Crisis in Venezuela | Predicament of the Masses
Over the past couple of years, Venezuela has been the center of global attention for all the wrong reasons. The oil-rich country is facing the most significant economic meltdown with inflation rates according to IMF in 2018 indicating an all-time high of 1,000,000%. The figures may not seem much because they are just statistics but when you move to the ground is when you realize how much the trickle-down effect has affected scores of Venezuelans.
The rate of inflation in Venezuela is the worst hyperinflation ever to hit any country in the world in Modern history. In this article, we are going to delve more in-depth on some of the economic issues facing Venezuela including how it all started, how the people are affected on the ground, and if there is a remedy for this crisis.
How it all started
The Venezuelan crisis is both political and economical because it came as a result of making uninformed populist decisions on the economy. The state of deterioration began in 2010 during the reign of President Chavez when he declared “economic war” in response to the increasing shortages in Venezuela. The state of the crisis deteriorated during the presidency of President Maduro mostly due to the global fall of oil prices and the low production of oil in Venezuela.
Oil being the most dependable source of revenue could not generate enough money for the government to carry out its role and that is where the rain started to hit hard on Venezuela.
In response, the government did not limit spending of the little money from the treasury which further heightened the aggravation. As if that was not enough, the run-away corruption and embezzlement of funds ripped the economy apart like a coconut skull draining all the country had left.
The aftermath of these atrocious acts was a shortage of food and medicine, widespread unemployment, defunct companies, and government institutions, human rights violations, and authoritarianism.
Effects of the Economic Crisis
To understand the implication this economic crisis has on Venezuelans, we have to follow the magnitude of its impact. It is said by most economists and historians that Venezuela is facing a worse time than the USA during the great depression or Russia during the fall of the Soviet Union. There are real problems facing people in the ground for instance:
Housing: The housing crisis began in 2005 when President Chaves promised to build cheap houses to the homeless with the housing deficit at the time being at 1.6 million homes. Government resources continue to shrink, and the government could no longer build homes to fill the shortfall of 3 million homes at the moment.
Debt: The current debt of Venezuela both internationally and domestically is at $105 billion despite its reserves at $10 billion. It is reported that Venezuela has defaulted on paying debts worth $36 billion.
The shortage which is as a result of poor economic policies has denied the citizens access to the most basic products such as milk, toiletries, personal hygiene products, and medicine. Most people result in long queue lines to buy certain products and at times forgo using the products; some people are spotted eating wild fruits and others from the garbage cans.
The gross domestic product of the country is mainly dependent on oil revenues which account to around 96% of all export revenues. The over-reliance of wealth and failing to invest in other sectors has plunged the country into ore problem. The inflation, on the other hand, is on unprecedented proportions as some of the essential items cost a fortune t acquire.
Business and Industry
After the economic crisis, most of the government industries were forced to either shut down or slow down with their activities. The all reliant petroleum industry was its knees due to poor maintenance leading to low production. Most industries have shut down leading to widespread unemployment.
Venezuela is going through a hard economic time, and it can only be speculated on how the people are surviving through such difficult conditions. For the situation to alleviate, there needs to be sobriety in the political system and the formation of policies.