Confusion reigns as Venezuela braces for release of new banknotes

The new Venezuelan currency will be called the sovereign bolivar — to distinguish from the current, and ironically named strong bolivar, above. (AFP)
Updated 20 August 2018
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Confusion reigns as Venezuela braces for release of new banknotes

  • Caracas is issuing new banknotes after lopping five zeroes off the crippled bolivar
  • The new currency will be anchored to the country’s widely discredited cryptocurrency, the petro

CARACAS: Beleaguered Venezuelans braced Monday for the rollout of 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,” said the director of the Ecoanalitica consultancy, Asdrubal Oliveros.
“It’s a chaotic scenario.”
Other measures — revealed by Maduro in a speech to the nation late 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 a kilogram (2.2 pounds) of meat.
The embattled Maduro, a former bus driver and union leader, said the country needed to show “fiscal discipline” and stop the excessive money printing of recent years.
But economists say 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,” 39-year-old Bruno Choy, who runs a street food stand, said.
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 on Tuesday.
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 $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 (1,800 sovereign bolivars). That is about $28 — more than 34 times the previous level of less than a dollar at the prevailing black market rate.
The socialist president also announced a curb on heavily subsidized fuel in a bid to prevent oil being smuggled to other countries.
Subsidies would only be available to citizens registering their vehicles for a “fatherland card,” which the opposition has decried as a mechanism to exert social control over opponents.
Fuel subsidies have cost Venezuela $10 billion since 2012, according to oil analyst Luis Oliveros, but without them, most people would not be able to buy fuel.
Oliveros also warned that the new bank notes will crumble “within a few months” if hyperinflation is not brought under control.
The International Monetary Fund predicts inflation will hit a staggering one million percent this year in Venezuela — now in a fourth year of recession, hamstrung by shortages of basic goods, and paralyzed public services.
“Don’t pay attention to naysayers,” Information Minister Jorge Rodriguez said, pushing back against criticism of the plan. “With oil income, with taxes and income from gasoline price hikes... we’ll be able to fund our program.”
Oil production accounts for 96 percent of Venezuela’s revenue — but that has slumped to a 30-year low of 1.4 million barrels a day, compared to its record high of 3.2 million 10 years ago.
Maduro’s predecessor Hugo Chavez stripped three zeroes off the bolivar in 2008, but that failed to prevent hyperinflation.


Damac chief confident of Dubai property market recovery by 2021

Updated 12 November 2018
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Damac chief confident of Dubai property market recovery by 2021

DUBAI: One of the UAE’s leading property developers believes that the property market will pick up again by 2021.
Hussain Sajwani, the billionaire founder and chairman of Dubai-based Damac Properties, told a World Economic Forum meeting in the UAE that it could take “a few years” before the current phase of the property cycle reversed, boosted by foreign buyers, especially those from China.
“As you appreciate the property market is cyclical everywhere in the world — and you see a few years up, and a few years down.

“We had our chance of a (bull) market from 2012 to 2015 … Then in 2016 we started seeing some slowdown with the oil prices coming down,” he said at the WEF’s Global Future Councils gathering in Dubai.
“This year has been a difficult year and I think next year will be another difficult year. I don’t see it’s going to be better than this year. We’re in that cycle of slowdown and it will take a few years. I hope that by 2020 with the Expo coming in, more people will be coming to Dubai,” he added.
Some real estate experts have forecast a recovery to the Dubai property market next year, as the expected “Expo 2020 effect” boosts the economy.
Sajwani was confident of the long-term attractions of Dubai.

“I genuinely believe Dubai is still a hidden jewel and a lot of people around the world still want to come to Dubai and they love it,” he said.
“If we just take one country, like China, if we can attract another few million tourists from China we can get more people to come here, spend time, buy property… and retail … I would hope by the end of 2020 or 2021 we start coming out of this slowdown.”