A raft of new measures comes into effect in Venezuela on Monday, in the latest attempt to deal with the country's growing economic crisis.
President Nicolas Maduro announced on Friday that a major currency overhaul would take place on Monday, with Caracas set to issue new banknotes after chopping five zeroes off the beleaguered bolivar, which has been subject to spiraling hyperinflation.
The other measures announced by Maduro (pictured above), a former union leader who came to power five years ago following the death of Hugo Chavez, include a massive hike of the country's minimum wage as well as new official exchange rate arrangements.
Read more: Inflation-wracked Venezuela forced to end cheap oil and gas
The reform plans are the latest attempt to halt the oil-rich country's ongoing economic collapse, caused by years of populist policies which have ultimately destabilized the country's economy.
A chaotic scenario
Analysts were initially skeptical about the possible benefits of the latest measures.
"There will be a lot of confusion in the next few days, for consumers and the private sector," Asdrubal Oliveros, director of the Ecoanalitica consultancy, told AFP. "It's a chaotic scenario."
In Friday's speech to the nation, Maduro said the country needed to show "fiscal discipline" following years of excessive money printing.
The new currency, which comes into use on Monday, is known as the sovereign bolivar (to distinguish from the current currency, the so-called 'strong' bolivar) and it will be anchored to the country's widely discredited cryptocurrency, the petro.
In the new arrangements, one petro will be worth $60 (€53), based on the price of the country's oil. That will be equal to 3,600 sovereign bolivars.
Read more: How Venezuela gets plundered
As for the minimum wage hike, which also comes into place on Monday, the new monthly rate will be fixed at 1,800 sovereign bolivars. That works out at more than 34 times the previous rate, based on the black market valuation of a US dollar in the country.
Due to devastating inflation and the persistent devaluation of the bolivar, the existing monthly minimum wage rate is barely enough to buy a kilo of meat in the capital city.
Optimism and money in short supply
The International Monetary Fund (IMF) predicts that inflation in Venezuela will hit a staggering one million percent this year. That continues what has already been four years of economic misery for the country.
Hyperinflation has crippled the Venezuelan economy
Maduro has consistently blamed others for the economic difficulties and over the weekend, his government defended its role in the ongoing crisis.
"Don't pay attention to naysayers," Information Minister Jorge Rodriguez said. "With oil income, with taxes and income from gasoline price hikes, we'll be able to fund our program."
Since Sunday, electronic transactions have been suspended in the country in order to facilitate the currency switch. However, considering that Venezuela has made similar moves before, hopes are less than high that the reforms will work.
"Everything will stay the same, prices will continue to rise," 39-year-old Bruno Choy, who runs a street food stand in Caracas, told AFP.
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Venezuela on the brink
The last straw
In March 2017, violent protests erupted across the country in response to a Supreme Court decision to strip the legislative branch of its powers. Amid an international outcry, President Nicolas Maduro reversed the decision, but it was too late. Thousands continued to take to the streets, calling for new elections. More than 100 people were killed in clashes with security forces.
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Venezuela on the brink
Hunger, a growing problem
The violence added to the ongoing economic and political crisis in Venezuela. Many Venezuelans spend more than 30 hours a week waiting in lines to shop, and are often confronted with empty shelves when they finally enter a store. President Maduro blames the crisis on US price speculation. The opposition, however, accuses the Socialist government of economic mismanagement.
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Venezuela on the brink
Health care in crisis
The crisis has even affected health care in the oil-rich nation. Venezuelans often head to Colombia to collect medical supplies to send home, as seen in this picture. Hospitals across Venezuela have compared conditions to those seen only in war zones. As patient deaths rise, health officials have sounded the alarm on the rise of malaria and dengue fever.
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Venezuela on the brink
Power grab
By July 2017, Venezuela's pro-government Constituent Assembly was established. For observers, it had all the hallmarks of a power grab. The new body adopted the authority to pass legislation on a range of issues, effectively taking away the powers of Venezuela's elected congress, which was under the opposition's control. The move drew wide international condemnation.
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Venezuela on the brink
The West sanctions
In response to the political crisis, the United States and European Union imposed a series of sanctions against ruling officials. The US blacklisted members of the Constituent Assembly and froze all of Maduro's assets that are subject to US jurisdiction. The EU banned arms sales to the country.
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Venezuela on the brink
Government victorious in regional elections
In October 2017, Venezuela held two votes: regional elections and elections for governors, which were long overdue. The opposition boycotted the vote, but then split, as some candidates and small parties chose to participate. This caused a deep rift within Maduro's opponents. The government went on to sweep the vote, which detractors say was unfair and heavily favored the regime.
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Venezuela on the brink
Debt default
In November 2017, the oil-rich, cash-poor nation faced its day of reckoning. Credit ratings agencies declared Venezuela and its state-run oil company in "selective default." But Russia offered to restructure the South American country's debt to ensure Caracas pays its other creditors. US and EU sanctions, however, limited the chance of an agreement.
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Venezuela on the brink
Presidential elections scheduled
The National Assembly announced in January 2018 that it would grant Maduro's call for snap presidential elections. The electoral authority, CNE, held the elections on May 20. The EU, the US and 14 Latin American nations warned that they would not recognize the results. The mainstream MUD opposition alliance boycotted the vote, leaving only one possible outcome.
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Venezuela on the brink
Maduro wins ...
Maduro was re-elected to a second six-year term with about 68 percent of the vote. Turnout was only 46 percent, according to electoral authorities. However, the MUD opposition alliance put turnout at less than 30 percent. The Organization of American States (OAS) called the elections neither free nor fair.
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Venezuela on the brink
... Guaido assumes power
But weeks into the new year, the situation took a drastic turn. On January 23, 2019, parliament president Juan Guaido declared himself interim president of Venezuela — a move that was quickly recognized by US President Donald Trump. Maduro called it a US-backed "coup." Days later, the US sanctioned Venezuela's state oil firm, while Guaido staked his claim on the country's foreign assets.
aos/uhe (AFP, Reuters)