Venezuelan President Nicolás Maduro (shown), “desperately grasping at straws to try to fix the country’s economic meltdown,” announced a series of economic policy changes over the weekend that he hopes — almost certainly in vain — will save socialism from itself, reported Agence France-Presse.

In a speech to the nation late Friday, Maduro said the country must show “fiscal discipline” and stop inflating its currency, the bolivar, which has become practically worthless. That is, of course, very good advice; but Maduro is unlikely to follow it because doing so would require slashing the massive Venezuelan welfare state and liberalizing the economy, both of which are anathema to the committed Marxist. Instead, he is employing half-measures and tricks that “analysts say … could only serve to make matters worse,” wrote AFP.

Inflation is a huge problem in Venezuela. According to Bloomberg, “Prices are currently rising at an annualized rate of 108,000 percent,” causing thousands of Venezuelans to flee the country. Unfortunately, noted the news service, inflation “will get fresh fuel from [Maduro’s] measures.”

The government introduced Monday a new currency, the bolívar soberano (“sovereign bolivar”), to replace the old bolívar fuerte (“strong bolivar”). The new one is officially valued at 100,000 times the old one, which is to say the government lopped five zeros off the old bills. In 2008, Maduro’s predecessor and mentor, the late Hugo Chávez, tried the same thing, only with three zeros, to no avail.

The new currency will be pegged to Venezuela’s “widely discredited cryptocurrency,” the petro, noted AFP, explaining:

Cryptocurrency rating site ICOindex.com has branded the petro a “scam,” while the U.S. has banned its nationals from trading in it.

“Anchoring the bolivar to the petro is anchoring it to nothing,” said economist Luis Vicente Leon, director at polling organization Datanalisis.

Right from the outset, it has not been clear how the petro would operate, nor what being backed by oil actually means.

Nevertheless, Maduro is setting the petro up as the standard for Venezuela. Its value, currently set at $60 or 3,600 sovereign bolivars, but subject to change, will be used to set prices for goods in the country.

Meanwhile, Maduro “carried out one of the greatest currency devaluations in history over the weekend — a 95 percent plunge,” reported Bloomberg. The official exchange rate for the bolivar went from about 285,000 per dollar to six million. This move, while significant, is in large measure simply a recognition of reality: Six million-to-one is the going rate for bolivars on the black market, and many businesses already list their prices accordingly.

Maduro also tried to buy support from the populace by raising the monthly minimum wage to 1,800 sovereign bolivars, or about $28. That, observed AFP, “is still not enough to buy a kilo of meat.” However, considering that it is a 3,500-percent jump over the previous level, it, along with a four-percentage-point hike in the country’s value added tax, will greatly increase the cost of doing business in Venezuela, which will hardly help its embattled economy.

The uncertainty surrounding the sudden policy changes was such that many businesses did not open Monday. Banks were closed while trying to apply the new currency rules to their ATMs and other electronic services.

All these policy changes are driven by the government’s desire to raise desperately needed revenue. According to AFP, “The fiscal deficit is almost 20 percent of GDP while Venezuela struggles with an external debt of $150 billion.” Maduro has stopped payments on most foreign debt, and creditors are trying to seize Venezuela’s foreign assets in payment.

Last week, Maduro also announced that only those citizens registering their vehicles for a “fatherland card” would be allowed to continuing buying fuel at greatly subsidized prices. While ending the subsidies, which have cost Venezuela $10 billion since 2012, would be a good idea, Maduro’s opponents are right to fear that the move is less about saving money and more about controlling the populace.

Controlling the populace, however, is Maduro’s modus operandi, as it is for all socialists. But unless Maduro becomes willing to cede this control, he may well end up presiding over a barren, depopulated wasteland — situated, ironically, on the world’s largest proven oil reserves.</s>Venezeula has announced it will be pegging its economy to a national cryptocurrency as it looks to save itself from economic ruin.

The crisis-hit South American country, which recently saw its hyper-inflation grow to more than 1,000,000 per cent, has announced it will be tying the bolivar to the government's own petro cryptocurrency.

