By Prarthana Mitra
A Latin American country once thriving on an oil economy is now languishing in poverty, economic depression and utter anarchy. What many are referring to as a cruel and unprecedented reversal of fortune, can be attributed to hyperinflation which began in 2014. The fall of the bolivar and oil prices has brought the economy on the verge of collapse as mass migration, food shortage, increase in crimes and grinding poverty reach epic proportions.
President Nicolas Maduro is in a precarious position, facing the wrath of Venezuelans who have risen to revolt against the government. He has blamed several external and internal factors including ruthless sanctions from the US and conspiracy plots hatched by the opposition.
Economy in free fall
According to the International Monetary Fund, Venezuela’s inflation rate is expected to reach a one million per cent this year, putting it on par with Zimbabwe’s crisis in the 2000s and Germany’s in the 1920s.
Oil trade which contributed to 96% of the nation’s revenue, suffered when oil price drastically fell in 2014, causing a shortage in the influx of foreign currency.
How it is affecting the citizens
Venezuela’s imports are down 50% from a year ago, and this includes food and medicinal products. Naturally, the black market has assumed an upper hand in the country grappling with food shortages. Coupled with the doubling of prices every month or so, Venezuelans have been robbed of basic standards of living.
At times like these, people have resorted to scavenging for food in the trash bins and others are making a break for the border for a better life in Columbia, Peru, Ecuador, Chile and Brazil. The pace of departures has accelerated in recent days although not all countries have been welcoming of the immigrants, which has the United Nations on high alert.
Venezuela’s minimum wage has reached an unthinkable low at $1 per month, and 90% of Venezuelans live in poverty, reported Reuters. According to The Indian Express, the economic crisis has also hit the public health system, making medicine and equipment inaccessible to its people.
Riot police on Thursday blocked hundreds of doctors and nurses from marching to Venezuela’s presidential palace to protest low pay and shortages of medical supplies amid the nation’s deepening economic crisis, according to media reports.
Dramatic and ill-conceived economic reforms
The government issued new currency to keep up with the projected inflation, which will be released next month and tie the bolivar to the recently launched a cryptocurrency called the petro, Maduro said in a televised broadcast. The new “Bolivar Soberano” currency is worth 100,000 “old” Bolivares, while the public has very little confidence in the state-backed cryptocurrency given the gross mismanagement in the ruling government.
Amidst this crisis, crime rates have surged, resulting in almost 27,000 violent deaths in the last year and the second highest murder rate in the world. After two decades of socialist rule, the country is gripped by tumultuous social, political and economic deadlock which shows no sign of ending anytime soon.
Prarthana Mitra is a staff writer at Qrius.
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