Venezuela to calculate social benefits in state-backed crypto – President Maduro

Venezuela’s President Nicolas Maduro has announced that social benefits would be calculated based on state-owned oil-backed digital coin, the petro, as the sanctions-hit country is facing severe economic crisis and hyperinflation.

“I can announce today a proposal that I have approved … which is to ‘petrolize’ the social benefits of public workers of the central, the decentralized administration and of the state public companies, [rebalance] them with the petro [cryptocurrency],” Maduro said, speaking in Caracas on Saturday.

The move is meant to “protect” the real value of those payments, according to the president.

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The petro was introduced in 2018 as a tool to support Venezuela’s economic stability and shift away from the US dollar in times of economic turmoil and growing sanctions pressure from the US. Unlike bitcoin and other decentralized crypto assets that are not pegged to fiat currency or a natural resource, the petro is backed by Venezuela’s oil reserves. The token’s value was established at $60 or 3,600 sovereign bolivars, the central bank said in August 2018.

Caracas has been trying to ensure wider adoption of the Venezuelan cryptocurrency. Last year, Maduro announced that all fuel for flights out of the country can be bought only with petro, however, it remained unclear whether the measure would apply to all airlines or be limited to domestic carriers. He also said that the token must be used for state document-processing services.

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The country also moved to accept tax payments and gasoline purchases in petros, while public employees were previously offered their Christmas bonus in the digital token. 

The adoption of the government-backed digital currency came in the year when inflation in Venezuela hit over 130,000%, according to central bank figures, and all amid the rapid depreciation of the local currency, the bolivar. The inflationary tendency has slowed since then, but is still projected to hit a whopping 5,500% by the end of 2021, according to the International Monetary Fund (IMF).

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