According to surveys from the International Monetary Fund (IMF), the yearly inflation rate for Venezuela could go as high as 1.37 million percent towards the end of the year. Inflation projections for the country have risen at different times this year as the country struggles with policies and production and makes way to launch its Petro cryptocurrency.
Venezuela has made news on several occasions this year in its present battle with inflation. According to reports, the inflation is due to “years of excessive government spending on welfare programs, poorly managed facilities and dilapidated farms.”
This signifies the third time the IMF has increased its inflation projections, with projections from January of 13,000 percent and from July at 1,000,000 percent. It is also expected that Gross Domestic Product (GDP) will drop by 18 percent this year. This is unfortunate news for Venezuela as it has such a promising amount of oil reserves.
In addition to the inflation, the issue is the intense rise of the minimum wage, brought on by Nicolas Maduro, Venezuela’s president. Maduro has increased minimum wage a surprising 24 times since 2013, resulting in part to many business closings.
Headed by Maduro, Venezuela’s government has found a solution for its economic struggles in the “Petro,” a state-issued cryptocurrency supposedly supported by barrels of oil.
In more moves to fight the issue of inflation, Maduro has claimed that the government will develop a fiat currency that’s connected to the Petro, which is itself tied to oil. The double-connected fiat currency is known as the Bolivar Soberano- or in English, the Sovereign Bolivar.
“I ask for your confidence, I ask for your support, beyond ideologies and political positions, because Venezuela needs this change, the mafias are over!… We have the correct vision of what the economic future in Venezuela should be, above all, we will achieve it.”
Rationally, it will be hard to rely on these statements based in the earlier track record.
During doubt, Maduro remains to be resolute about the concept of the Petro. He revealed in late August that, “Venezuela will have a second accounting unit based on the price, the value of the Petro. It will be a second accounting unit of the Republic and will begin operations as a mandatory accounting unit of our PDVSA oil industry.”
Many suspicions have also surfaced that the Petro might not even exist at all. Moreover, no shops or stores were supposedly using the Petro and the only buyers that could be found were unidentified online persons.
According to recent reports, it seems that Petro usage has been on the downside, although this might be different after the public sale in November.