The inflation rate in Venezuela is the highest in the world. People are struggling to afford the basic goods and services on the basis of their current income.
Venezuela has decided to remove three zeros from its battered currency in order to eliminate poverty from its country. The decision has been taken by Venezuelan President Nicolas Maduro on Thursday to deal with the economic crisis prevailing in the country.
Steps taken by Venezuelan Government
The government of Venezuela will prevent the circulation of old bank notes and coins and will put the new ones into circulation. This will be implemented on 4th June. It will help the government fight the financial war planned by Colombian President Juan Manuel Santos along with Venezuelan opposition leader Julio Borges. They were also accused of stealing the country oil money.
The president has ordered the release of new digital currency named “petro”. The new bills will be called as sovereign bolivar. Its main focus is to secure the monetary, economic and financial sovereignty of the country.
Venezuela’s Monetary Denomination
Venezuela’s monetary denomination will include two coins, one of 0.50 cents bolivar which is $0.00001 and the other of one bolivar i.e. $0.00002.
It will also have bills of two bolivars ($0.00004) and five bolivars ($0.0001) followed by 10 bolivars ($0.0002), 20 bolivars ($0.0004), 50 bolivars ($0.001), 100 bolivars ($0.002), 200 bolivars ($0.004) and 500 bolivars ($0.01).Out of these the largest bill which is in circulation is the 100,000 bolivar note, which gets trades for about $0.50 in the black market.
Till February the inflation rate in Venezuela was more than 6,000 percent in the 12-month period. The inflation rate is expected to top 13,000 percent this year by the International Monetary Fund. The political crisis in Venezuela has led to the shortage of food and basic goods. Various NGOs have tried to help the country. In response to prevailing inflation, various slums in the country have created their own currencies. The country is facing multiple collapse and severe economic crisis.
According to critics dropping three zeroes from currency will not solve the problems leading to hyperinflation in the country. The same step was earlier taken by the late President Hugo Chavez. He also renamed the currency the “strong bolivar” and similarly removed three zeros from the currency. But it did nothing to eliminate poverty.