CARACAS, (Reuters) – Venezuela’s government – subject to sanctions by the United States and others – is increasingly paying providers in U.S. dollars as it seeks to reduce spending in its bolivar currency to control inflation, three sources with knowledge of the matter told Reuters. State oil company PDVSA, government entities and publicly-owned companies this year have started paying a portion of invoices using dollars deposited in foreign currency accounts at some local banks, according to the sources, who asked not to be identified because of the sensitivity of the information.
Though Venezuela’s government has paid some contractors in cash with euros before, it has not previously made dollar transfers on the scale it is now. The payments are an effort to stabilize the exchange rate and prices, the sources said.
Banks are allowed by the government to offer accounts in dollars but Washington’s sanctions prevent international transfers into and out of Venezuela. Some local banks have maintained intermediary relationships with global partners.
Venezuela has grappled with hyperinflation for four years as the central bank printed money to finance the budget deficit.
Venezuela’s information ministry did not respond to a request for comment. The central bank and PDVSA also did not respond to requests for comment.
The growing transactions show that, despite the hostility between Washington and President Nicolas Maduro’s government, the United States has little recourse to stop Venezuela from using dollars to stabilize its economy.
