North Korea’s politically motivated currency revaluation is forcing its people to barter for food to survive even though the regime promised a new year drive to raise living standards, experts said.
In an policy-setting editorial on Jan. 1, the rulers of the impoverished country stressed efforts to bring about “a radical turn in the people’s standard of living.”
But analysts said the shock revaluation of the won on Nov. 30 could intensify the already severe hardships of ordinary people.
PHOTO: AFP
“Inflation is widespread despite the regime’s desperate efforts to stabilize prices,” said Lee Seung-yong, director of the South Korean Good Friends welfare group, which has extensive cross-border contacts.
Lee said new state prices have yet to be announced following the revaluation “due to a surge in food prices and chaos in the markets, which paralyzed daily distribution of commodities and forced some people to rely on bartering.”
“This prompted authorities to further strengthen control of market activities. However, the situation is getting worse,” he said.
“Without outside help especially from China, North Koreans will suffer from shortages and high prices for a while, maybe throughout this year,” he said.
Authorities restricted the amount of old banknotes that could be changed at a rate of 100-for-one for new currency, wiping out savings and sparking widespread anger.
The revaluation was widely seen as an attempt to reassert control over the economy and clamp down on growing free-market activities. Private markets emerged after the state food distribution system collapsed during famines in the 1990s.
A Pyongyang central bank official himself called it an attempt to strengthen “socialist principles and order in economic management.”
Seoul-based Internet newspaper DailyNK also reported last week that bartering has made a comeback.
“For now, state-designated prices are still not public, so people think that selling goods for cash now would mean making a loss,” it quoted a defector who talked to his family in the North as saying.
“Therefore, bartering has become the main method of trading for the people,” he said.
The defector said the barter value of products is decided according to their value in old money, with trade carried out privately to avoid detection.
Before the redenomination, one fish was worth 1,500 won (US$11.11) and a kilogram of corn was 900 won, so people barter one fish for a little less than two kilograms of corn, DailyNK said.
“The economy worsened due to the currency change where markets were closed and the public needed necessities which were not provided by the state,” Cho Bong-hyun, of the Industrial Bank of Korea’s economic research center, told a seminar on Friday.
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