Venezuela’s government will begin printing larger-denominated bank notes sometime this year, a top finance official said, as runaway inflation has eroded the value of the nation’s biggest bill to less than a US dime on the black market.
Central Bank President Nelson Merentes’ comments in an interview Monday with The Associated Press were the first confirmation that Venezuela is preparing to print larger bills, something that had been rumored for months.
Market economists have said bigger bills will only accelerate inflation that last year hit 181%—the highest in the world.
Merentes, who has helped steer the economy for more than a decade as finance minister and then as head of the central bank, disagreed. He said that far from generating panic among inflation-wary Venezuelans the new bills will reduce price pressures “because you’re going to have less bills circulating”.
“This is a big project that will take us to a monetary system more in line with the Venezuelan situation,” Merentes said.
He said no date has been set for the 500- and 1,000-bolivar notes to enter circulation nor had it been decided what image would be on the new bills.
The largest bill currently in circulation—100 bolivars—is worth 50 US cents at the weaker of two official rates and less than 10 cents at the widely used black market rate.
Venezuela’s economy shrank 5.7% last year while shortages of basic goods multiplied, adding to social tensions and undermining support for President Nicolas Maduro, whose socialist party lost congressional elections in December by a landslide.
The misery is expected to continue this year as world prices for oil hover near a 13-year low, cutting into earnings from petroleum, which account for 95% of Venezuela’s export revenue. The International Monetary Fund has forecast Venezuela’s inflation this year could surge to 720%.
