2018-08-29 Wed

Venezuela is soon going to release a new currency by taking away five zeroes from their original Bolivar to combat hyperinflation. Businesses and consumers are really worried about President Nicolas Maduro’s decision. Experts have predicted a lot of chaos and uncertainty in the private sector. Maduro has also stated that the minimum wages are going to be hiked considerably.

Many people are sceptical about these reforms and the opposition parties have called for a protest against these plans. The new currency is called Sovereign Bolivar or strong Bolivar. It is also connected to the crypto-currency, the Petro, which makes people even more insecure.

Each Petro would be worth $60, depending on the market value of one barrel of Venezuelan oil. That amount would be worth 3,600 sovereign bolivars, leading to a big devaluation. The minimum wage will be raised 34 times higher to 1,800 sovereign bolivars. Heavy subsidy on oil might also be relaxed so that oil is not smuggled to other countries.

Inflation might reach 1-million Percent in 2018, as per predictions by The International Monetary Fund (IMF). The country is facing a recession since last four years. There is a shortage of basic goods and public services have also been affected.

The ruling government is confident that they would able to carry out this plan with the help of income from oil, taxes and petrol price hikes. However, the revenue generated through oil production has reduced considerably in the last 10 years. In 2008 as well, three zeroes were removed from Bolivar, but it could not reduce hyperinflation.

Image Courtesy: Wikimedia Commons