Venezuela has the world’s highest rate of inflation. And as the Latin American country gears up for presidential elections next month, the economy is taking center stage in the political campaign.
Some argue the only way forward for Venezuela is to drop its currency, and start using the dollar.
CGTN’s Stefano Pozzebon reports.
The Mercado de Chacao in central Caracas is where Venezuela’s macro-economic concerns spell trouble for the regular shopper. As the country grapples with hyperinflation, price labels here are rewritten every day, and customers simply can’t keep up.
Housewive Ana Lucia Berrio Blanco explains,“Last week I paid 70,000. This week who knows? I have just begun to look for my groceries, and I don’t know how much they cost today.”
The IMF projects Venezuela’s inflation rate could soar to a jaw-dropping 13,000 percent this year, requiring drastic measures to get the economy back on track. Among the options is dollarization: abandoning the national currency in favor of using the U.S. dollar. That’s what opposition candidate Henri Falcon said he would do if he’s elected president next month.
His plan is backed by his adviser Francisco Rodriguez, a former Wall Street banker. Rodriguez said dollarizing is the last chance for Venezuela to rescue its economy.
“Dollarization, because it stops the government from printing money, it guarantees the absolute credibility of monetary policy and that’s why it brings down inflation perfectly, without fail.”
But critics, like opposition lawmaker Jose Guerra, argue that dollarization is a risky move that would solve Venezuela’s problems only in the short term.
“The problem I have with dollarization, is that we would surrender our monetary policy to the Federal Reserve of the United States. We solve one problem, hyperinflation, and get another.”
President Nicolas Maduro has also laid out his plan: If re-elected, he’ll launch a new national currency – re-denominating the bolivar to be worth one thousand of the current one, effective in June.
At the market, shoppers see Falcon’s Dollarization plan and Maduro’s new currency plan as exactly that – plans.Shoppers said they don’t really care what currency they use, as long as it puts a stop to the hyperinflation that’s making their lives so difficult.