Crunched for Cash, Panamanians Try Barter, Coupons, Paycheck Deals

On a recent and typically hot and airless spring afternoon in Panama City, Samantha Martinez, a dockworker’s wife, went looking for a way to convert her husband’s $50 government paycheck into cash.

Banks, including the government’s own National Bank of Panama, were closed for lack of money. A rumor that a state-run bingo parlor would cash her check proved false. Martinez heard that a pawn shop was cashing checks, but only at half their value. Unreasonable, she thought.

Finally, Martinez saw a sign on a store called The Million that invited shoppers to use government checks in making their purchases.

Like a Gift Coupon

Martinez went in to the half-shuttered store and found that if she spent 50% of her check, the rest would be returned in change. The check became something like a gift coupon, except that it was no gift, it was her husband’s wages.

In any case, Martinez’s feet were aching and the stores were soon to close for the Easter holidays. She went on an impulse buying spree.

She chose a red polyester blouse for herself, a small belt with metal studs that her daughter would like and some yellow embroidered socks. The purchases amounted to $23.45.

“Not yet enough to cash the check,” the clerk smiled, adding, “Perhaps you would like some perfume?”

Martinez picked up a small bottle of greenish liquid trademarked Scorpio. Directions on the bottle promised that the perfume, if sprinkled on the neck three times a week, would unleash certain Egyptian powers of seduction, health and fortune.

Other Powers Handy

“Why not?” Martinez mused. “It only costs $1.75 and I could use some good luck. The other powers might come in handy when my husband finds out.”

Such reluctant buying is a sign of the times in Panama. An economic squeeze engineered by the United States and by foes of military ruler Manuel A. Noriega has created a shortage of money that has virtually brought Panama’s economy to its knees. The goal is to force Noriega out of power by way of a dollar siege.

The dollar embargo has sent individual Panamanians and the government alike on a scramble to stretch their money supplies.

The goal of Panamanian citizens is to get by until the country’s political crisis works itself out; for Gen. Noriega, accused in U.S. courts of drug trafficking, the stakes are survival in power and staying out of jail.

Martinez’s solution to cash starvation was to make purchases that she might not otherwise have made just to get her hands on a few dollars.

Solutions are more complex for businessmen trying to pay their workers. With limited cash on hand, employers have been issuing coupons that workers can use to go shopping at retail stores. The stores will collect later from the businessmen who issued the coupons or return them in return for services that the businessmen might provide.

Coupons Pay for Trucking

For example, some trucking companies have handed out coupons to workers that are good at grocery stores. The grocery stores use the coupons to pay for transportation services from the same trucking firms.

Individual craftsmen are making barter agreements. Mauricio Wilson, a tailor in the working-class suburb of San Miguelito, repairs trousers for vegetable vendors who in return supply him with lettuce and tomatoes.

Wilson admits that such an arrangement cannot last for long. His customers own only so many pairs of worn pants. “But for the moment, I can conserve what money I have,” he said.

The very poor, who in the best of times rarely knew where their next meal was coming from, have been reduced to taking handouts at Roman Catholic relief centers. The centers dispense bags filled with rice, beans, canned tuna and other simple foods as well as prepared lunches for entire families.

Needs of 9,000 Families

In two weeks, the program has grown to fill the needs of 9,000 families, church officials say.

The government itself also set up food distribution centers, although the food is not given out free. It is sold for cash, or the amount of the purchase is deducted from the wages of public employees.

Noriega’s government supplemented its supply of basic foods last month by seizing tons of flour that were donated to the church relief program. In the longer term, the government is trying to design a system to make the dwindling dollar supply go further. Officials hope that checks, though uncashable, will circulate along with dollars in the economy.

“Checks would be, in effect, temporary currency,” Commerce Minister Mario Rognoni said.

In all, Rognoni estimated, there is probably $150 million available to circulate in Panama, compared to $350 million in normal times. The money is tied up in banks, in closed businesses and “under mattresses” in private homes, Rognoni said.

At some point, the government must persuade stores and businesses to accept checks and use them as if they were cash. To make the checks attractive, the government is paying its workers in certificates denominated in $50 and $100 amounts.

Businesses that accept the checks could then use them not only to pay their own suppliers but to pay government taxes and utility bills.

The strategy has yet to be tested fully. Most commerce in Panama has been closed for 2 weeks in protest of Noriega’s rule. Also, banks have closed, so there has been no place to deposit such checks, which could then be credited against individual accounts.

The government is trying to force banks to open this week, but bankers are resisting.

No Definite Solution

Rognoni admits that the plan is not a definite solution to Panama’s economic problems. Because Panamanians are hoarding whatever dollars they get their hands on, eventually the $150 million still circulating will all but dry up.

The difficulties in overcoming the dollar embargo touched off calls in Noriega’s government to make deep changes in the Panamanian economy. Rognoni said the government feels aggrieved that the United States would strike at the economy’s most vulnerable point--its use of U.S. greenbacks as its official currency.

“We employed the dollar because we thought the U.S. would play fair. We never imagined, no matter what our political differences, that the U.S. would choke us with the dollar,” Rognoni said.

Would Break Pattern

To conserve dollars inside Panama, the government may restrict imports and try to encourage industries to produce basic needs for Panama in a closed economy. Such a move would interrupt Panama’s long history as a trading center.

As for freeing Panama from dollar dependence, Rognoni said that printing a new currency is considered too costly and time-consuming. Inviting other currencies to replace the dollar as Panama’s economic medium might work, but it would not do much to ease the country’s deep depression right away, Rognoni added.

Nonetheless, the frustration has made government officials search frantically for solutions. “We must get away from the dollar at some point,” Rognoni said. “The U.S. has tried to smother us once. Who is to say it won’t happen again?”