Bare supermarket aisles and pharmacy stores are now commonplace in Venezuela. Meat chicken, eggs and corn flour, the Venezuelans’ staple diet, have disappeared from the shelves—a stark reminder of how the economy has sharply sunk after years of utter mismanagement by the dictatorial regime of President Nicolas Maduro.
The Philippine economic story is an unfair comparison with that of Venezuela, but the grim situation in the South American nation will serve as a lesson to everyone trying to run a government.
The inflation rate in Venezuela is currently estimated at 100,000 percent, with the International Monetary Fund predicting it could go up to one million percent toward the end of the year. The Venezuelan government raised the minimum wage by 3,400 percent to compensate for zooming prices, printed more money and devalued the bolivar by 96 percent in an effort to defuse the economic crisis.
The inflation rate, however, worsened. With little foreign exchange earnings as a result of weak oil prices and capital flight, Venezuela suffered massive food shortages that, in turn, fueled the inflation rate to increase further.
Falling public services, hyperinflation and shortages of basic necessities have forced millions of Venezuelans to abandon their country. The United Nations estimated that about 1.6-million Venezuelans have been displaced since 2015 when the economic crisis worsened. It says 2.3-million Venezuelans are now living abroad but other sources put the figure much higher.
Venezuela’s economic problems stemmed from over-dependence on its huge oil reserves. It derives 96 percent of its revenues from oil but the heavy reliance on crude created a problem when world prices plunged in 2014, leading to shortages of foreign capital.
The bad economic situation, meanwhile, resulted in a brain drain. People with capital and college education were the first to leave Venezuela. Millions soon followed as hyperinflation increased the number of poor people who were unable to purchase the basic necessities.
President Maduro introduced populist economic policies in his bid to consolidate power. Venezuela, for one, has one of the cheapest pump prices in the world. He ignored economic fundamentals, stifled the opposition and turned to socialism. In short, he ruined Venezuela’s economy.”‹