As part of the move, the bolivar will be devalued 96 per cent, from 285,000 to the dollar to six million. In addition, corporate tax rates will go up, as will the minimum wage. Overall, Venezuela hopes that wages, pensions and prices will all be pegged to the new currency.

Announcing the news, President Nicolas Maduro said that the new "sovereign bolivar" would help the country to bounce back from its recent hardships, which he has blamed on the United States.

"I want the country to recover and I have the formula. Trust me," Maduro said on state television. "They've dollarized our prices. I am petrolising salaries and petrolising prices.

"We are going to convert the petro into the reference that pegs the entire economy's movements."

Venezeula launched its cryptocurrenncy back in February as it looked to raise cash. At the launch, President Maduro said that around 100 million petro tokens would be issued, each of which would be backed by a barrel of the nation's vast oil reserves.

However many observers warned the scheme could be a scam, with US President Donald Trump quickly signing an executive order banning Americans from investing.
• What is blockchain? Everything you need to know</s>Image copyright Reuters Image caption Before the changes, one kilo (2 lb) of rice cost 2.5m Strong Bolivars

A government plan to curb hyperinflation is coming into force in Venezuela amid confusion about how it will work.

From Monday, new banknotes denominated in "sovereign bolivars" are legal tender, with five zeros taken off.

The measures come after the International Monetary Fund predicted that inflation could reach one million per cent this year.

Economists have warned that the new measures could make things worse.

What's happening on Monday?

The move is effectively a redenomination. President Nicolás Maduro is lopping five zeros off the current currency, the "strong bolívar", and giving it its new name.

Eight new banknotes and two new coins will also be launched. The new notes will have a value of 2, 5, 10, 20, 50, 100, 200 and 500 sovereign bolivars.

Most old bolivar notes will continue to circulate "for a time", Venezuelan Central Bank President Calixto Ortega announced. Only the lowest current notes, worth less than 1,000 strong bolivars, will be phased out straight away,

How will this affect prices?

Venezuela has been suffering from hyperinflation. According to a recent study by the opposition-controlled National Assembly, prices have been doubling every 26 days on average.

Some economists have been using the price of a cup of coffee with milk as an indicator of inflation.

On 31 July cafes in the capital, Caracas, charged 2.5m strong bolivars for a cup, about double the amount recorded five weeks earlier.

Under the new system, the drink will now cost 25 sovereign bolivars.

Will this make things easier?

For a time, it should make cash transactions easier. Someone wanting to pay for their cup of coffee in cash until now had to carry huge wads of banknotes.

The biggest denomination in the old currency was the 100,000 strong bolivar note. So the minimum amount of notes you could pay your coffee with would have been 25.

High denomination banknotes were very sought after and banks imposed strict restrictions on how much cash each customer could take out of their account per day.

So Venezuelans would find themselves paying either with rucksacks full of lower denomination bills or increasingly avoiding paying by cash altogether and transferring money electronically.

As the BBC's South America correspondent Katy Watson found, even tips were being paid via bank transfer.

Media playback is unsupported on your device Media caption How to get by in Venezuela, when money is in short supply

Will the new currency stop inflation?

The government hopes that its new economic plan will not only curb the country's hyperinflation but also put an end to the "economic war" which it says has been waged against it by "imperialist forces".

It says the introduction of the new currency is accompanied by key measures which will help Venezuela's battered economy recover. Among them are:

Raising the minimum wage to 34 times its previous level from 1 September

Anchoring the sovereign bolivar to the petro, a virtual currency the government says is linked to Venezuela's oil reserves

Curbing Venezuela's generous fuel subsidies for those not in possession of a "Fatherland ID"

Raising VAT by 4% to 16%

President Maduro tweeted [in Spanish] that his government would "dismantle neoliberal capitalism's perverse war to install a virtuous, balanced, sustainable, healthy and productive economic system".

But economists have been warning that the new measures do not address the root causes of inflation in Venezuela and that the printing of new notes could exacerbate inflation rather than curb it.

They say the rise in the minimum wage will only drive inflation up faster. Some analysts estimate that the benefits of the new currency could be wiped out by hyperinflation "within months".

What immediate effect is the change likely to have?

