LA PAZ, Bolivia -- The government of Bolivia announced Tuesday it will remove six zeros from the its inflation-battered peso and rename the currency the 'boliviano,' effective New Year's Day.
One U.S. dollar now buys 1,923,000 pesos. After Jan. 1, one dollar will be worth 1.93 bolivianos, the government said in newspaper advertisements in local newspapers. Bolivia's Central Bank said all commercial banks will close Friday so they can adjust their balances and ledgers.
Central Bank officials said they have begun stamping 'one boliviano' on a blank space on 1 million peso bills. The bills are worth about 52 U.S. cents. Smaller bills will carry stamps indicating they are fractions of bolivianos.
President Victor Paz Estenssoro, 79, is following the lead of presidents in Argentina and Brazil, who decided to remove zeros and rename their currencies as part of economic programs to combat hyper-inflation.
Paz Estenssoro faced inflation that galloped at more than 20,000 percent a year -- a world record -- when he came to office nearly 17 months ago and imposed a severe economic austerity program.
The program has been successful, reigning in inflation to its current level of about 10 percent a year.
But the effects of years of runaway prices remain. Bankers have trouble balancing dozen-digit accounts on their calculators. Prices in stores do not fit on price tags. Cashiers cannot ring up totals on registers.
Prices are astronomical. A hamburger costs 3 million pesos. Bus fares are 200,000 pesos. The jackpot of the annual lottery will pay off 400 billion pesos when it is picked today.
During the peak of the inflation frenzy, paper money became Bolivia's third biggest import. Bolivia paid $30 million to foreign firms in 1984 to print its currency and air freight it in. Bolivia does not have its own mint.
Central Bank Director Fernando Paz told United Press International that the bank has not yet selected a bidder for the $3 million job of printing new bills and minting coins because the monetary changeover was approved less than a month ago.
Once the new bolivianos are printed, the government will have to figure out what to do with hundreds of tons of outdated pesos, Paz said.
Inflation raged so fast at one point that some new money never got used. Among the 500 tons of worthless peso bills the Central Bank stores in warehouses are brand-new 1,000 peso notes printed in 1983, Paz said. The currency is being incinerated in special ovens.
Paz and other bankers are hoping the currency reform will prove durable. In 1962, after an earlier period of heavy inflation, the government chopped two zeros from the currency, and changed its name from the boliviano to the peso.