Economic Crisis in Venezuela

Did you know? From 1953 to 1957 is THE moment in the economic history of Venezuela, where a constant valuation of the bolivar is made. Meaning, periodically, because of the incredible economic policy carried for that moment. Every day the Venezuelan currency worthed more against foreign currencies such as the US dollar.

According to the UN Statistical Yearbook of 1964, Venezuelan production and GDP rose 60%. More than the United States and Great Britain up until 1957.

According to a writer named Asdrúbal Baptista in his pioneering books of Venezuelan economic theory for 1956, the bolivar surpassed the dollar. Being the only time in world history when a Latin American currency or a growing economy dominates the international market above the US dollar.

This economic system generated a “bonanza” of economic freedoms never seen in Venezuelan history before. To the point that the Venezuelan consulates in Europe and the United States had long daily lines of people wanting to come and live and work in Venezuela. Transforming the name of the “American Dream” into a “Venezuelan Dream”.

As a result of these economic events which took place since 1950, the North American magazine TIME, on February 1955, named President Marcos Pérez Jiménez as MAN OF THE YEAR, his face is the cover of the magazine for that month “EL HOMBRE TIME.”

The man of the Year 1950

What is happening in Venezuela now?

Venezuela, a priceless jewel not only for its natural resources but also for its geographical position. There is always a sad feeling about the old glory in which Venezuela lived. The era in which Marcos Pérez Jiménez, who was known as a dictator, promoted Venezuela and made it recognized worldwide. Becoming the first power in the continent, and the sixth power in the world. Where ever the bolivar had more value than the American dollar. But those bonanza days are in the past now.

Venezuela is now in the middle of a panorama where the important works built at that time, reason for pride, are now falling on themselves for lack of care in infrastructure and the weight of socialist propaganda.

Gold reserves being one of the largest of the world, are now being emptied little by little to sustain an economy in crisis .

A country with the largest crude oil reserves in the world, but not even among the top ten producers. Something with the potential to keep Venezuela in a life quality as developed oil producers countries. Now represents a country where money serves as napkins, literally — note bills which production value exceeds its denomination. say you have right now 100 bolivars note bill in your hand, well, to manufacture that not bill is around 1 USD. The legal price of the USD right now is five sobering bolivars. But no one finds those USD, only the parallel/illegal USD which value now is: 638.18 Bs.

The economic crisis in Venezuela, how this paradise got spoiled?

In 1999, the country changed from democracy to socialism, and elected Hugo Chávez as president, who fought for populism, broke ties with the United States and joined China and Russia, which lent Venezuela billions. Chávez ruled until his death in 2013 and is still, even today considered for many people, a “hero of the poor“. I got to say this, only somebody with not a single piece of thought, can claim such.

Chavez administration spent way too much on welfare programs and set prices for everything. The agricultural lands were first declared state property and then abandoned. The country became dependent on the sale of its oil abroad and no internal production of goods at all.

Before dying, as a “last gift/will” Chávez pointed Maduro as his successor. For that time, many Venezuelan people thought: Nothing can be worse than Chavez. But wait, Maduro is coming, he´s coming! And Maduro kept the practices of the regime of Chavez. His government, moreover, stopped publishing reliable statistics, including figures on economic growth and inflation. He also accepted millions in bribes for construction projects and accumulated debts that he still struggles to pay.

Meanwhile, the only product left for Venezuela began to devalue.

For 2014, the price of oil reached about 100 dollars per barrel. But then, several countries began to extract more of this product, because it was no longer inaccessible: now it could be dredged with new technology. At the same time, companies worldwide stopped buying gasoline. So the excess oil led to the global price falling to $ 26 per barrel in 2016.

Today it is around 50 dollars, which means that Venezuela’s income was reduced by half.

INTERNACIONAL RESERVES 1998-2018

Hyperinflation in Venezuela

Simultaneously, Maduro’s hostility towards foreign companies produced a corporate exodus. Pepsi, General Motors and United Airlines were just some of the companies which reduced their presence or left for good the country. According to the International Monetary Fund, this year unemployment could reach 25%.

And the outlook for inflation is not encouraging either. In 2010, a dollar was equivalent to about eight bolivars, while today it corresponds to almost 8,000 bolivars, according to the unofficial change, which many Venezuelans use because the government’s rates are considered quite overvalued. In addition, prices could rise by an astonishing 4000% next year.

To stay afloat, Maduro increased the minimum wage three times last year 2018. This strategy provided some short-term relief for the poor, but experts argue that in the long run it ends up creating more pain through a worthless currency.

The economy is chaotic; it’s collapsed, the economic crisis in Venezuela it’s at the point of no return, said Alberto Ramos, an economist who heads the research department for Latin America at Goldman Sachs.

Venezuela inflation is on the verge of astronomical levels: it will reach 1,000,000%, the IMF projects.

The figure of the new IMF forecast is abysmally greater than that of just three months ago when it projected that Venezuelan inflation would rise by 13,864 %. We are talking about two more digits in the number.

(CNN Spanish) – As a scourge that does not give respite to its already beaten economy, inflation in Venezuela Must likely reach 1,000,000% by the end of this year, revealed by the forecast from the International Monetary Fund (IMF) published this Monday. So severe is the situation of the Latin American country that the entity compared it with what Germany experienced in 1923, during its period of hyperinflation after the First World War.

Venezuela news today, January 4, 2019

  • Food of the basic basket increased to 700,000% in 12 months. The vegetables also increased more than 300,000% due to the inflationary crisis in the country
  • The crisis will affect holiday seasons. Is important to mention that only internal tourism is working in Venezuela. Since foreign visitors are avoiding the country.
  • Venezuelans can pay using the BiopagoBDV. From December 6, 2018. People in Venezuela can pay via these points of sale with the funds available in the “Monedero Patria.” This another attempt of the regime to stop the crisis.
  • Oil exports in Venezuela fell to its lowest point in 28 years.

There so many things going on in Venezuela. one article with not be enough to bring them all. But one thing is for sure; if the people in Venezuela cant get out of its current situation. Then that country will totally colapse and become a ruined country. Yes, more ruined than now. do you think it cannt be worse? well, I thought the same with Chavez, and Maduro came.

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