Even though Monday is the date on which the new notes were due to be introduced, President Maduro declared it a bank holiday.

Not only will banks remain closed, financial institutions have also been told to suspend all electronic transactions for 24 hours starting at 18:00 local time on Sunday.

The new notes will therefore not start circulating until Tuesday and with long queues forming at banks even on average days many Venezuelans fear the sudden introduction of the new currency could lead to chaos.

Ahead of the changes, many Venezuelans stocked up on whatever staple goods they could get hold of amid longstanding shortages.

Image copyright EPA Image caption On the weekend, Venezuelans stocked up on whatever they could ahead of the changes

Economic experts have also questioned the wisdom of anchoring the new currency to the petro.

Even though the government says the virtual currency has been a huge success, details of how it operates have been hard to come by.

The US has banned its citizens from trading in it and one cryptocurrency site, ICOindex.com, has even labelled the petro "a scam".

"Anchoring the bolivar to the petro is anchoring it to nothing," economist Luis Vicente León told AFP news agency.</s>CARACAS/VALENCIA, Venezuela (Reuters) - Venezuela on Monday slashed five zeros from prices as part of a broad economic plan that President Nicolas Maduro says will tame hyperinflation but critics call another raft of failed socialist policies that will push the chaotic country deeper into crisis.

Streets were quiet and shops were closed due to a national holiday that Maduro decreed for the first day of the new pricing plan for the stricken economy, which the International Monetary Fund has estimated will have 1 million percent inflation by year end.

The price change comes with a 3,000 percent minimum wage hike, tax increases meant to shore up state coffers and a plan to peg salaries, prices and the country’s exchange rate to the petro, an elusive state-backed cryptocurrency.

Economists say the plan, which was announced last Friday, is likely to escalate the crisis facing the once-booming nation that is now suffering from Soviet-style product shortages and a mass exodus of citizens fleeing for other South American countries.

Venezuelans were sceptical the plan will turn the economy around.

“I can’t find a cash machine because all the banks are closed today,” said Jose Moreno, 71, a retired engineer in the central city of Valencia, complaining of chronically dysfunctional public services.

“There’s no money, there’s no water, there’s no electricity - there’s nothing.”

After a decade-long oil bonanza that spawned a consumption boom in the OPEC member, many citizens are now reduced to scouring through garbage to find food as monthly salaries currently amount to a few U.S. dollars a month.

The new measures have worried shopkeepers already struggling to stay afloat due to hyperinflation, government-set prices for goods ranging from flour to diapers, and strict currency controls that crimp imports.

Venezuela’s main business organization, Fedecamaras, on Monday slammed Maduro’s economic plan as “improvised” and said it will cause confusion and put the country’s economic activity at “severe risk.”

“Pegging the bolivar to the petro to us seems to be a serious mistake,” said Fedecamaras President Carlos Larrazabal at a news conference. “The plan is incoherent.”

Though Maduro announced this month that the government would hike Venezuela’s heavily subsidized gasoline to international levels, drivers on Monday continued to fuel up at the same prices as last week.

The only notable difference at service stations was that trash cans were filled with old 100-bolivar notes, which are no longer accepted legal tender, that drivers had tossed. The old notes in denominations of 1,000 and above will continue to circulate alongside the new bills for an undetermined period of time.

At Monday’s exchange rate, the equivalent of $0.01 buys 4,233 gallons of gasoline, with one bar of hand soap selling for the same as 152,381 gallons of fuel, according to Reuters calculations.

The bolivar traded on the opaque black market on Monday at around 96 bolivars to the dollar, a rate reflecting the monetary overhaul and which implies a depreciation in real terms of nearly 30 percent since last week. The rate may not be representative of the overall market because trading volumes were thin due to the public holiday, industry experts said.

Growing discontent with Maduro has spread to the military as soldiers struggle to get enough food and many desert by leaving the country, along with thousands of civilians.

Two high-ranking military officers were arrested this month for their alleged involvement in drone explosions during a speech by Maduro, who has described it as an assassination attempt.

