Venezuelan business leaders lambast Maduro’s new banknotes

CARACAS: New banknotes stripped of five zeros entered circulation in Venezuela on Monday as part of President Nicolas Maduro’s radical plan to curb hyperinflation, but business leaders branded the move as counterproductive.

The country appeared paralyzed. Most shops and businesses closed as Venezuelans reacted nervously to the issuing of the new “sovereign bolivar,” launched to replace the oil-rich, cash-strapped country’s crippled “strong bolivar.”

But Carlos Larrazabal, president of leading business association, Fedecamaras, said the measure would only “increase economic instability.”

Having been suspended for more than 12 hours on Sunday, electronic transactions resumed amid palpable uncertainty.

“We’re all in the same boat, waiting to see what will happen,” Maria Sanchez, a 39- year- old shopkeeper told AFP after withdrawing some cash.

Alongside the bolivar redenomination, Maduro announced other measures to tackle widespread poverty, including a 3,400 per cent hike in the minimum wage, the fifth such move this year alone.

“That’s a crazy measure,” Henkel Garcia, director of consultancy group Econometrica, told AFP.

Larrazabal said it “could devastate companies’ already debilitated assets.”

Inflation that the International Monetary Fund predicts will reach one million per cent this year rendered the old bolivar currency practically worthless, while the economic crisis has driven more than two million people to flee the country, according to the United Nations.

In a video broadcast Monday night on Facebook, Maduro said the launch of the new bank notes had gone smoothly, insisting “the banking system performed wonderfully.”

He also issued a vague threat to companies to comply with the minimum wage increase. “Otherwise, they will have to answer to us,” Maduro said without explaining what punishment there might be.

On the border with Brazil, the flow of fleeing people continued despite some 1,200 being driven back over the weekend in antimigrant violence that got so bad President Michel Temer sent troops to the area to restore order.

“The Venezuelan people bear the tragic cost of the Maduro regime’s rampant corruption and tyranny,” tweeted US Vice President Mike Pence, adding that “recent moves will only make life worse for every Venezuelan.”

“Nicolas Maduro and his regime have driven a once-prosperous country to economic ruin and humanitarian crisis,” Pence said.

The embattled Maduro, a former bus driver and union leader, said the country needed to show “fiscal discipline” and stop the excessive money printing of recent years.

In the capital, Caracas, residents were skeptical about the new measures, not least since former president Hugo Chavez slashed three zeros from the bolivar 10 years ago without halting hyperinflation.

“Everything will stay the same, prices will continue to rise,” 39year-old Bruno Choy, who runs a street food stand, told AFP.

Angel Arias, a 67-year-old retiree, dubbed the new currency a “pure lie!”

Three of the country’s leading opposition groups – Primero Justicia, Voluntad Popular and Causa R – have called for a general strike and day of protests on Tuesday. — AFP