Updated: Aug 15
Economic crises in the world of Covid-19 are second nature to most countries. Prolonged lockdowns, restrictive curfews, and stringent restrictions have caused major crashes in the global economy as well as the global GDP.
However, there has been one particular country that has been reeling under one of the worst, if not the worst, economic crisis a country has ever faced. That country is Venezuela, situated in the northern half of South America. It has been staring at impending doom for over half a decade now.
It all began in 2010 under the presidency of Hugo Chavez during the Bolivarian Revolution. Since then, the situation has gone completely downhill. How did this happen? The answer is simple: hyper-inflation caused due to increased money-printing. During the 2000s, Venezuela was one of South America’s fastest-growing countries, owing the growth to its large crude oil reserves. As a result of the stability, Chavez spent huge amounts of money on social schemes and programs. Millions of Venezuelans benefitted from his schemes which included health benefits, education policies, and care packages to the poverty-stricken- they were vital to pulling thousands of Venezuelans out of poverty. However, these schemes were unplanned and built in such a way that they required constant investment.
At the turn of the decade, Chavez’s overspending over a decade finally caught up to him as Venezuela had little to no money left with them triggering a massive crisis. Chavez himself undid all of his hard work as poverty increased, the general rate of inflation ballooned, and a widespread shortage in commodities was reported.
On 2 June 2010, Chavez declared an “economic war” which the country had to fight by itself and against itself. The country had a steady shrink in its growth rate decimating the economy further.2013 then saw the death of Chavez. Within a few months, Nicolas Maduro, his right-hand man, won the election by a razor-thin 1% margin. He would inherit one of the most dysfunctional economies in the world. The next year, Venezuela entered a recession that was marked by skyrocketing rates of poverty, mass emigration from the country, and a shortage of basic goods. By 2016, the economy received its final nail in the coffin. The country’s inflation rate spiralled out of control. It witnessed an 800% inflation rate, the highest a country has seen.
Today, one Venezuelan Bolivar is worth absolutely nothing in the market as one bolivar is equal to 0.0000000000031172875 of one US dollar which is shameful for any economy. Daily transactions are carried out in the millions which may sound like a lot but is worth about a few dollars. A hundred USD is equal to 320 million Bolivares. The currency from the previous years denoting a hundred bolivares are mere showcases. Citizens woefully recollect how a few hundred Bolivares were enough to last a family for an entire week.
The President, Maduro, has done nearly nothing to improve the situation, with reports of Maduro himself extracting gold from illegal reserves and selling narcotics to earn extra money. He has pressured impoverished citizens into attending his rallies by promising them food and government handouts.
As a result of the country’s crumbling economy, the number of individuals living in poverty has doubled since 2014. Citizens have resorted to hunting wild animals for food such as anteaters, flamingos, and lizards. Eating dogs, donkeys, and pigeons is not uncommon as well. Overall health has therefore taken a huge hit as well due to malnutrition. More than half the people reported losing 11 kilos due to poor nutrition. Every day child care centers are filled to the brim all day. All for the same reason yet again: malnourishment.
A quintessential country destroyed by corruption and mismanagement, such is the tragic tale of Venezuela. The lesson to be learned from all of this? Their biggest mistake was not investing in its pristine beaches and mountains. Their downfall began the moment the country invested in its large crude oil reserves since 1922. Whatever the case, Venezuela provides the perfect example to other countries on how not to govern a country.