By Mayela Armas

CARACAS (Reuters – Venezuela’s government, which is under sanctions from the United States of America and other countries, has been paying more providers in U.S. Dollars as it tries to cut spending in the bolivar currency in order to manage inflation. Three sources familiar with the matter informed Reuters.

Sources say that the PDVSA state oil company, public entities, and companies owned by the government have paid a part of their invoices with dollars from foreign currency accounts at some local bank branches this year. This is despite the sensitive nature of the information.

Although Venezuela’s government may have paid contractors with cash in euros, the country has never made dollars transfers at this scale before. Sources said that the payments are intended to stabilize exchange rates and price fluctuations.

The government allows banks to open accounts in dollars, but Washington’s sanctions prohibit international transfer into or out of Venezuela. Some local banks maintain intermediary relationships to global partners.

Venezuela’s hyperinflation has been a problem for over four years, as the central banking printed money to pay the deficit.

Venezuela’s information ministry didn’t respond to our request for comment. Both the PDVSA and central bank did not respond.

Although Washington is hostile to President Nicolas Maduro’s government and has been increasing transactions, it seems that the United States doesn’t have the ability to prevent Venezuela using dollars to stabilise its economy.

The U.S. Treasury refused to comment.

According to sources, the payment involves four Venezuelan banks. They declined to give their names or identify the beneficiaries.

One source said that several service providers receive dollars from their banks. These funds can then be used to pay workers and other providers.

Sources could not determine the exact amount of dollars paid by the government. However, they did say that some payments were greater than $5,000.

Director of Sintesis Financiera consultancy, economist Tamara Herrera said that the recipients and local banks would not face U.S. legal consequences because they are small, local businesses.

Some dollars are used to pay for foreign sales. However, none of these sources provided specifics about the amount of income that Venezuelans receive from oil sales.

Due to rising crude oil production, Venezuela’s government is able to access increasing dollars. According to documents viewed by Reuters, November’s crude oil exports were 572 5,567 barrels per hour.

But, since May 2019, the central bank hasn’t published any figures on the trade balance.

According to two sources, the government intends to celebrate the success of lowering the inflation rate at the year’s end.

Since May, consumer prices have fallen and reached 6.8% in October, which is the lowest monthly rate since mid-2015 according to central bank statistics. The annualized figure for October was 1,575%.

In 2019, the government relaxed currency controls amid an economic crisis and U.S. sanctioned. This allowed some industries to recover.

Foreign currency is accepted in more pharmacies and supermarkets than bolivars. Maduro publicly acknowledged that the dollar is an “escape” valve for economic recovery.