Authorities in Venezuela have arrested two executives at Kriesel – the largest importer of toys into Venezuela – and have forcibly seized over 3.8 million toys, after issuing an order to retailers to lower the prices of toys and other goods by almost a third. Venezuela says they will be redistributing these toys, “fairly”, to the poor.
Venezuelan authorities have justified the move by claiming that the companies astronomically hiked prices in order to turn more of a profit during Christmas time. Sundde, which is the consumer protection agency of Venezuela, put out a tweet, which said “Our children are sacred, we will not let you rob them of Christmas.”
This isn’t the first time the government of Venezuela has ordered and enforced mandatory price cuts – in 2013, legal precedent was set, allowing government to set fixed prices and dictate the profit margins of private businesses. This legislation, which was used to enforce the recent seizure of these toys, specifically limited companies’ profits to only 30%.
The agency director of Sundde, William Contreras, has responded to criticisms by telling the press that “they say we’re stealing the toys from this company, but the company committed fraud against our country.” Contreras also defended the act in saying that “the children of the country will have a happy Christmas. We will guarantee their Christmas gifts.”
Price legislation has also made its way to food, an obvious basic need, causing prices to rise and many to go hungry. Inflation in Venezuela is rising dramatically, and is expected to increase 1660% in 2017 according to International Monetary Fund (IMF). The country expects to roll out larger denominations of their bank notes, as their largest denomination – 100 Bolivars – is worth only about 10 U.S. dollars. Food prices are skyrocketing, and a bottle of soft drink cost upwards of 25 times that amount.
In a country where the government is becoming increasingly unpopular, this move by Venezuelan authorities could have absolutely detrimental effects on an already desolate economy. While it might boost morale temporarily, these actions depleted these toy companies of almost 4 million of their products, which could tremendously impact these companies in a negative way going forward.
This post was written by Nicholas Amato.
The views expressed here belong to the author and do not necessarily reflect our views and opinions.