AFP, Caracas :
Venezuela will start issuing new banknotes on Monday after slashing five zeros off the crippled bolivar – but analysts warn the measure will do nothing to arrest a worsening economic crisis.
President Nicolas Maduro has described the move as a “great change” as the government attempts to halt spiraling hyperinflation that the International Monetary Fund predicts will hit a staggering one million percent this year.
Maduro blames Venezuela’s financial woes on opposition “plots” and United States sanctions – but he admits that the government will “learn as we go along” when it comes to the currency redenomination.
Uncertainty, doubt and skepticism reign.
“If you maintain the fiscal deficit and the disorganized emission of money (to cover it), then the crisis will worsen,” economist Jean Paul Leidenz told AFP.
Oil-rich Venezuela is in a fourth year of recession and has been hamstrung by food and medicine shortages, as well as failing public services such as transport, electricity and water.
Oil production accounts for 96 percent of Venezuela’s revenue but that has slumped to a 30-year low of 1.4 million barrels a day, compared to its record high of 3.2 million 10 years ago.
The fiscal deficit is almost 20 percent of GDP while Venezuela struggles with an external debt of $150 billion.
And there’s a good reason the redenomination hasn’t generated renewed hope or investor confidence: Venezuela has done this before.
Maduro’s predecessor and revolutionary hero Hugo Chavez stripped three zeros off the bolivar in 2008, but it was not enough to prevent hyperinflation.
Venezuela will start issuing new banknotes on Monday after slashing five zeros off the crippled bolivar – but analysts warn the measure will do nothing to arrest a worsening economic crisis.
President Nicolas Maduro has described the move as a “great change” as the government attempts to halt spiraling hyperinflation that the International Monetary Fund predicts will hit a staggering one million percent this year.
Maduro blames Venezuela’s financial woes on opposition “plots” and United States sanctions – but he admits that the government will “learn as we go along” when it comes to the currency redenomination.
Uncertainty, doubt and skepticism reign.
“If you maintain the fiscal deficit and the disorganized emission of money (to cover it), then the crisis will worsen,” economist Jean Paul Leidenz told AFP.
Oil-rich Venezuela is in a fourth year of recession and has been hamstrung by food and medicine shortages, as well as failing public services such as transport, electricity and water.
Oil production accounts for 96 percent of Venezuela’s revenue but that has slumped to a 30-year low of 1.4 million barrels a day, compared to its record high of 3.2 million 10 years ago.
The fiscal deficit is almost 20 percent of GDP while Venezuela struggles with an external debt of $150 billion.
And there’s a good reason the redenomination hasn’t generated renewed hope or investor confidence: Venezuela has done this before.
Maduro’s predecessor and revolutionary hero Hugo Chavez stripped three zeros off the bolivar in 2008, but it was not enough to prevent hyperinflation.