The chaos has become an increasing concern for the region. In recent days, Ecuador and Peru have tightened visa requirements for Venezuelans, and violence drove hundreds of Venezuelan migrants back across the border with Brazil on Saturday.

Maduro, re-elected to a second term in May in a vote widely condemned as rigged, says his government is the victim of an “economic war” led by political adversaries with the help of Washington, and accuses the United States of seeking to overthrow him.

The United States has denied the accusations. But it has described the former bus driver and union leader as a dictator and levied several rounds of financial sanctions against his government and top officials.</s>Maduro launches new currency with five zeroes less but the same misery for the people

Uncertainty reigned in Venezuela after President Nicolas Maduro unveiled a major economic reform plan aimed at halting the spiraling hyperinflation that has thrown the oil-rich, cash-poor country into chaos. Ahead of a major currency overhaul on Monday, when Caracas will start issuing new banknotes after slashing five zeroes off the crippled Bolívar, Maduro detailed other measures he hopes will pull Venezuela out of crisis.

Those measures – revealed in a speech to the nation – include a massive minimum wage hike, the fifth so far this year. But analysts say the radical overhaul could only serve to make matters worse.

“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.

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 embattled Maduro, a former bus driver and union leader, said the country needed to show “fiscal discipline” and stop the excessive money printing that has been regular in recent years.

The new currency, the sovereign Bolívar – to distinguish from the current, and ironically named, strong Bolívar – will be anchored to the country’s widely discredited cryptocurrency, the Petro.

Each Petro will be worth about US$60, based on the price of a barrel of Venezuela’s oil. In the new currency, that will be 3,600 sovereign Bolívar – signaling a massive devaluation.

In turn, the minimum wage will be fixed at half a Petro (1,800 sovereign Bolívar), starting Monday. That is about US$ 28 – more than 34 times the previous level of less than a dollar at the prevailing black market rate.

Maduro also said the country would have one fluctuating official exchange rate, also anchored to the Petro, without saying what the starting level would be.

As it stands, the monthly minimum wage – devastated by inflation and the aggressive devaluation of the Bolívar – is still not enough to buy a kilo of meat. In the capital Caracas, residents were skeptical about the new measures.

The International Monetary Fund predicts inflation will hit a staggering one million per cent this year in Venezuela – now in a fourth year of recession, hamstrung by shortages of basic goods, and crippled by paralyzed public services.

Maduro blames the country’s financial woes on opposition “plots” and American sanctions – but admits that the government will “learn as we go along” when it comes to the currency redenomination.

“Don’t pay attention to naysayers,” Information Minister Jorge Rodriguez said. “With oil income, with taxes and income from gasoline price hikes … we’ll be able to fund our programme.”

Electronic transactions were to be suspended from Sunday to facilitate the introduction of the new notes.

Oil production accounts for 96% 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. The fiscal deficit is almost 20% of GDP while Venezuela struggles with an external debt of US$ 150 billion.

Maduro’s predecessor Chavez stripped three zeroes off the Bolívar in 2008, but that failed to prevent hyperinflation.

According to economist Jean Paul Leidenz, Venezuela is trying to emulate Brazil, which replaced its old cruzeiro currency with the Real in the 1990s after the former was destroyed by hyperinflation. But he said that will not work because of the government’s fiscal indiscipline and a lack of financing.

Cryptocurrency rating site ICOindex.com has branded the Petro a “scam” while the US has banned its nationals from trading in it.

“Anchoring the Bolívar to the Petro is anchoring it to nothing,” said economist Luis Vicente Leon, director at polling organization Datanalisis.

Right from the outset, it has not been clear how the Petro would operate, nor what being backed by oil actually means. Maduro’s government is desperately grasping at straws to try to fix the country’s economic meltdown.</s>As previewed yesterday, on Monday Venezuela officially slashed five zeros from prices and its currency as part of what has been dubbed one of the greatest currency devaluations in history which slashed the value of the official bolivar by 95%, an overhaul that President Nicolas Maduro said would tame hyperinflation, and which everyone else called the latest desperate failed socialist policy that will push the chaotic country deeper into crisis and unleash even higher hyperinflation (impossible as that may sound: as a reminder the collapse of Venezuela's currency recently surpassed the Weimar republic).

