The National Executive issued Decree No. 4,553 of 6 August 2021, establishing a new monetary expression (Decree)1. The Decree entered into force on 6 August 2021; however, the new monetary expression will become effective as of 1 October 2021.
As of 1 October 2021, the unit of the Venezuelan monetary system must be expressed in the equivalent of one million Bolivars (VEB 1,000,000). Consequently, any amount expressed in local currency before 1 October 2021, must be converted to the new unit dividing by one million (1,000,000). The symbol "Bs." will continue to represent the Bolivar.
As in previous monetary conversions2, the purpose of the new monetary expression is to streamline transactions simplifying the amounts by eliminating six zeros. Consequently, all accounting records, payment systems, reference prices, wages, taxes and payment obligations in local currency must be represented with the new bolivar scale.
In addition to the foregoing, the Central Bank of Venezuela (BCV) issued a statement on 5 August 20213, announcing the new monetary expression and the introduction of the "digital Bolivar". Without giving further description, the BCV indicates that the digital Bolívar is the digital format of the local currency and will facilitate its use through a modernization in the national payment system. The statement states that the referential exchange rate will continue to be the one resulting from the Venezuelan Exchange Market System and will continue to be calculated from the foreign exchange purchase and sale operations performed through the exchange desks of the banking entities.
The Decree makes no reference to the digital Bolivar.
The most relevant aspects of the Decree are:
- As of 1 October 2021, the monetary unit must be converted to the new unit, dividing by one million (1,000,000).
- The symbol "Bs" will continue to represent the new unit.
- The BCV will regulate all matters concerning the rounding of the new monetary expression (Decree, article 1).
- The expressions in national currency contained in any instrument, act or legal business concluded until 30 September 2021, which maintain their legal effects after that date, will be understood to be automatically expressed in the new scale as of 1 October 2021, so it will not be necessary to grant or celebrate a new instrument, nor to perform additional procedures for its recognition. This includes procedures before the Autonomous Service of Registries and Notaries (SAREN) (Decree, article 4).
Notwithstanding the foregoing, it is advisable to record the new monetary expression in the Shareholders/Partners Registry Books reflecting the new value of the shares/quotas of their holders.
- All the instruments for which the prices of goods and services are offered, as well as others that express monetary amounts, will use in their reference the unit of account in its new expression and the unit of account in its previous expression (Decree, second transitory provision).
- In consequence, as of 1 October 2021:
- Payment of obligations shall be made by delivering the re-expressed amounts.
- Obligations in local currency shall be reflected in re-expressed bolivars.
- Prices, wages and other compensations of social nature, and taxes and other sums in local currency in financial statements or other accounting documents or credit deeds and, in general, any operation or reference expressed in local currency shall be reflected in the re-expressed bolivar.
- As of 1 October 2021, the paper currency and metallic coins issued by the BCV in force prior to the Decree, will circulate simultaneously with the new paper currency and coins and will retain their liberating power, until the BCV so determines (Decree, first transitory provision).
- The expressions of local currency contained in laws, regulations, decrees, resolutions, orders, notices, instruments or administrative acts of general and/or particular effects, as well as in court rulings, negotiable instruments or other documents that produce legal effects that have been issued and/or entered into force before 1 October 2021, must be converted to the new expression (Decree, third transitory provision).
- Stamped paper, tax stamps, stamps and/or postage stamps, as well as any other instruments valued in current bolivars must be used until exhausted. Their value will be understood according to the new monetary expression as of 1 October 2021 (Decree, third transitory provision).