From 1er October, Venezuela will remove six zeros from its currency, the bolivar, due to hyperinflation which has stripped it of its value and led to a “dollarization” of the economy, announced Thursday (August 5th). Central Bank of Venezuela (BCV).
In thirteen years, the bolivar will have lost fourteen zeros. Former President Hugo Chavez (1999-2013) had removed three in 2008. His successor and current president, Nicolas Maduro, had removed five in August 2018.
In Venezuela, most transactions are done in dollars, while inflation was over 250% between January and May. It had reached 400,000% in 2018, nearly 10,000% in 2019 and 3,000% in 2020. Once a rich oil country, Venezuela has seen its GDP fall by 80% since 2013 and 65% of households live in poverty. .
New tickets printed
The country will print new banknotes to accompany the measure as these have almost disappeared from circulation in the country. Most exchanges that are not made in dollars are done digitally (card payments, bank transfers or transfers).
This decision aims to “Facilitate” the use of money, bringing it back to “A simpler monetary scale”, adds the press release. According to BCV, “This change of monetary scale, which is based on the deepening and development of the digital economy, is a historical fact at the time when the country begins an economic recovery after a crisis caused by the brutal attack on our economy and our currency and the criminal and financial economic blockade ”.
To explain this inflation, the government regularly invokes the international sanctions imposed since 2019, in particular by the United States, in an attempt to oust President Maduro from power, even though the crisis has lasted for more than eight years.
Long before the announcement of this measure, the streets had already partially adopted the new suppression of zeros, since prices were often announced or written in thousands and not in millions for practical reasons.
Formerly a major player in the world oil market, Venezuela, which produced up to 3.3 million barrels per day, is now at just over 500,000.