As part of the devaluation, the official rate for the currency will go from about 285,000 per dollar to 6 million and together with salaries and prices, will be pegged to the Petro cryptocurrency which is reportedly backed by crude oil and is valued by the government at $60, or 3,600 sovereign bolivars. The Petro will fluctuate and be used to set prices for goods.

Government officials tried to partly mask the shock by raising the minimum wage 3,500% so instead of the new minimum wage being 1.8 million strong bolivars, it will be 1,800 sovereign bolivars: the equivalent of $30 a month. Banks were closed and busy trying to adopt ATMs and online platforms to the new currency rules; they will likely fail.

Less discussed was the concurrent increase in the value added tax by 4%, while officials also ended some gasoline subsidies, saving the government $10 billion a year, as many ordinary citizens are forced to switch from subsidized to western fuel prices.

Even though Maduro boasted in Friday night’s announcement that the IMF wasn’t involved in the policies, aspects of the moves bore a resemblance to a classic orthodox economic adjustment, even if those usually involve removal of the corrupt regime whereas Maduro is only becoming more entrenched. Meanwhile, most economists said the plan announced on Friday will escalate the crisis facing the once-prosperous country that is now suffering from Soviet-style product shortages and a mass exodus of citizens fleeing for nearby South American countries.

As Bloomberg notes, the symbolism of announcing the drastic measures on a Friday night wasn’t lost on many Venezuelans. In 1983, President Luis Herrera Campins devalued the bolivar for the first time in 22 years after oil prices crashed. The day became to be known locally as “Black Friday.”

When in 1989 Venezuela raised gasoline costs, lifted foreign-exchange controls and let the currency plunge, prices soared 21 percent in one month alone, leading to riots known as the “Caracazo” that killed hundreds and eventually paved the way for Chavez’s rise to power.

There were no riots - or celebrations - on Monday, however: streets were deserted and shops were closed due to a national holiday that Maduro decreed for the first day of the new pricing plan for the stricken economy, which the International Monetary Fund has estimated will have 1 million percent inflation by year end. Venezuela is already well on its way:according to the Bloomberg Cafe Con Leche index - which tracks the price of a cup of coffee - inflation in Venezuela has hit an annual inflation rate of 108,596%.

In many ways the devaluation is a mere formality. For years now, most people and companies have been unable to access dollars at government-set rates and have been purchasing them in the black market. As a result, the prices on many goods across the country are already based on that exchange rate.

As for ordinary Venezuelans they were mostly baffled by the monetary overhaul and skeptical it will achieve anything. "This is out of control, prices are sky high," said Betzabeth Linares, 47, in a supermarket in the central city of Valencia. "What worries me is how we’ll eat, the truth is that the way things are going, I really don’t know.

Most local businesses were shocked by the announcement: the new measures spooked shopkeepers already struggling to stay afloat due to hyperinflation, government-set prices for goods ranging from flour to diapers, and strict currency controls that crimp imports.

Private companies, already dealing with hyperinflation, years of brain drain, price controls and threats of seizure, now must deal with even faster inflation and mandatory wage hikes. It’s also possible that the exodus of Venezuelans to other countries will increase, even as Ecuador and Peru announced entry restrictions and tensions flared along the border with Brazil.

"People are leaving because of a feeling of despair, and the desperation will now increase," Naim said.

But the biggest question is how the military, without whose support Maduro will be swept from office overnight, would react. It was not immediately clear how the shock measures will sit with the local military which already runs much of the nation. Top ranking generals have been handed the keys to ministries, the state-run oil company and the lucrative business of food imports. Myriad exchange rates created juicy arbitrage opportunities that enriched many close associates of the state.

For now there is little hope that the official opposition, a fragmented group of parties whose leaders are either in hiding or in jail, can stir a popular uprising: Together with several labor unions, the opposition called for protests against the measures Tuesday as well as a 24-hour national strike. It was not immediately clear if anyone turned up.

