Nicaragua Will Issue New Currency Today

The Sandinista government Sunday said it is scrapping its currency, the cordoba, and issuing a new one as part of a package of reforms to prop up the country’s teetering wartime economy.

Announcing the move, President Daniel Ortega said in a broadcast that the “new cordoba,” to start circulating today, will be worth 1,000 times as much as the old one and fixed at 10 to the U.S. dollar.

Ortega also said the government will be readjusting salaries and prices of goods and services.

Ortega, blaming Nicaragua’s woes on U.S. military and economic pressure, said the measures are designed in part to combat chronic inflation and speculation that have severely distorted the economy.

A private sector business group, the Superior Council of Private Enterprise, has estimated Nicaragua’s inflation rate at more than 1,500%.

“Despite extraordinary efforts . . . inflation has carried on growing,” Ortega said. “As a consequence, from Monday, Feb. 15, we will execute a complete monetary reform. “

Ortega said the government wanted to mop up excess liquidity, one of the causes of inflation.

Chronic production problems and shortages of many goods has encouraged a thriving black market in which speculators with billions of cordobas hoarded at home buy in bulk and sell at a higher price later.

The government, which has sought in vain to impose a system of officially controlled prices, has dubbed the speculators “enemies of the revolution” that toppled dictator Anastasio Somoza in 1979.

Ortega blamed the Reagan Administration’s policy of “aggression” for the economic crisis, mentioning Washington’s trade embargo imposed on Nicaragua in 1985.

U.S.-backed Contras, meanwhile, have been waging a campaign of economic sabotage that has hampered production of Nicaragua’s key export--coffee.

Ortega said Nicaragua also is scrapping a system of varying exchange rates in favor of a single rate of 10 new cordobas to the dollar.

Previously the dollar was worth 25,000 cordobas at the official rate.