Mon | Dec 17, 2018

Inflation-hit Venezuela unveils new money with fewer zeros

Published:Friday | July 27, 2018 | 12:00 AM
In this February 22, 2018 photo, Richard Segovia, shows a bag he made out of Venezuelan bolivars for sale as art and craft in La Parada, Colombia, on the border with Venezuela.

President Nicolas Maduro unveiled plans Wednesday for combatting runaway inflation in Venezuela - by printing new paper money with five fewer zeros.

The announcement came two days after the International Monetary Fund warned that Venezuela's inflation could top one million per cent this year.

Maduro said the monetary conversion will spark "great revolutionary changes in the economy, which Venezuela demands".

Venezuela sits atop the world's largest proven oil reserves, but it is five years into an economic crisis with shortages of food and medicine that is driving mass migration.

The new bills will begin circulating on August 20.

Paper money is hard to get in Venezuela, where the largest bill today is the 100,000-bolivar note, equal to less than one cent on the commonly used black market exchange rate. A simple lunch easily costs three million bolivars.

The new paper bills will have denominations ranging from two up to 500. The lowest represents the buying power of 200,000 current bolivars, while the highest stands in for 50 million bolivars.

Printing new money is a move Venezuela has taken before to combat soaring inflation that requires more and more bolivars to make a purchase. In 2008, then President Hugo Ch·vez issued new currency that eliminated three zeros.

In March, Maduro announced that Venezuela would print money with three fewer zeros, but it was never carried out, and inflation continued to soar.

On Wednesday, Maduro spoke on national TV to his economic team, also vowing a renewed focus on Venezuela's failing oil sector, but providing no details for improving crude production.

- AP