Beleaguered Venezuelans yesterday were bracing for the rollout of Venezuelan President Nicolas Maduro’s radical new plan to curb the spiraling hyperinflation that has thrown their oil-rich, cash-poor nation into turmoil.
Caracas is issuing new banknotes after lopping five zeroes off the crippled bolivar, casting a pall of uncertainty over businesses and consumers across the country.
“There will be a lot of confusion in the next few days, for consumers and the private sector,” Ecoanalitica consultancy director Asdrubal Oliveros said. “It’s a chaotic scenario.”
Other measures — revealed by Maduro in a speech to the nation late on Friday — include a massive minimum wage hike, the fifth so far this year.
As it stands, the monthly minimum wage — devastated by inflation and the aggressive devaluation of the bolivar — is still not enough to buy 1kg of meat.
The embattled Maduro said the country needed to show “fiscal discipline” and stop the excessive money printing of recent years.
However, economists said the radical overhaul could only make matters worse. In the capital, Caracas, residents were skeptical about the new measures.
“Everything will stay the same, prices will continue to rise,” said 39-year-old Bruno Choy, who runs a street food stand.
Angel Arias, a 67-year-old retiree, dubbed the new currency a “pure lie.”
Three of the country’s leading opposition groups — Primero Justicia, Voluntad Popular and Causa R — have rejected the reform plan and called for a day of protest today.
The new currency, the sovereign bolivar — to distinguish from the current, and ironically named, strong bolivar — will be anchored to the country’s widely discredited cryptocurrency, the petro.
Each petro will be worth about US$60, based on the price of a barrel of Venezuelan oil. In the new currency, that will be 3,600 sovereign bolivars — signaling a massive devaluation.
In turn, the minimum wage will be fixed at half a petro or 1,800 sovereign bolivars. That is about US$28 — more than 34 times the previous level of less than a dollar at the prevailing black market rate.
Dozens of furious Venezuelan migrants fleeing economic misery in Venezuela for a new life elsewhere on Sunday defied rules requiring they hold a valid passport to cross the border from Colombia into Ecuador, and authorities appeared to be allowing it.
Hundreds of desperate people who traveled days from Venezuela, mostly by bus but some on foot, were prevented from passing the checkpoint near the town of Ipiales by a regulation set by Ecuadoran President Lenin Moreno that took effect in on Saturday.
However, as tension mounted in the frigid Colombian mountain town, migrants decided to risk being detained and simply walked across the ungated border, having spent days in freezing conditions at the Rumichaca crossing.
Fearful Venezuelan immigrants lined up in smaller numbers to enter Brazil on Sunday at the only border crossing between the two countries one day after violent protests by Brazilian residents drove hundreds back across the frontier.
The Brazilian army, which reinforces security at the Pacaraima border post, said 1,200 Venezuelans, including women and children, fled back into Venezuelan on Saturday when residents went on a rampage after the stabbing and beating of a local shop owner.
The angry demonstrators destroyed tents used by Venezuelans to camp out in the street near the bus station and set fire to belongings the immigrants left behind.
Additional reporting by Reuter
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