Article 1 of the Decree-Law of Currency Redenomination establishes that as of January 1st, 2008, the Venezuelan official currency will experience a changeover (redenomination) to a unit equivalent to Bs. 1,000.00 current Bolivars. The Bolivar resulting from this redenomination will continue being represented with the “Bs.” Symbol and will be divisible in one hundred (100) cents. Therefore, charges expressed in national currency before that date shall be converted into the new currency by dividing them by 1,000 and then rounding the amount off.  

The regulation establishes that if the fraction resulting from this changeover is less than zero point five (0.5) cents, it shall be rounded down to the nearest cent; but  if it is equal or higher to zero point five (0.5) cents, it shall be rounded up to the nearest cent.

 To that effect, the Board of Directors of the Central Bank of Venezuela in a meeting dated May 22nd approved a draft resolution to establish redenomination and rounding regulations.

To sum up, the regulations suggested in this draft resolution are the following:

Rounding rules used for redenomination will be applied so that all the amounts in redenominated bolivars will be rounded off to two decimals.However, the prices of fuel for automobiles; Liquefied Petroleum Gas (LPG) marketable by barrel; water, electricity, rubbish dumping, direct gas and telephone services; securities or claims in the securities exchange market fixed in bolivars; exchange rates and of the Tax Unit, will be redenominated by dividing them by 1.000 and recording them with at least five (5) decimals, unless the amount of the transaction has less decimals, in which case all the figures shall be recorded. 

 In these cases, rounding to two decimals shall be carried out when the corresponding payment or accounting is made and after the stores, establishments, service corporations, or counterpart in the transaction totalize including the corresponding commissions, rates, overcharges or taxes.

 The project establishes that as of October 1st, 2007 and until otherwise expressed by Banco Central de Venezuela, all goods and services should be marked, represented or shown in current bolivars as well as in “bolivar fuerte” which is the bolivar resulting from the changeover (redenomination) according to what is established in article 1° of the Decree-law of Currency Redenomination, and article 1° of the resolution project. In other words, stores should include in the labels of their products the description of the prices both in “Bs.” as well as in “Bs.F.”

Regarding the financial statements, the regulation establishes that those that correspond to the fiscal year ended before January 1st, 2008 should be made and approved in current bolivars, and their results should be redenominated according to what is foreseen in article 1 of the Decree-Law and in article 1° of the Resolution Project.

Technological Adjustment Rules

BCV’s recommendations regarding technological adjustments are available to enterprises, stores, public entities and citizens in general in order to facilitate the adaptation of calculation systems that include prices. These proposals include two formulas (algorisms) that facilitate the adjustments of calculation systems to the changeover (redenomination) of the sums, as part of the monetary reconversion.

The first proposed formula allows the systems to automatically divide the amounts by 1.000 (one thousand), and, the second one, rounds the amounts to two decimals. The algorisms will allow the calculation of the new amounts and are specified in the document: “ Regulations for technological adjustment”.      

The algorism is expressed in natural language to allow each institution, enterprise or store to have a rounding pattern for calculation systems because it doesn’t matter the software they use, the result of the formula should be the same.