The Petro: Three Sides of a Coin

By Pasqualina Curcio

Equivalent to a barrel of oil, the petro emerged at the end of 2017 in response to the financial blockade imposed by the US government against the Venezuelan people. It would serve as a means of payment in commercial transactions with other countries. It was born encrypted.

In August 2018 it was assigned a second task: a unit of account next to the bolivar. It would serve to maintain the relationship between the prices of goods and wages.

To calculate the relationship between the two units of account, they chose to apply this logic: if a petro equals 1 barrel of oil and it has a price of $60 US, but at the same time $1 US equals 60 BsS, it turns out that 1 petro it amounted to 3,600 BsS (60 BsS /$ US for $60 US / barrel).

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As today the exchange rate is 5,641 BsS / $ US, the ratio bolívar-petro should be 338,460 and not 80,000 as it is “fixed” on the BCV (Central Bank of Venezuela) website.

Paradoxically, the bolivar is not anchored to the petro but continues to depend on the dollar: it uses the bolívar-dollar exchange rate for its calculation. It is anchored to the most powerful weapon imperialism has used against the Venezuelan people, dolartoday.

At the end of 2018, it [the petro] was given a third task: that of a financial instrument so that those who could, would save in petros.

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Fortunately, nobody in the BCV has come up with the idea of “stabilizing” the petro through a fixed exchange rate bolívar-petro.
This fourth side of the coin would be catastrophic, would imply giving away the oil currencies in the style of the Fourth Republic (the 80’s) when it was allowed to freely buy the dollars at the fixed and cheap exchange rate of 4.30. It would lead to special areas of capital flight and exchange cycling.

If, for example, the bolívar petro ratio was fixed at 80,000 BsS / petro, we would need 80,000 BsS to buy 1 petro. For that petro they will give us US $60 (1 barrel of oil). With those US $60 exchange houses (banks) will give us 338,640 BsS (the exchange rate of the “market” that we know freely follows dolartoday is today 5,641 BsS / US $). Miraculously the 80,000 BsS will be converted into 338,640 BsS, with which we can buy 4.23 petros and I always have my nickel and a half.

Let us heed the call for rectification made by the legitimate president Nicolás Maduro. Let’s review this petro issue.

Source URL: 15 y Ultimo

Translated by JRE/EF

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Pasqualina Curcio
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Economist (Central University of Venezuela). PhD in Political Science from Simón Bolívar University (Venezuela). Master in Public Policies of the Institute of Advanced Studies in Administration (Venezuela). She is a Full Professor of the Department of Economic and Administrative Sciences of the Simón Bolívar University. She was Deputy Minister of Collective Health Networks.

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Pasqualina Curcio

Economist (Central University of Venezuela). PhD in Political Science from Simón Bolívar University (Venezuela). Master in Public Policies of the Institute of Advanced Studies in Administration (Venezuela). She is a Full Professor of the Department of Economic and Administrative Sciences of the Simón Bolívar University. She was Deputy Minister of Collective Health Networks.