Steve Hanke Takes Venezuela Advisory Role to Fight 400% Inflation With Dollarization
Updated
Updated · Fortune · Aug 20
Steve Hanke Takes Venezuela Advisory Role to Fight 400% Inflation With Dollarization
2 articles · Updated · Fortune · Aug 20
Summary
Steve Hanke has been named special adviser on economic, monetary and energy affairs to a leader in Venezuela’s National Assembly, with a mandate to curb hyperinflation running at about 400% a year.
His proposed fix is a full dollarization law that would scrap the bolivar and shut the central bank, ending the government’s ability to print money; Hanke puts the bill’s chances of passage at 50% to 80%.
Hanke argues inflation and oil collapse reinforce each other: Venezuela produces just 1.1 million barrels a day, down from 3.4 million in 1998, while debt has climbed to about $250 billion, or 150% of GDP.
Foreign investors still hesitate to fund a recovery because property-rights protections remain weak and major oil companies view Venezuela as contract-risky, even as consumers already transact largely in U.S. dollars or dollar-backed stablecoins.
For Hanke, who failed to win backing for a Venezuela currency-board plan in the mid-1990s, official dollarization would be his biggest test yet and a potential trigger for faster debt restructuring, renewed credit and oil-led growth.