CARACAS (Reuters) - Venezuela said on Saturday a postponed currency overhaul to remove three zeroes from the devalued bolivar would take place on Aug. 4, two months later than originally planned.
President Nicolas Maduro’s socialist government is taking the measure in response to high inflation and a devastating economic crisis that has made it increasingly difficult to find cash and left millions struggling to obtain basic foodstuffs.
Banking industry leaders had asked for a postponement from the original June 4 date, given that the new notes and transaction systems were nowhere near ready.
Saturday’s government communique urged financial institutions to prepare well for the Aug. 4 change “to facilitate the population’s financial transactions and protect our currency.”
Venezuela’s annual inflation is now close to 14,000 percent, according to the opposition-controlled legislature, as the country’s socialist economic system spirals downward.
Cash is in short supply because new banknotes have not been printed fast enough to keep up with price increases, spurring a growing use of phone apps for transactions.
Late socialist leader Hugo Chavez in 2008 carried out a similar so-called monetary conversion that removed three zeroes from the currency.
But the bolivar has depreciated by 99 percent since Maduro took office in 2013, while unchecked expansion of money supply has given the country the world’s fastest rate of inflation.
Most economists say shedding three zeroes from the currency is a palliative measure that would need to be repeated unless Maduro makes deep reforms to the country’s dysfunctional currency controls and excessive money creation.
Maduro, who portrays the country as the victim of an “economic war,” has in the past accused adversaries of stealing the country’s bills and smuggling them to neighboring Colombia.
Reporting by Deisy Buitrago; Writing by Andrew Cawthorne; Editing by Paul Simao