Maduro, who was re-elected to a second term in May in a vote many said was rigged, has said his government is the victim of an “economic war” led by political adversaries with the help Washington, and accuses the United States of seeking to overthrow him. While the US has denied the accusations, it has described the former bus driver and union leader as a dictator and levied several rounds of financial sanctions against his government and top officials.</s>Venezeula has announced it will be pegging its economy to a national cryptocurrency as it looks to save itself from economic ruin.

The crisis-hit South American country, which recently saw its hyper-inflation grow to more than 1,000,000 per cent, has announced it will be tying the bolivar to the government's own petro cryptocurrency.

As part of the move, the bolivar will be devalued 96 per cent, from 285,000 to the dollar to six million. In addition, corporate tax rates will go up, as will the minimum wage. Overall, Venezuela hopes that wages, pensions and prices will all be pegged to the new currency.

Announcing the news, President Nicolas Maduro said that the new "sovereign bolivar" would help the country to bounce back from its recent hardships, which he has blamed on the United States.

"I want the country to recover and I have the formula. Trust me," Maduro said on state television. "They've dollarized our prices. I am petrolising salaries and petrolising prices.

"We are going to convert the petro into the reference that pegs the entire economy's movements."

Venezeula launched its cryptocurrenncy back in February as it looked to raise cash. At the launch, President Maduro said that around 100 million petro tokens would be issued, each of which would be backed by a barrel of the nation's vast oil reserves.

However many observers warned the scheme could be a scam, with US President Donald Trump quickly signing an executive order banning Americans from investing.
• What is blockchain? Everything you need to know</s>CARACAS/VALENCIA, Venezuela (Reuters) - Venezuela on Monday slashed five zeros from prices as part of a broad economic plan that President Nicolas Maduro says will tame hyperinflation but critics call another raft of failed socialist policies that will push the chaotic country deeper into crisis.

Streets were quiet and shops were closed due to a national holiday that Maduro decreed for the first day of the new pricing plan for the stricken economy, which the International Monetary Fund has estimated will have 1 million percent inflation by year end.

The price change comes with a 3,000 percent minimum wage hike, tax increases meant to shore up state coffers and a plan to peg salaries, prices and the country’s exchange rate to the petro, an elusive state-backed cryptocurrency.

Economists say the plan, which was announced last Friday, is likely to escalate the crisis facing the once-booming nation that is now suffering from Soviet-style product shortages and a mass exodus of citizens fleeing for other South American countries.

Venezuelans were skeptical the plan will turn the economy around.

“I can’t find a cash machine because all the banks are closed today,” said Jose Moreno, 71, a retired engineer in the central city of Valencia, complaining of chronically dysfunctional public services.

“There’s no money, there’s no water, there’s no electricity - there’s nothing.”

After a decade-long oil bonanza that spawned a consumption boom in the OPEC member, many citizens are now reduced to scouring through garbage to find food as monthly salaries currently amount to a few U.S. dollars a month.

The new measures have worried shopkeepers already struggling to stay afloat due to hyperinflation, government-set prices for goods ranging from flour to diapers, and strict currency controls that crimp imports.

Venezuela’s main business organization, Fedecamaras, on Monday slammed Maduro’s economic plan as “improvised” and said it will cause confusion and put the country’s economic activity at “severe risk.”

“Pegging the bolivar to the petro to us seems to be a serious mistake,” said Fedecamaras President Carlos Larrazabal at a news conference. “The plan is incoherent.”

Though Maduro announced this month that the government would hike Venezuela’s heavily subsidized gasoline to international levels, drivers on Monday continued to fuel up at the same prices as last week.

The only notable difference at service stations was that trash cans were filled with old 100-bolivar notes, which are no longer accepted legal tender, that drivers had tossed. The old notes in denominations of 1,000 and above will continue to circulate alongside the new bills for an undetermined period of time.

At Monday’s exchange rate, the equivalent of $0.01 buys 4,233 gallons of gasoline, with one bar of hand soap selling for the same as 152,381 gallons of fuel, according to Reuters calculations.

The bolivar traded on the opaque black market on Monday at around 96 bolivars to the dollar, a rate reflecting the monetary overhaul and which implies a depreciation in real terms of nearly 30 percent since last week. The rate may not be representative of the overall market because trading volumes were thin due to the public holiday, industry experts said.

