The International Monetary Fund (IMF) recently predicted that the annual inflation rate for Venezuela could reach as high as 1.37 million percent by the end of 2018.
Venezuela’s central bank stopped publishing economic information three years ago, after the situation began to spiral out of control. Because of this, outside sources have had to rely on opposition legislators supplying them with information, or on monitoring the increase in prices of consumer goods.
Their gross domestic product is also expected to shrink by 18% this year. In a misguided effort to fix his nation’s currency problems, President Nicolás Maduro removed five zeros from the Venezuelan bolivar. Not surprisingly, this did not help the situation.
Maduro also tried to stabilize the bolivar by backing it to a cryptocurrency called the “petro.” Petro is scheduled for a public sale on November 1st, following the initial use of the cryptocurrency for international transactions on October 1st.
In further efforts to combat the problem of inflation, Maduro has said that the government will create a fiat currency that’s pegged to the Petro, which is itself pegged to oil — as confusing as that sounds. This double-pegged fiat currency is called the Bolivar Soberano — or, in English, the Sovereign Bolivar.
Maduro said :
“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.”
Several doubts have also come to light that the Petro (and its oil backing) may not even exist at all. Additionally, no shops or stores were reportedly using the Petro, and the only buyers that could be found were anonymous online persons. It appears that Petro adoption has been low, though this may change following the public sale in November.