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Venezuela to pay social benefits in state-backed cryptocurrency

Venezuela to pay social benefits in state-backed cryptocurrency

According to Venezuela's President Nicolas Maduro, the government has to take unconventional measures to combat inflation. The head of state has suggested paying social benefits in the national cryptocurrency Petro.

The President is confident that such a step will help enhance financial and economic stability in the country. In addition, this will make it possible to “petrolize” social payments to government employees, including representatives of the centralized and decentralized state administration as well as the public sector.

Maduro believes that this measure will preserve the real value of social benefits amid hyperinflation. Notably, the inflation rate in Venezuela reached an enormous 2,959.8% in 2020. In this regard, the country's authorities are considering the indexation of basic wage levels in relation to the national cryptocurrency Petro. This measure is necessary to eradicate extreme poverty. The value of the national cryptocurrency depends on the prices of oil, gold, iron ore,and diamonds.

However, it is rather difficult for the government to implement this project. It is still under consideration, while the inflation rate in the country continues to accelerate. Notably, between 2014 to 2020, Venezuela’s foreign exchange income plummeted by 98.6% due to US sanctions. Over the past seven years, the contributions of state oil and gas company PDVSA to the central bank have tumbled by more than 99%. Earlier, the corporation contributed $56.609 billion. Now, the amount has dipped to $73.4 million a year, analysts note.

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