Last night, Maduro spoke in a televised address last night and made a number of economic policy announcements that are being panned by experts as nonsensical and wholly ineffective.
Speaking from the Miraflores Palace, Maduro began by announcing that the country’s new currency–the Bolivar Soberano (Bs. S.) —would enter into circulation on August 20. The currency was originally scheduled to roll out on June 4, but the date has been pushed back twice now due to logistical problems.
Maduro also announced that the Bolivar Soberano would launch with five fewer zeroes than the current currency the Bolivar Fuerte (Bs.). The announcement constitutes a subtraction of two zeroes, since the Bolivar Soberano was originally set to launch with three fewer zeroes than its predecessor.
By way of example, a Venezuelan person earning the minimum monthly salary takes home Bs. 3,000,000. If the Bs. S. enters circulation as planned on August 20, the minimum monthly salary will become Bs. S. 30.
Maduro also announced that the Bs. S. would be anchored to the Petro, a regime-issued cryptocurrency. In other words, the value of the new currency will be determined by the value of the Petro.
Economists, Experts Call Currency Reforms Nonsensical
Reception to Maduro’s announced monetary reforms has been universally negative from economists and other experts.
Jorge Roig, the former head of FEDECAMARAS–the country’s largest business organization–said that the measures were “incomplete, incoherent and poorly announced”. Speaking in a television interview earlier today, Roig said:
I have full and absolute confidence that [these measures] will be implemented poorly.
Roig also said that erasing zeroes from the currency would do nothing to halt the country’s hyperinflation spiral, and that it was merely an “aesthetic” measure to give only the appearance of improvement.
Roig went on to point out that business will be forced to increase the prices of many goods and services, since there will be no currency to pay for them otherwise.
For example, eliminating five zeroes from the currency would make the price of one liter of gasoline Bs. S. 0.0001. Because there is no Bs. S. 0.0001 bill or coin, the price of a liter of gasoline will necessarily have to increase just to be workable with the new currency.
For economist Albani Granado, the anchoring of the Bolivar Soberno to the Petro is problematic on a number of levels. For one, by all indications the Petro has been an abject failure given the opacity with which the regime has handled its function and the poor reputation from which it suffers. Granado said:
It’s all been really opaque, and up to now [the regime] has not issued any official information regarding the results of the pre-sale of this so-called crypto currency.
Granado stressed that calling the Petro a crypto currency was a mistake, because it lacks two important qualities: it is not decentralized, and any potential buyer cannot reasonably trust that the regime will guarantee its value. He said:
The Petro is centralized in the Venezuelan government, which does not have the trust of national or international economic actors since its economic policies are based on controls and restrictions.
Granado said that given the current conditions, it was “practically impossible” for the Petro to enjoy any kind of success as a crypto-currency.
Juan Pablo Olalquiaga, the head of the Venezuelan Federation of Industry (CONINDUSTRIA)–an organization that represents private business–called Maduro’s announcements “a joke”, and that none of them would help to solve the country’s economic crisis.
Billion-Dollar Embezzlement at PDVSA Happened Under Flores’ Watch
Following the United States’ Department of Justice announcement yesterday of an investigation into a $1.2 billion money laundering scheme involving the state-owned PDVSA oil firm, El Pitazo reported today on the crime’s connection to the presidential couple.
According to the Department of Justice press release issued yesterday, the money laundering under investigation “began in December 2014” and continued until at least May 2015. During that time, $1.2 billion were stolen from the company.
El Pitazo pointed out in an article published today that Carlos Erick Malpica Flores, the nephew of first lady Cilia Flores, was named vice-president of finance at PDVSA on December 30, 2014. Flores was also the National Treasurer at the same time; he served in both positions simultaneously until November 2015.
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