Current Developments in Venezuela

Venezuela has been through a terrible economic crisis ever since former President Chavez died in 2013. As oil prices have sunk and political unrest has increased, the Venezuelan economy shrunk by 6-10 percent during 2015 and the inflation of the Bolivar is currently at 141%, the highest in the world, and the national debt is $120 billion. People have to stand in line for hours just to be able to buy groceries, that is, whatever little is available. Whatever is not for sale in the supermarkets, people have to buy on the streets from illegal vendors, also known as ‘buhoneros’, who sell products for many times their original price. People can’t buy essential products like sugar, flour, diapers, milk, and toilet paper. This situation has gotten worse the past year, but since January 2016, the queues at supermarkets have gotten 40% longer. National production has gotten to a critically low point and practically everything has to be imported from abroad. Something as essential as water is a great struggle to get.

With Venezuela’s economic situation being the way it is, this year’s El Niño has hit especially hard. Drought has made it more difficult for people to get water as they now have to wait hours in order to fill their jugs and bring clean water home to their family. Instead of the government taking steps to help get products back on the shelves, they resorted to blaming supermarkets and pharmacies of conspiring to “create the spectacle of hundreds of people lining up for scarce goods to embarrass his administration and foster a counterrevolution.” Another unusual action that the government took when they noticed the crisis was getting bad was the decision to fingerprint customers entering grocery stores. They argued that this would be a good way to combat the hoarding and smuggling of government-subsidized goods.

Henkel García, director of the financial advising firm Econométrica, says that the minimum salary in Venezuela has decreased by 56.9% since 2009. He also voiced concern about the way the country’s debt has increased and how national production has fallen during the years that Chavez was in power. Another problem has to do with the generating of electricity. Recent protests have taken place by workers of Corpoelec, Venezuela’s state power company, to express their concern about the fact that a big power plant, Planta Centro, has not been generating electricity since December of last year. This doesn’t only have negative implications for people at home, but also for shops, banks, hotels, and other services. Several shopping centers have had to cut the time employees work each day because of power shortages. Some shops are only open 4 hours a day, which means that employees will be getting only half their salary; a huge pay cut which is especially bad in these hard economic times. Besides the pay cuts, this also means that the public has less time to go out and do their daily errands. This represents another important issue because something as seemingly straightforward like going to the supermarket usually takes hours, so people already have less time to do other things like going to the bank etc. Hotels have also had problems with power cuts as they are facing the possibility of not being able to have enough electricity to power elevators and air conditioners; a problem that will definitely cause financial loss for these businesses.

With the economic situation worsening, people have less money to buy essentials and less products are available for sale. Because of this combination of issues, the malnutrition rate among children in Caracas, Maracaibo, and Mérida has increased by 9% between 2014 and 2015. What’s worrying is that these numbers represent children that go to schools where breakfast is included. This means that children from more rural parts of the country that go to schools that don’t include breakfast are probably suffering even more from malnutrition. This doesn’t only have negative effects on the health of the children, it also decreases their ability to learn quickly and to absorb and remember information that they learn at school. Another possible huge issue is that of the Zika virus. Hospitals have suffered big spending cuts and are no longer able to afford to buy all the equipment and tools needed to treat all the patients in a proper way. The Venezuelan Pharmaceutical Federation has said that 70% of basic medicines in the country are in short supply. As a result, people are having to rely on the black market to get products like insect repellents. The people have not been well informed about the virus because President Maduro hasn’t released the weekly epidemiological bulletin in over a year. Experts speculate that there may have been around half a million Zika cases in Venezuela already, which would mean it would be the country with the most Zika cases behind Brazil. As more people get infected and the situation in pharmacies and hospitals doesn’t seem to be improving, all they can do is pray that they and their loved ones don’t get infected and that their country will be able to get back on its feet.

On February 17, President Maduro announced his plan to tackle the economic problems facing his country. The first thing he plans on doing is increasing oil prices as the Venezuelan people have been able to get gas for pennies at the pump for too long. He hopes this will help PDVSA, the Venezuelan state-owned oil and natural gas company, get back on track. PDVSA figures estimate that in 2014 the Venezuelan government subsidized up to US$15 billion of oil. Maduro has in mind a national foreign currency management plan, policies to shore up oil income, plans to encourage exports and hard currency income, policies to attract investments in US dollars and the new foreign exchange system. Despite all the criticisms against him, the Venezuelan President continues to blame all the country’s problems to the right-wing and other outside forces, who are, according to  him, out to destroy Venezuela for their own selfish purposes. After having won the elections in December, the opposition has been adamant to find a way to remove the President from office. However, that won’t be easy as Maduro still has strong support among Chavistas, and has also vowed to veto any laws that don’t benefit him.

Venezuela has a long road to recovery ahead, but if the country’s leadership changes, so will their direction. It doesn’t seem logical that a country with the largest proven oil reserves on earth also has the highest rate of inflation. A country that was once an economic hub and holiday destination is now barely able to provide essential goods to its own citizens. The years under Chavismo have led to the current state of the country, and we can all see that it hasn’t worked and that the people are not better off. It’s time for new people to come in, take control, and make Venezuela the great country it has the potential to be.

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