(CNN)Venezuela issued a new currency Monday in an attempt to bolster its crumbling economy as the International Monetary Fund (IMF) warned that inflation could hit one million percent this year.
Venezuela issues new currency, amid hyperinflation and social turmoil
The move, part of a dramatic raft of measures aimed at halting runaway hyperinflation, comes as thousands of Venezuelans continue to flee across the border into neighboring countries amid food and medicine shortages, political turmoil and soaring crime rates.
In a tweet posted following the unveiling of Venezuela's new currency Monday, the country's president Nicolas Maduro hailed the recovery package as a "revolutionary formula."
The new "Bolivar Soberano" currency is worth 100,000 "old" Bolivares.
"We found the revolutionary formula that puts work in the center of the general re-adjustment of society, based on the production of goods and the value of salary. With that, we're gonna put to rest forever the perverse model that dollarized the prices in the country," tweeted Venezuela's 55-year-old leader.
"I call on the people to defend -- conscientiously -- the adjustment of the prices on street," Maduro later said in another tweet.
A bank holiday was declared Monday, with banks remaining closed as the new currency took effect.
The rebranded currency, which has five fewer zeroes than the country's previous currency and will be pegged to a cryptocurrency called the Petro, is intended to simplify transactions.
Speaking to CNN from Caracas, journalist Stefano Pozzebon, said the new currency represented a "significant change" for the millions of Venezuelans who will have to deal with the numerical conversions.
"I went to the pharmacy and saw that a can of coke, for example, cost 2,800,000 of the older Bolivar, the ones that were still in use until yesterday at 8 p.m. This morning, the staff of the pharmacy were busy labeling the products with the new prices, and the can of coke will cost 28 bolivars."
However, experts remain unconvinced. Writing in Forbes, economist Steve Hanke of the Cato institute likened the measures to cosmetic surgery, describing the new currency as a "scam."
"The bolivar's redenomination will be like going under the knife of one of Caracas's famed plastic surgeons. Appearances change, but, in reality, nothing changes. That's what's in store for the bolivar: a face lift."
Prominent opposition leader Henrique Capriles described the measures as a "final disaster."
The government is "gambling everything and experimenting in an irresponsible way, " wrote Capriles in an online essay, in which he accused Maduro of "starving his own people."
A survey from February this year found that almost 90% of Venezuelans live in poverty and more than 60% surveyed said that they did not have enough money to buy food.
The new economic measures include a 60-fold increase in the minimum wage that will take effect September 1.
In an address Friday, Maduro said the government will provide assistance on the minimum wage increase for 90 days but employers are nervous they won't have enough money to pay their staff.
Explaining the measures on national television Sunday night, Maduro said: "This is a really impressive, magic formula that we discovered while studying with our own, Venezuelan, Latin American-rooted thinking."
The latest announcements caused merchants to close their doors over the weekend, not knowing how to reflect the new currency in their pricing. Shoppers, on the other hand, rushed to supermarkets and gas stations that remained open.
In a Facebook Live address Sunday, Maduro described the measures as part of a "re-balancing process."
"This does not happen overnight," he said. "This re-balancing process will be developed. This is a magic formula that is truly impressive. That we discovered through our own thoughts and analysis."
Amid the chaos, there have been attempts on Maduro's life. Two high-ranking military officers were detained earlier this month in connection with an alleged drone attack against Maduro. The government said drones armed with explosives flew toward the president as he spoke at a military parade.
Maduro has accused opposition groups of orchestrating the August 4 failed attack and claimed the "financiers and planners" of the operation live in Florida.