May 29, 2018 / 3:32 AM / in 3 months

Venezuela warns businesses not to halt payments amid currency overhaul

CARACAS (Reuters) - Venezuela warned businesses on Monday not to slow operations during next week’s monetary overhaul to remove three zeros from the hyperinflationary economy’s prices, a measure critics say could create chaos because it is being implemented so quickly.

A street vendor holds a stack of bolivar notes as people buy groceries in Caracas, Venezuela March 23, 2018. REUTERS/Carlos Garcia Rawlins/Files

Socialist President Nicolas Maduro said in March the bolivar currency would be redenominated on June 4, and the central bank has been tweeting pictures of the new banknotes emblazoned with Venezuelan historical figures.

But the banks have not received the new bills and have not had a chance to adjust cash machines for them, according to two finance industry sources.

Opposition critics say Maduro is at risk of repeating the chaos of late 2016, when the government withdrew the largest bill from circulation, sparking long lines, looting and protests that led to at least three deaths.

Maduro, who says the country is the victim of an “economic war” led by his political adversaries, blamed the 2016 problems on sabotage by enemies and ultimately postponed the measure.

Businesses “should take provisions so that the monetary conversion does not affect, slow or suspend customer service, payment or billing,” the government’s consumer protection agency, Sundde, said in a statement.

A man shows Bolivar notes after withdrawing them from an automated teller machine (ATM) in Caracas, Venezuela March 23, 2018. REUTERS/Marco Bello/Files

The Information Ministry did not immediately respond to a request for comment.

Venezuela has annual inflation near 14,000 percent, according to the opposition-controlled legislature, amid a collapse of its socialist economic system that has left millions of people struggling to eat properly.

Cash is increasingly difficult to obtain because new banknotes have not been printed fast enough to keep up with price increases, spurring a growing use of cellular phone apps. [nL2N1PR0UF]

Some stores and bus companies were no longer accepting cash on Monday out of fear the notes would be worthless next week.

Others worried that problems with cash payments could lead to increased use of the already overloaded digital systems such as bank transfers and debit card payments, potentially crashing bank websites.

“There are rumors that transfers will be impossible for several days and that would be terrible because people pay by electronic transfers,” said messenger Antoni Zambrano, 22, in Tachira state near the Colombian border.

“We demand that the monetary overhaul scheduled for June 4 be postponed,” tweeted opposition lawmaker and economist Jose Guerra. “It’s not possible to do it well.”

Venezuela's President Nicolas Maduro talks to the media during a news conference before his departure to Cuba at the Simon Bolivar airport in La Guaira, Venezuela April 20, 2018. REUTERS/Carlos Garcia Rawlins/Files

Reporting by Corina Pons; Additional reporting by Alexandra Ulmer in Caracas and Anggy Polanco in San Cristobal, Venezuela; Writing by Brian Ellsworth; Editing by Alexandra Ulmer and Peter Cooney

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