Venezuela has been on an economic downturn since the death of Hugo Chavez. After his death, Maduro took over using the economic crisis as the platform for his campaign. However, not much has changed, and the extreme drop in oil prices has not helped the oil-reliant economy.
OPEC has refused to cut oil production, hurting the Venezuelan, Russian, and Iranian. Currently Venezuela is spending more than oil revenues are bringing in, and it is hurting them. The government is subsidizing food costs, oil costs, and have limits on the number of items a consumer can purchase at the store. Inflation is over 60%.
Venezuela is about to default on its loans. And is going to be about $5 billion under budget. It is estimated that their economy is expected to shrink by about 7%. There is a thriving underground black market that is helping people get goods and currency in USD that they cannot get in stores. The future looks bleak. The Maduro government will not take responsibility and keeps blaming The United States and it's allies for the problems its facing, when in reality it is the fault of the government for spending too much on it's citizens.
The government needs to take control of the situation before it becomes much worse, but with the uncertainty of oil prices, there may some time before their economic system improves.
http://www.thedailybeast.com/articles/2015/01/26/is-venezuela-about-to-collapse.html
2 comments:
Currency controls that restrict the availability of the dollars for imports has played a key role in creating the scarcity of many items.This has led the government to take over a private supermarket chain by the food agency. This take over would be permanent.
Venezuela has an inflation of 60% where basic items are very expensive and scarce. Consumers are restricted to how much they can buy.85% of the Venezuelan monthly minimum salary is 5,602 bolivars i.e. $ 755 US dollars.
A box of protection in Venezuela costs $755.
The drop in oil prices has definitely not helped Venezuela's oil-dependent economy. It is shocking to see that the economy is estimated to shrink by 7%. Also, I wonder if the country will adopt another currency in order to save their economy and to avoid their currency from reaching an even higher inflation rate. This is a very scary situation for Venezuela and its citizens because we could see an increase in crime rates and an increase in unemployment rates. It will be interesting to see what happens to the Venezuelan economy and what actions the government will do to save the economy from an economic collapse.
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