Venezuela’s president Nicolas Maduro has ordered an issuance of the national cryptocurrency Petro, he expects will help the country amid the deepening economic and humanitarian crisis.
According to Maduro, Petro will be linked to the country’s oil reserves and will have a value of a Venezuelan barrel of oil, or around $60, per Petro.
Maduro mooted the Petro in November 2017, and he has now ordered the official release of 100 million Petro, backed by the country’s oil reserves, starting January 14.
Telesur, a government-sponsored television network has previously praised Maduro’s petro initiative, saying the move “aroused a lot of enthusiasm in the cryptocurrency investor community, placed Venezuela at the forefront of technology and global finance, and generated enormous expectations.”
The news organization has produced a video in which it said that cryptocurrencies, such as petro, can help stabilize volatile economies, and “freeing countries around the world from harsh economic sanctions imposed by the world’s most powerful nations.”
Explaining the rationale behind the cryptocurrency launch, Maduro said he would hold a meeting on January 14, which will serve to strengthen confidence in the cryptocurrency, in order to attract foreign investment to strengthen the economy of the country.
Worth noting, the U.S. last week sanctioned four Venezuelan government officials associated with corruption and repression in Venezuela, freezing their U.S. assets, and prohibiting U.S. citizens from dealing with them.
“President Maduro and his inner circle continue to put their own interests above those of the Venezuelan people,” said Treasury Secretary Steven T. Mnuchin. “This action underscores the United States’ resolve to hold Maduro and others engaged in corruption in Venezuela accountable. We call on concerned parties and international partners around the world to join us as we stand with the Venezuelan people to further isolate this oppressive regime.”
Venezuela recently failed to make $35 million in coupon payments for its global bonds due 2018 within the 30-calendar-day grace period, spurring Standard & Poor’s to lower the issue rating on this bond to ‘D’ from ‘CC’.
“The local currency sovereign credit ratings and senior unsecured issue ratings on Venezuela remain on CreditWatch with negative implications, reflecting our view that the sovereign could again miss a payment on its outstanding debt obligations or advance a distressed debt exchange operation, equivalent to default, within the next three months,” S&P said on January 2.
S&P also said there was a one-in-two chance that Venezuela could default again within the next three months.
“We could lower specific issue ratings to default (‘D’) if Venezuela doesn’t make its overdue coupon payments before the stated grace period expires, or upon the execution of the announced debt restructuring,” S&P said last week.
Venezuela, a member of OPEC, has the world’s largest proven reserves and is South America’s largest oil exporter.