Two years ago, shoppers in Venezuela would pay fruit sellers like José Pacheco with boxfuls of 100 bolívar notes – then the currency’s highest denomination. Now, thanks to rampant hyperinflation, even those are useless.
“It’s crazy to accept notes of 100, 500, or 1000 bolívares,” said Pacheco, a wiry 61-year-old, whose humble stall clings to the fringe of one of the major markets in Ciudad Guayana, a city in Venezuela’s southern Bolívar state.
He now only accepts newly minted 100,000 bolívar notes, which due to demand are hard to come by. “Otherwise it’s a box [full of notes] that afterwards we have to take to the bank,” he said.
Inflation in the embattled South American country could reach one million per cent by December, the International Monetary Fund (IMF) warned this week, reflecting an economic crisis comparable to Germany’s after the first world war and Zimbabwe’s at the beginning of the last decade.
Venezuela, which has the largest proven oil reserves on the planet, is in the midst of a five-year crisis that has left many of its people unable to afford food and medicine, with shelves bare in supermarkets. Crime rates continue to set records, with local residents fearful to leave the house at night.
Alejandro Werner, the head of the IMF’s western hemisphere department, elaborated on the grim prognosis. “We expect the government to continue to run wide fiscal deficits financed entirely by an expansion in base money,” he wrote in a blogpost on Monday night, “which will continue to fuel an acceleration of inflation as money demand continues to collapse.”
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