The bulk of Maduro’s highly anticipated economic reforms came into effect today, the most visible of which is the introduction of a new set of currency, the Bolivar Soberano (Bs S.). The new bills hit the streets of the country today after months of anticipation, and are designed to coexist with the currency that it will eventually replace, the Bolivar Fuerte (Bs.).
Announced earlier this year, the Bolivar Soberano had its debut pushed back twice. Its release was also set to take place in conjunction with the erasure of five zeroes from the inflation-played Venezuelan currency. The measure means that, starting today, an item that cost Bs. 1,000,000 yesterday now costs Bs. S. 10.
The deployment of the Bolivar Soberano comes as Venezuela continues to experience the highest inflation rate on the planet, which the International Monetary Fund (IMF) estimates could hit 1,000,000% at the end of 2018.
Rollout Technical Success, But Questions and Fears Linger
The roll-out of the Bolivar Soberano was facilitated by a bank holiday, which resulted in the closure of businesses throughout the country. While the technical roll-out of the new bills appears to have been largely successful, the introduction of the Bolivar Soberano is far from easing concerns over the state of the Venezuelan economy.
A journalist by the name of Eugenio Martinez pointed out in a Twitter message this afternoon that while he was successfully able to withdraw Bolivar Soberanos from ATMs on two occassions, he immediately ran into a problem: the maximum amount of money that ATMs are allowed to dispense can purchase virtually nothing. Martinez said:
My first two transactions. New money, same problems. The maximum withdrawal amount from an ATM is [Bs. S.] 10. A coffee + a candy [costs Bs. S.] 72.
Another concern that the deployment of the new currency is causing has to do with the fact that it exists alongside the Bolivar Fuerte. In other words, as of today, Venezuela has two different currencies, both of which are legal tender.
A journalist by the name of Jesus Medina spoke to a woman who sells cigarettes on the streets about her impressions of the country’s new monetary reality. In the video, Jesus finds out that the woman, whose name is Maribel, sells cigarettes for Bs. 100 each. In Bs. S., that is 0.001, but because the lowest-denomination Bs. S. bill is Bs. S. 2, the transaction is impossible to complete. Jesus and the woman also talk about the fact that the Bs. S. bills look a lot like the bills they are meant to replace.
Below, the video along with my translation:
Jesus: What’s your name, ma’am?
Jesus: Speak up a bit, please.
Woman: Maribel Aguirre.
Jesus: Ms. Maribel, how much does one cigarette cost?
Maribel: Bs. 100.
Jesus: Bs. 100? Alright, I’m going to hand you a bill–today is August 20. I’m going to give you one of the new bills that just came out. You told me that you didn’t have any of the new bills, correct?
Jesus: Alright. I want to buy one cigarette. I want to see how you’ll give me change. This is one of the new bills [hands Maribel the bill].
Maribel: Which is the same as the old bills.
Jesus: Right. Now, how will you give me change?
Maribel: Well, that I don’t know.
Jesus: You don’t know? You don’t have any of the new coins?
Maribel: Not a single one.
Jesus: What do you say to the government?
Jesus: What do you say to the government, because they haven’t come out with any coins.
Maribel: They haven’t come out with any coins, or the bills–we don’t have any of them.
Jesus: What are you thinking about right now?
Maribel: Well–what are we going to do with this new currency? Even though we know about it, because it’s the [same as] the old one, but the new coins–
Jesus: –it’s [the same as] the old bills, but with a different colour.
Maribel: With a different colour.
Jesus: And some of the designs on the bills are different.
Jesus: Where are we right now?
Maribel: At the Petare subway station.
Jesus: Alright, so I want to see how you’d make change. What would you do?
Maribel: I really don’t know.
Jesus: You’d give the bill back, or…?
Maribel: Yeah, give it back because if I don’t have change, what can I do? I don’t even know how to do it.
Another journalist by the name of Stefano Pozzebon tweeted the image below, pointing out that the new bills do not contain their name–“Soberano”–anywhere:
Carlos Larrazabal, the head of the largest guild representing private sector business in the country (FEDECAMARAS), said that Maduro’s economic reforms will bankrupt businesses, blaming in part the “uncertainty” with which the measures were announced and implemented.
Larrazabal also zeroed-in on Maduro’s 3,500% increase to the minimum monthly wage, saying that the measure was not grounded in reality. Larrazabal said:
Increasing salaries–even though necessary–becomes completely unmanageable when it’s done all at once by 3,500%, [since] the economy is in a serious depression. There’s no level of economic activity or cash flow in businesses to be able to meet this increase.
Maduro also announced that the salary increase, which goes into effect on September 1, would be subsidized by the government for the first 90 days.
Cabello: Reforms Will Make Colombians Move to Venezuela
PSUV vice president and Constituent Assembly chief Diosdado Cabello spoke in glowing terms of the economic reforms that came into effect today, and even predicted that they would spark a miraculous recovery in the country.
Speaking during a press conference today, Cabello said:
[These reforms] could cause an exodus of Colombians to return to Venezuela. The decisions that we are making have an impact on the Colombian economy. We are getting ready to continue to receive Colombians in Venezuela.
With his comment, Cabello appeared to be referencing the regime’s longstanding assertion that Venezuela’s economic troubles are directed from Colombia, and that the country’s misfortunes benefit Bogota.
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