Venezuelans rush to shop, fill tanks before monetary overhaul
CARACAS/MARACAIBO: Jittery Venezuelans rushed to shops and lined up at gas stations on concerns that a monetary overhaul to lop off five zeros from prices in response to hyperinflation could wreak financial havoc and make basic commerce impossible.
Shoppers sought to ensure their homes were fully stocked with essentials such as food and dry goods and their tanks full before the measure decreed by President Nicolas Maduro takes effect on Monday.
Inflation hit 82,700 per cent in July, according to the oppositionrun congress, as the country’s socialisteconomicmodelcontinued to unravel, meaning purchases of basic items such as a bar of soap or a kilo 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, 38, a 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 country was effectively left without legal tender.
Drivers also rushed to fill up on Venezuela’s heavily- subsidised gas, the world’s cheapest at around 2,896 gallons per US penny. Some drivers were worried about paying for gas as there will be no new legal tender small enough to pay for a full tank.
Maduro also said this month that gas price should be increased, but has not provided a timeframe for the price hike. A half-dozen sources at service stations said they had not been briefed about any changes and were not expecting an imminent rise in prices.
“It’s better to be safe than to try to go out during the weekend and not to find open gas stations... I think people are more sad than angry about this,” said teacher Ana Perez, 50, as she lined up in a station in the once industry-filled city of Valencia.
Maduro, who has said the country is victim of an ‘economic war’ led by political adversaries, said the new monetary measure would bring economic stability to the struggling OPEC nation.
But 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.
Because many transactions now happen via debit cards over pointof-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 Monday, when a new set of bills will be introduced with the lower denominations. Internet banking operations will be halted for several hours starting on Sunday evening.
But the primary difference between the upcoming change and Maduro’s 2016 currency decision is that in this instance, most of the current ones will coexist with the new notes for an undetermined period while the new bills come into circulation. — Reuters