Sun, Aug 19, 2018 - Page 1 News List

Venezuelans brace for monetary overhaul

Reuters, CARACAS and MARACAIBO, Venezuela

A kilogram of tomatoes is pictured next to 5 million bolivars (US$0.76), which the products sold for at a mini-market in Caracas on Friday.

Photo: Reuters

Venezuelans on Friday rushed to shops and formed long lines in preparation for a monetary overhaul that is to remove five zeros from prices in response to hyperinflation that has made cash increasingly worthless.

Shoppers sought to ensure their homes were stocked with food before the measure decreed by Venezuelan President Nicolas Maduro takes effect tomorrow, on concerns that confusion among merchants and overtaxed banking systems could make commerce impossible.

Inflation hit 82,700 percent last month as the country’s socialist economic model continues to unravel, meaning purchases of basic items such as a bar of soap or a kilogram of tomatoes require piles of cash that is often difficult to obtain.

“I came to buy vegetables, but I’m leaving because I’m not going to wait in this line,” said Alicia Ramirez, a 38-year-old business administrator, leaving a supermarket in the western city of Maracaibo. “People are going crazy.”

The change appears unlikely to generate the chaos of December 2016, when Maduro removed the largest note in circulation without providing a replacement for it. That led to protests, lootings and hundreds of arrests as the nation was effectively left without legal tender.

Traffic was light in the capital, Caracas, on Friday as shopkeepers hunkered down ahead of the overhaul.

Maduro, who has said the country is victim of an “economic war” led by political adversaries, said the measure would bring economic stability to the struggling OPEC nation.

His critics have said the move is little more than an accounting maneuver that would do nothing to slow soaring prices.

They blame inflation on failed socialist policies and indiscriminate money printing.

As many transactions now happen via debit cards over point-of-sale terminals, many worry that the change — which banking industry leaders have said was carried out too quickly — could collapse financial networks.

Maduro has declared a public holiday for tomorrow, when a new set of bills is to be introduced with the lower denominations. Internet banking operations are to be halted for several hours starting today.

“I don’t understand this monetary conversion, the government has not explained how it will work or what salaries will be,” said Yuraima Galaviz, who was shopping in the western city of San Cristobal.

“How are we supposed to buy things if we haven’t even seen the new bills?” Galaviz asked.

“This is going to be complete disaster, we don’t have information,” said Yoleima Manrique, a 42-year-old assistant manager of a home appliance store in Caracas. “It’s going to be crazy for the clients and for us.”

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