With the IMF projecting an inflation rate of 13,000% next year, Venezuelans are abandoning the bolivar in droves as prices for necessities like bread and meat double every month.
After we reported back in December that a socialist collective in one Caracas neighborhood launched its own currency, the panal.
Here's the Associated Press:
The panal, which means honeycomb in Spanish, can be spent in just a few stores. But residents of one neighborhood desperate for spending cash said they welcome the idea proposed by pro-government groups.
"There is no cash on the street," said Liset Sanchez, a 36-year-old housewife who plans to use her freshly printed panals to buy rice for her family. "This currency is going to be a great help for us."
Amid triple-digit inflation and a currency meltdown, there has been a run on cash in Venezuela.
Buying common items such as toilet paper, or paying a taxi driver, requires stacks of the official currency, called the bolivar.
Now, the local currency movement has claimed its biggest victory yet with the western Venezuelan city of Elorza, near the border with Colombia, launching its own currency featuring the face of a local independence leader, per Reuters.
A western Venezuelan city began to issue its own currency this week to alleviate the hyper-inflationary country’s cash crisis.
The “Elorza” currency, with bills featuring the face of local independence leader Jose Andres Elorza, will be valid in the city of Elorza, near Venezuela’s border with Colombia.
The bills are being sold in the municipality’s offices to ensure that thousands of tourists and residents can trade, said mayor Solfreddy Solorzano, a member of the ruling Socialist Party.
Venezuela’s national currency, the bolivar, has plummeted in recent years amid a crippling economic crisis. Prices are doubling nearly every month and basics such as food and medicine are nearly unavailable.
On top of that, there are shortages of cash itself making basic transactions impossible.
“People do not have bolivars to spend, so we created two denominations of notes,” Solorzano said, adding that some 2 billion bolivars’ worth of “Elorza” had been purchased — roughly $9,000 at the black market exchange rate.
Many in Venezuela earn the equivalent of just a dollar or two a month.
While the currency is still relatively limited in terms of circulation, it's the latest sign that communities in economically devastated Venezuela are taking their economic fortune into their own hands. The idea of regional currencies was first proposed by former President Hugo Chavez. The Maduro regime has apparently adopted a policy of indifference.
The economic collapse was caused by falling oil prices and years of economic mismanagement that started when Maduro succeeded Chavez, who died of cancer in 2013. Maduro's government blames US sanctions and a broader international conspiracy led by Washington for its problems.
Meanwhile, with the country's next election set for May 20, one of Maduro's opponents, former state governor Henri Falcon, is promising voters a $25 monthly giveaway should he be elected, Reuters reported.
Delivering on such a promise would be, of course, impossible. Venezuela has less than $10 billion in foreign currency reserves. And strict capital controls and US Treasury Department sanctions make foreign currency difficult to come by.
But Falcon needs to promise voters something, because Maduro's government has adopted a strategy of tying government benefits to individuals' votes in the election. If you don't vote socialist, you don't get what paltry government benefits exist - including a food bag that many poor Venezuelans rely on.
In an equally far-fetched proposal, Falcon also suggested abandoning the bolivar entirely in favor of the dollar.
He also proposed a populist "solidarity card" which mimics a popular welfare benefit doled out by the Maduro regime.
Still, given Maduro's hardball tactics - and the economic lifelines his country has received, and will likely continue to receive, from China and Russia - Falcon can make all the lofty promises he wants.
In a desperate bid to stave off insolvency, Maduro recently launched the Petro - billed as the first government-backed cryptocurrency. It's backed by 5 billion barrels of oil.
In the end, the socialists will inevitably prevail.