Two days ago, the news recently broke that the nation of Venezuela officially defaulted on its debt. Writing at Forbes, Frances Coppola reports on the straw that broke the camel’s back for what had been one of the richest nations in South America.

Venezuela has defaulted on two of its US dollar-denominated sovereign bond issues. Downgrading Venezuela’s sovereign rating to SD (“selective default”), the ratings agency Standard & Poors said that Venezuela had “failed to make $200 million in coupon payments for its global bonds due 2019 and 2024 within the 30-calendar-day grace period.”

That’s just the tip of the iceberg, as the country is very likely to continue failing to make scheduled payments on its debt when they come due, even with the deal it struck to restructure its debts with Russia and China yesterday.

Coppola reflects on what its default means for Venezuela now.

For long-term Venezuela watchers like me, this default comes as something of a relief. Venezuela’s determination to maintain debt payments despite the horrendous humanitarian cost to its population has been an international scandal. And even more scandalous has been the determination by some investors to profit from Venezuela’s mismanagement of its finances. Because of their very high yields, Venezuela’s “hunger bonds” have been popular with Wall Street giants like JP Morgan. The angry part of me wants all those investors who have profited from Venezuela’s distress to lose their shirts, big time. But the more cynical part of me says the real villain is Maduro, who has sacrificed his people to maintain Venezuela’s international standing….

But there is a much, much bigger problem looming. Figures from the latest IMF World Economic Outlook database reveal that Venezuela is entering hyperinflation. The IMF forecasts that inflation will rise to 2,350% in 2018 and reach an astonishing 4,685% by 2022.

If this is not stopped – and short of regime change, it is hard to see how it can be stopped, since the IMF was shut out over a decade ago and the Venezuelan government does not welcome external interference – then sovereign debt restructuring will be entirely pointless. As Venezuela’s currency collapses, foreign currencies will become infinitely valuable, and therefore unaffordable. Venezuela’s oil production has already fallen so much that it is no longer earning enough US dollars to meet its debt obligations, and with a worthless currency it will be unable to obtain dollars on the open market. Default is therefore inevitable, with or without restructuring.

Venezuela is entering into the final phases of the national debt death spiral. Things are going to get much worse before any real hope of recovery arrives. And that’s saying something for a country where “extreme food rationing” has already become the norm thanks to its failed socialist economics.