Despite having massive oil reserves, Venezuela’s economy is still stuck in a downfall.

Since 2014, the economy of Venezuela has been in a free-fall. The once vibrant economy that was also once the largest in South America. has been decimated by hyperinflation – almost hitting the one million percent mark. With the crisis has come hopelessness and uncertainty for the millions of people living in the country, and many have left the country because of the crisis.

History of the crisis in Venezuela

While the crisis in Venezuela could be traced back to the late 1990s when Hugo Chavez took over the presidency, things took a disastrous turn in 2014 when oil production in the country slumped and global oil prices fell.

Venezuela has the largest proven oil reserves in the world with a capacity of almost 300 billion barrels. Oil makes up 95 percent of the country’s exports and from the foreign revenue earned the government supports its population with food, medicine and other supplies.

When oil revenue took a dip, crucial services were affected including food and medical supplies. Reuters reported that three-quarters of Venezuelans have since lost an average of 11kgs of bodyweight. According to a New York Times investigation, doctors are seeing record rates of malnutrition in children.

State of the Crisis in Venezuela Now

• Hyperinflation – When Maduro took over and the oil prices plummeted, government revenue also fell sending the country into a state of budget deficit. Maduro ordered for more money to be printed which caused the bolivar to lose value and inflation set in. The International Monetary Fund (IMF) warned the rate of inflation could reach 1,000,000 percent.
• Food shortage – Severe food shortages face Venezuelans as a result of the crisis. Many line up in front of stores hoping to get small rations of food while others have had to cross over into neighboring countries. Others have resulted to cutting their hair and selling it for food.
• Decreased oil production – While oil forms the backbone of Venezuela’s economy, production has been steadily dropping by at least 20,000 barrels per day. This is as a result of under-investment in the state’s oil production process, refineries deteriorate over time and now with hyperinflation and a cash-strapped economy repairing refineries is challenging. Many refineries have also been left in the dark as the country experienced rolling blackouts.
• Health – since the crisis began, the public health system in Venezuela has undergone a near collapsed. A Lancet World Report in August, 2017, revealed a 65 percent increase in maternal mortality and a 30 percent increase in infant mortality, with 11,466 infants dying during 2016. Hyperinflation and a crumbling infrastructure have left some hospitals struggling to provide nutrition and water, let alone expensive medicine.
• Crime – with increasing hunger, inflation and hopelessness, crime, suicide and killings have shot up in Venezuela to record highs.

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