Imbalances in government accounts trigger inflation
In July the Central Bank of Venezuela (BCV) issued 41.9 million units of VEB 100 bills, which represents an increase by 153% over the volume of bills issued during the same month in 2013. This is due to the loss of purchasing power of money in circulation, which in turn leads to a need for higher-value bills to be issued.
The imbalances eating away at purchasing power, to the extent that the highest-denomination bill is not enough to pay for half a kilo of cheese, stem from asymmetry in government accounts.
Efraín Velásquez, the president of the National Economics Council, explains that to cover expenditures soaring over oil revenue and tax collection the government incurs in debt and seeks the aid of the central bank, which responds by creating more bolivars to fund the government.
"The government's spending is limitless, so bolivars are injected into the economy, and this boosts demand. From 2010 to 2013, consolidated public-sector expenditures amounted to 39% of the GDP against 33.1% in 2000," notes Velásquez.
http://www.eluniversal.com/economia/140913/imbalances-in-government-accounts-trigger-inflation
