Genius, Nick! It's JUST that easy![WashingtonPost] Economic pledges may be par for the course in election campaigns, but in hyperinflationary Venezuela, the candidates' dueling promises are going further, with the incumbent vowing to lop a few zeros off the currency, while his main challenger calls for the adoption of the U.S. dollar.
President Nicolás Maduro late Thursday briefly outlined his monetary rescue plan. In a country where a dozen eggs can cost 250,000 bolivars ($5) amid worsening inflation, he would chop three zeros off the currency ‐ arguably bringing the price for those eggs down to 250.
"It's 1000 times less. Instantly! Surely this is a miracle!"
"I ask you all for your prayers and support for the success of the monetary reconversion," Maduro said in a televised event Thursday night.
The move came as Henri Falcon ‐ a former governor running against Maduro in elections set for May ‐ is proposing a far more radical fix. He wants to follow the path of countries such as Ecuador and Panama by dollarizing the Venezuelan economy. Doing so, he says, would prevent the printing of new bills - instantly constraining inflation.
Socialist Venezuela is going through a crisis that has left people struggling to pay for food and find medicines. Prices are being influenced by a black-market exchange rate that rises by the day and is currently five times the nearly inaccessible official rate.
Customers are standing in hours-long lines at banks to take out a daily limit, set so low that it barely covers the price of a cup of coffee. Larger transactions are done by bank card or transfer - although some vendors are charging double for electronic payments.
Maduro's redenomination plan was met with serious skepticism by critics and analysts, who say that the impact on hyperinflation would be minimal ‐ and that the plan would be confusing. By June 2, under Maduro's plan, new bolivars with lower denominations would be circulated ‐ but old ones, with denominations as high as 100,000, would remain valid. It would leave vendors charging two prices - one for old bills, the other for the redenominated bolivar.
Salaries too would be redenominated - so little would change in terms of buying power.
"That's not how this works. That's not how any of this works"