Venezuela, once a rich oil reserve country, is now battering an unprecedented economic crisis. Hyperinflation, mass migration, food shortage, increasing number of crimes and grinding poverty has pushed the nation into a deep turmoil. Many in Venezuela blame President Nicolas Maduro for the country’s current condition. Here is a look at the crisis unfolding in Venezuela and how it is affecting its people
What is the Venezuela crisis?
Hyperinflation is the biggest problem faced by Venezuela. The inflation rate there is expected to reach a stunning one million per cent this year, putting it on par with the crises of Zimbabwe in the 2000s and Germany in the 1920s, according to the International Monetary Fund. The government claims that the country is the victim of an “economic war” and that the major issues are due to opposition “plots” and American sanctions.
Hyperinflation in Venezuela
The plummeting oil prices since 2014 is one of the main reasons why Venezuela’s currency has weakened sharply. The country, which has rich oil reserves largely depended on it for its revenue. But when the oil price dropped drastically in 2014, Venezuela which received 96 per cent of its revenue from the oil exports, suffered a shortage of foreign currency. This made import of basic essentials like food and medicines difficult.
Food and medicine shortage in Venezuela
Venezuela’s imports are down 50% from a year ago, according to Ecoanalitica, a national research firm, CNN reported. Venezuela’s minimum wage is now about the equivalent of $1 a month, making basics unaffordable for many. With a shortage of the import goods, the black market has got a free hand in the country. Prices have been doubling every 26 days on average, according to a report in BBC. According to an Al Jazeera report, many Venezuelans sift through the rubbish and bins in search for food.
A survey from February this year found that almost 90% of Venezuelans live in poverty and more than 60% surveyed said that they had woken up hungry because they did not have enough money to buy food, reported Reuters. Apart from food, the country is also facing medicine shortage. The economic crisis has also hit the public health system, making medicine and equipment inaccessible to its people.
New currency of Venezuela
Amid the growing crisis, the government issued new currency — with new clour notes and denomination — to keep up with the projected inflation. While earlier, Maduro had decided to remove three zeros from the bolivar currency, he later dropped off five zeros. The new currency will be released next month and overhaul would tie the bolivar to the recently launched state-backed cryptocurrency called the petro, Maduro said in a televised broadcast. The new “Bolivar Soberano” currency is worth 100,000 “old” Bolivares.
Cryptocurrency experts have said the petro suffers from a lack of credibility because of a lack of confidence in Maduro’s government and the mismanagement of the country’s existing national currency.