity.
The government promoted the Petro, its state-backed cryptocurrency, as a cash substitute, paying pensioners and state workers their Christmas bonus last December. Since, however, the government has not enabled the Petro-based point-of-sale system to allow citizens to use it in several stores once that accepted it during the holidays. Instead, the government is promoting e-money systems like debit and credit cards, as banks will maintain these systems running. Interestingly, this contingency allows for alternative payment systems like cryptocurrencies to be used to ease the troubles of the population, allowing for easy access to payment resources and contactless payment to avoid worries about coronavirus contagion.
Quarantine Impacts Access to Resources
The initial measure of “social quarantine” quickly evolved into an almost curfew situation where normal Venezuelan citizens who don’t have access to special resources are becoming more and more isolated. Pensioners are a part of the population that has been especially impacted by the measure. Reports state that, while the majority of them do have access to electronic payment means, there is still a significant portion who does not know how to use these instruments.
Luis Francisco Cabezas, of COVITE, an organization that works with elderly pensioners, informed 700,000 pensioners of the 3.8 million registered have no access to nor can manage electronic money payments. This adds a new layer of complexity to the already difficult situation prior to the pandemic because these people won’t be able to purchase basic goods and pay for services without access to cash. Also, with the quarantine in effect, the government has restricted access to gasoline to limit the transit of people in the main cities, limiting the critical distribution reach to vulnerable populations of basic goods like food and medicine.
While the government declared they have the resources necessary to handle the coronavirus quarantine and its aftermath, its actions state otherwise. Maduro recently asked the IMF for a loan of $5 billion dollars to finance the whole pandemic reaction in Venezuela, but it was denied due to the political turmoil the country is still experiencing. In the meantime, more than 80% of the population is ill-equipped to prevent or treat the virus, as they have poor access to basic elements like water and soap.
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