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

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.


Saudi Aramco iktva forum kicks off in Dhahran

Updated 19 min 12 sec ago

Saudi Aramco iktva forum kicks off in Dhahran

  • Iktva has become one of the Kingdom’s most important and strategic programs focused on developing the energy sector and creating a world-class supply chain
  • The program aims to reach 70 percent local content, increase exports of Saudi-made energy goods and services, and create thousands of jobs

DHAHRAN: Saudi Aramco’s 5th annual iktva (In-Kingdom Total Value Add) forum kicked off on Monday at the Dhahran Expo center, with over 70 exhibitors, 14 government entities, and 8 international energy partners all present at the mega-event.

Iktva was launched by Saudi Aramco in 2015 to drive increased levels of localization in its supply chain. 

Amin Nasser, President and CEO of Aramco, highlighted the success of the event and how the forum has contributed to the kingdom’s reputation internationally and locally.

“The iktva Forum and Exhibition 2020 represents an ideal opportunity to continue to build on the enormous progress which has already been made in creating an integrated supply chain for the oil field service industry, serving not just the Kingdom but the entire region. As you know, we take great pride in our low-cost production, and our reputation for reliability. A first-class supply chain is a critical factor that makes both possible,” he said.

He also indicated that the success of the event could be seen in the numbers.

“For the first time, the majority of our procurement is from in-kingdom: 56 percent to be exact. Our suppliers have tripled their local purchases of goods and services, their employment of Saudis is up 50 percent, and female employment has increased by almost a third. Our suppliers are exporting 50 percent more from the kingdom, because of iktva,”

Aramco signed 66 initial agreements and strategic and commercial collaborations valued at more than $21 billion with international partner companies and entities from 11 countries in several industrial and business sectors across the Saudi Arabian energy sector.

In addition, a joint venture agreement with Baker Hughes was also signed. The joint venture will be a multi-sectorial non-metallic investment platform designed to innovate, develop and manufacture composite materials for both oil and gas as well as non-oil and gas applications.

The venture will leverage polymer materials and state-of-the-art manufacturing processes to deliver transformational non-metallic products, starting with reinforced thermoplastic pipes. The JV facility will be located at the King Salman Energy Park (SPARK), and will serve the MENA region. 

Launched in 2015, iktva has become one of the Kingdom’s most important and strategic programs focused on developing the energy sector and creating of a world-class supply chain. The program aims to reach 70 percent local content, increase exports of Saudi-made energy goods and services, and create thousands of technical and professional jobs and careers.