The economy of Venezuela is hurting. President Nicolas Maduro’s government is trying to help its people. The bolivar is performing worse by the day as the government continues its measures to integrate its national digital currency, Petro, to aid the transition from the “criminal dollar”.
The latest move by Maduro to increase the value of the Petro to 36,000 Venezuelan bolivar has been criticized by many of the economists in the country as shortsighted. President Maduro announced the launch of a new monetary system on Monday this week.
In the announcement, the president reaffirmed his commitment to stabilize the economy that is currently facing an inflation rate of over 2,000,000% and protect the national bolivar from extinction.
Apart from the increase in value of the national cryptocurrency, the new monetary system will include the minimum wage moving to 18,000 bolivar ($6.45 USD) and bring up new ways of financing and investing to grow wealth in the country. However, the move to hike prices of the Petro is risky to the economy and is pushing citizens away from using the Petro.
The 300% increase of the minimum wage is also no consolation for an ailing economy like Venezuela’s. According to Henkel Garcia, an economic analyst and director of the Caracas consultancy Econometrica, the persistent calls by the government to push its citizens to adopt the Petro will be the downfall of the coin.
Further criticizing the actions by Maduro, he explained that the arbitrary increase in the value of the Petro [without the critical demand and supply market forces] will boost hyperinflation and further damage the economy.
Will Maduro’s new monetary system work this time?
The value of the Petro has been hiked as recently as December despite the economists pushing for the dollar or Bitcoin to be used as the national currency.
Furthermore the minimum wage was also bumped five times in the past year as the economy of the South American country deteriorated to new lows month by month. The recent hike however poses a different story as Maduro claimed the new system is to be built around the Petro. Can this boost the adoption of Petro across the country?
Probably not. First, the national cryptocurrency is a long way off from being launched across any exchange and has no wallet in trace.
With the situation of the economy getting worse by the day, the president will need to formulate new ways to solve the massive hyperinflation the economy is facing as the “Petro solution” is not working. One software engineer reacted to the latest monetary system claiming the Petro is effectively dead. He further claimed the Petro system is a sham and will destroy the economy.