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Caracas (AFP) – The zapping of five zeros off the Venezuelan currency is only one hesitant measure and will not solve the country's chronic hyperinflation, badysts said on Monday. AFP
. After predicting earlier this year that Venezuelan inflation would reach 14,000% by 2018, the International Monetary Fund has adjusted this projection earlier this week to a bewildering one. While the country is struggling with a financial and humanitarian crisis, shortages of food and medicine and failing public services such as water, electricity and transport, the question is how does this drastic move will help Venezuela to recover.
Prices and inflation are rising so rapidly that the highest-denominated bank notes issued in 2016 are already virtually worthless.
The larger of the two e, 100,000 bolivars, would have bought five kilograms (11 pounds) of rice in 2017, now it's barely enough for a single cigarette.
– Obsolete in December & # 39; –
"If inflation continues at 100% per month" The new score of 500 bolivars, which will be the largest following the redenomination on August 20 ", will be obsolete by December", has said economist Leonardo Vera
currently, a pair of reading glbades can cost a billion bolivars (about $ 300 on the black market). It is estimated that 10,000 of the country's largest bank notes will pay for cash.
Some stores used bank notes to determine their value rather than counting them.
Not surprisingly, the money has almost disappeared.
But few people could afford to buy these glbades because they cost 200 times the minimum wage of five million bolivars a month.
The government's decision to eliminate some zeros is simply a "partial recognition" of the crisis of "hyperinflation" must be accompanied by economic reforms to stop it, "said Henkel Garcia of econometrica econometrica
Venezuela is already in this way, 10 years ago, Hugo Chavez, the predecessor of Maduro. by removing three zeros.
"The redenomination in 2008 was a failure because we ended up with hyperinflation," said Asdrubal Oliveros, economist at Ecobaditica, another economy.
"The redenomination was made without accompanying policies to combat inflation, so it did not address the causes."
In the short term, the move was a "transactional success", said Garcia, but by "not"
The government attributes inflation to the opposition and to the United States, but in In reality, the financing of the fiscal hole has increased the monetary base by 250 times in two years
and the Minister of Production, Tareck El Aissami, has declared that the purpose of the redenomination was "to improve the power of purchase of workers. "
A tangible benefit will be to ease the pressure on technology systems in billions of bolivars
Many supermarkets, for example, have to divide sales in addition to 39. a transaction since their systems are limited to figures of 20 million.
– Risk of collapse –
"The redenomination monetary The goal is to avoid the collapse of financial systems of companies: each transaction costs hundreds millions or billions, "said Vera.
The bank is also affected, according to a source affirming to AFP "a real possibility of collapse". ] Virtually the only product spared by inflation in this oil-rich country is gasoline, that's why it's the cheapest in the world
A single dollar to its value black market could buy 3.3 million liters of gasoline. ] Absurdly, once the redenomination is over, half a bolivar – currently 50,000 bolivars, or less than two hundred on the black market – would buy 50,000 liters.
Such a distortion makes that the government will be forced to adjust However, what could complicate things is that the government decides to concurrently manage old and new currencies, which will affect small payments.
Fill the tank with a small car. This transaction under the new currency would cost half a centimeter – but the centimeter bolivar subunit has long been rendered obsolete by inflation.
Maduro showed limited signs of applying measures to cope with the crisis, suggesting that it could facilitate
Imports of raw materials and machinery will be exempt from customs duties for try to encourage production in the country.
But these measures will only work "if there is economic stability that attracts investment," economist Luis Vicente Leon.
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