Growing discontent with Maduro has spread to the military as soldiers struggle to get enough food and many desert by leaving the country, along with thousands of civilians.

Two high-ranking military officers were arrested this month for their alleged involvement in drone explosions during a speech by Maduro, who has described it as an assassination attempt.

The chaos has become an increasing concern for the region. In recent days, Ecuador and Peru have tightened visa requirements for Venezuelans, and violence drove hundreds of Venezuelan migrants back across the border with Brazil on Saturday.

Maduro, re-elected to a second term in May in a vote widely condemned as rigged, says his government is the victim of an “economic war” led by political adversaries with the help of Washington, and accuses the United States of seeking to overthrow him.

The United States has denied the accusations. But it has described the former bus driver and union leader as a dictator and levied several rounds of financial sanctions against his government and top officials.</s>Venezuela has rolled out a new currency, slashing five zeroes from the bolivar, in a bid to tame the country's rampant hyperinflation, but critics say the new measures will only make matters worse.

President Nicolas Maduro declared Monday a national holiday to mark the introduction of a "sovereign bolivar", part of a raft of financial reforms being pushed through by the embattled leader.

The new bolivar, which will be in circulation alongside the old currency during a transitional period, will be pegged to the country's state-backed 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.

Al Jazeera's Alessandro Rampietti, reporting from neighbouring Colombia's capital, Bogota, said Maduro was betting on the petro bringing some stability to the bolivar.

"But people are very worried because they don't understand how this currency will actually work," Rampietti said.

"Many fear that what we will see happening on Tuesday is that prices will continue to go up and this will not make much of a change in a country that is already seeing hyperinflation," he added.

Maria Sanchez, a 39-year-old shopkeeper, told AFP news agency that everyone is "waiting to see what will happen".

Electronic transactions resumed by midday Monday after being suspended for more than 12 hours.

On Sunday, Maduro called the implementation of the new currency a "historic moment" for the country, with further changes expected to include a more than 3,400 percent minimum wage hike and a rise in the price of fuel.

Beginning September 1, the minimum wage will be fixed at half a petro, 1,800 sovereign bolivars, about $28.

"We need a complete economic revolution, like the one I have already activated and at the centre of it is work, the payment and protection of work," Maduro said in a video posted on Facebook.

Critics, however, warned the policies could worsen Venezuela's ongoing economic crisis, with the International Monetary Fund (IMF) predicting inflation could rise to one million percent by the end of 2018.

Venezuela's opposition, meanwhile, called for a nationwide protest and strike on Tuesday against Maduro's policies.

"The measures announced are not any economic recovery plan for the country," opposition politician Andres Velasquez said.

"On the contrary, they represent more hunger, more ruin, more poverty, more suffering, more pain, more inflation, more deterioration of the economy," he added.

Maduro was re-elected as president in May in an election marred by low turnout, an opposition boycott and allegations from rival candidates of multiple voting irregularities.

Several countries - including those comprising the Lima Group bloc - denounced the vote as illegitimate, while US President Donald Trump passed new sanctions on Venezuela within 24 hours of the election aimed at restricting Maduro's government from selling off, or borrowing against, public assets.

In June, the European Union also announced tighter sanctions focused on several senior officials in response to the May 20 vote.

Sonia Schott, a Venezuela analyst, said Maduro's financial reforms were an attempt to energise the country's ailing economy amid heavy external restrictions.

"He is trying to use the petro cryptocurrency in order to skip these sanctions and try to survive and bring life to the Venezuelan economy," Schott told Al Jazeera from Washington, DC.

"Of course there are other countries who will be willing to help Venezuela, like China, Russia and probably India, but the rest of the world won't do that unless they see a political change and a return to democracy in the country," she added.

Maduro has accused the US and its allies of waging "economic war" on Venezuela, saying the measures imposed by Washington were an attempt to force the country to default on its debt.

Venezuela's gross domestic product (GDP) has dropped by about 45 percent since Maduro took office in April 2013, according to the IMF.

