The government is preparing to issue its Petro cryptocurrency.
The inflation rate has risen a lot during the year as the country is facing policy and production problems. Аccording to CNN, the reason for the inflation is the government‘s inability to manage its spending on welfare programs, as well as critically operated facilities and old farms.
At the beginning of this year, the International Monetary Fund (IMF) has estimated a 13,000 percent increase which rose to 1,000,000 percent in July. The Gross Domestic Product (GDP) is predicted to decrease by 18 percent. With the massive amount of oil reserves Venezuela has, the news is terrible.
The country‘s current president Nicolas Maduro has worsened the situation by increasing the minimum wage significantly. Since 2013, it has risen 24 times which resulted in the closing of businesses.
The Petro cryptocurrency, which is backed by oils and mineral resources, could be Venezuela‘s only way to restore its previous state. The double-pegged fiat currency is called the Sovereign Bolivar.
President Maduro urged people to support and trust the change, no matter the political positions, and be part of the economic future of Venezuela. In September, Banco Central de Venezuela was the first bank to create an Android app that is meant to help citizens adapt quickly to the oil-backed currency.
The Petro was supposed to provide financial aid and avoid the pending sanctions by the United States. It received mixed reactions, both enthusiastic and critical. According to some, the crypto shouldn’t even exist, and no shops are using it.
As of now, the Petro adoption is still low, but during the public sale in November, that could change. Even with that, citizens are continuing to flee the country looking for ways to escape the economic crisis. More than 2 million have already left.
On October 8th, President Maduro announced that future salary bonuses would be paid in Petros.