CARACAS, Venezuela—Venezuela’s government, faced with looming hyperinflation, is planning to issue new bills in December with larger denominations—up to 200 times higher than the current biggest bill, according to people familiar with the plans.
The move marks an implicit acknowledgment by the government that skyrocketing prices have slashed the value of the currency.
The biggest note currently in use, the 100-bolivar bill, is worth eight cents on the black market, turning the most basic transactions into logistical nightmares and saddling banks with crippling money-handling costs.
The new coins and notes will go up to 20,000 bolivars, according to people close to the central bank, the finance ministry, the country’s banks and bill suppliers. This would make the biggest note worth $15 on the black market.
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The move is the latest sign of the Socialist government’s quiet relaxation of economic controls as it battles with the deepest recession in modern history and breakdown of basic services.
Earlier this year, the government began informally allowing shops in the outer provinces to sell food at free market prices, reducing shortages at the cost of higher inflation, which the International Monetary Fund expects to reach 1,600% next year.
The state oil company is also gradually rolling out higher-priced gasoline at gas stations in the border regions to reduce the cost of subsidizing the cheapest car fuel in the world, according to the company’s executives.
In recent weeks, several companies, including U.K.-based De La Rue, the world’s largest commercial printer, won contracts to print the new set of notes, which the government wants in time for the annual December spending spree, according to a person familiar with contract negotiations.
“It’s a very big deal. It’s a big package,” the person said.
A De La Rue spokesman didn’t immediately respond to comment. In the past, the company has said that it doesn’t comment on its relationships with clients. A Venezuelan central bank spokeswoman declined to comment.
Until now, the government of President Nicolás Maduro has resisted issuing larger denomination notes. Economists and central bank employees say Mr. Maduro didn’t want to acknowledge the country’s inflation problem by printing bigger notes.
The central bank hasn’t published price statistics for almost two years. Instead, Mr. Maduro has blamed the skyrocketing prices on the “economic war” waged against his government by shopkeepers and financiers.
This has forced people to brave one of the world’s highest crime rates by shopping with backpacks full of cash and spend hours lining up outside ATMs, which give out less than $10 per withdrawal. A fully stocked ATM is emptied in just three and a half hours on average now, according to the Venezuelan Banking Association.
Many provincial banks have reduced daily withdrawals to 30,000 bolivars, which would buy a Venezuelan couple a lunch at a mid-scale restaurant.
But the high demand for nearly worthless currency notes has also presented a financial burden for the cash-strapped government, which also lacks raw materials to print its own money. Since last year, Venezuela has had to pay hundreds of millions of dollars to printing companies to feed its economy with bolivar currency.
The shipments arrived to Venezuela from private printing presses around the world on several dozen windowless Boeing 747 jets. Given the crime risks, the air shipments arrive at the Caracas airport at night before the notes are loaded onto armored trucks and transported to the central bank vaults in Caracas, protected on the 18-mile route by soldiers.
Corrections & Amplifications:
Venezuela’s government is planning to release bills of up to 200 times higher denomination in December. An earlier version of this article incorrectly stated the amount. (Oct. 26, 2016)
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