The UN estimates about 2.3 million Venezuelans have fled the country, which is suffering from chronic shortages of food, medicine and other basic supplies, with the majority departing for Colombia, Ecuador, Brazil and Peru.

While many countries have agreed to take those fleeing economic hardship, Eucador and Peru recently announced that only those with valid passports will be allowed entry at their borders, leaving many Venezuelans with only paper IDs uncertain about their futures.</s>CARACAS/VALENCIA, Venezuela (Reuters) - Venezuela on Monday slashed five zeros from prices as part of a broad economic plan that President Nicolas Maduro says will tame hyperinflation but critics call another raft of failed socialist policies that will push the chaotic country deeper into crisis.

Streets were quiet and shops were closed due to a national holiday that Maduro decreed for the first day of the new pricing plan for the stricken economy, which the International Monetary Fund has estimated will have 1 million percent inflation by year end.

The price change comes with a 3,000 percent minimum wage hike, tax increases meant to shore up state coffers and a plan to peg salaries, prices and the country’s exchange rate to the petro, an elusive state-backed cryptocurrency.

Economists say the plan, which was announced last Friday, is likely to escalate the crisis facing the once-booming nation that is now suffering from Soviet-style product shortages and a mass exodus of citizens fleeing for other South American countries.

Venezuelans were skeptical the plan will turn the economy around.

“I can’t find a cash machine because all the banks are closed today,” said Jose Moreno, 71, a retired engineer in the central city of Valencia, complaining of chronically dysfunctional public services.

“There’s no money, there’s no water, there’s no electricity - there’s nothing.”

After a decade-long oil bonanza that spawned a consumption boom in the OPEC member, many citizens are now reduced to scouring through garbage to find food as monthly salaries currently amount to a few U.S. dollars a month.

The new measures have worried shopkeepers already struggling to stay afloat due to hyperinflation, government-set prices for goods ranging from flour to diapers, and strict currency controls that crimp imports.

Venezuela’s main business organization, Fedecamaras, on Monday slammed Maduro’s economic plan as “improvised” and said it will cause confusion and put the country’s economic activity at “severe risk.”

“Pegging the bolivar to the petro to us seems to be a serious mistake,” said Fedecamaras President Carlos Larrazabal at a news conference. “The plan is incoherent.”

Though Maduro announced this month that the government would hike Venezuela’s heavily subsidized gasoline to international levels, drivers on Monday continued to fuel up at the same prices as last week.

The only notable difference at service stations was that trash cans were filled with old 100-bolivar notes, which are no longer accepted legal tender, that drivers had tossed. The old notes in denominations of 1,000 and above will continue to circulate alongside the new bills for an undetermined period of time.

At Monday’s exchange rate, the equivalent of $0.01 buys 4,233 gallons of gasoline, with one bar of hand soap selling for the same as 152,381 gallons of fuel, according to Reuters calculations.

The bolivar traded on the opaque black market on Monday at around 96 bolivars to the dollar, a rate reflecting the monetary overhaul and which implies a depreciation in real terms of nearly 30 percent since last week. The rate may not be representative of the overall market because trading volumes were thin due to the public holiday, industry experts said.

Growing discontent with Maduro has spread to the military as soldiers struggle to get enough food and many desert by leaving the country, along with thousands of civilians.

Two high-ranking military officers were arrested this month for their alleged involvement in drone explosions during a speech by Maduro, who has described it as an assassination attempt.

The chaos has become an increasing concern for the region. In recent days, Ecuador and Peru have tightened visa requirements for Venezuelans, and violence drove hundreds of Venezuelan migrants back across the border with Brazil on Saturday.

Maduro, re-elected to a second term in May in a vote widely condemned as rigged, says his government is the victim of an “economic war” led by political adversaries with the help of Washington, and accuses the United States of seeking to overthrow him.

The United States has denied the accusations. But it has described the former bus driver and union leader as a dictator and levied several rounds of financial sanctions against his government and top officials.
The Venezuelan bolívar fuerte is replaced with the "Sovereign Bolivar" in an attempt to curb inflation. Venezuela announces that the new currency will be linked to the petro, a form of cryptocurrency operated by the country.