The president of Venezuela, Nicola Maduro, issues a state of economic urgency regarding the extensive sadness that has engulfed the entire country on May 2014. Many protests started in the different parts of the country to reform the government because of the crisis striking the country.
There was the steady rise in the inflation that began in 2015, and it was on the constant rise in the months of June and July. By the end of the year, the country was left with 180 percent of the rate of inflation, the highest recorded inflammation in the world. The inflation gave rise to the crisis of essentials like food, medicine, and other products.
But, other studies released show that the inflammation is not the results of any instant issue, and the entire situation has something deeper that was built up years. So, summing up the different studies, articles, and other in one, we are tracing the reasons that led Venezuela in such a crisis.
Miserable oil prices top the list
Of course, there are many reasons that are equally responsible for the economic crisis, but, miserable oil prices have the biggest role to play in it. The miserable oil prices made the conduct of the International commerce disabled. The oil used in the overall exports gets to the 95%, and it states that main revenue brought to the country was from the exporting business. It has been claimed and showed that the revenue brought to the country was collapsed more than the two-thirds from the year 2014 and for each $1 drop in the prices, the country lost somewhere $700,000 million.
This is not the end, since the oil production was taken by the government, the rate of the foreign investments has collapsed badly, and it is shown that nearly 25% of the oil production has been reduced. There were other reasons that took the hold and position of the oil production and revenue brought by it.
This goes for another important reason for taking the economic of the country in crisis, and this was not sudden, but Venezuela has been going through the high inflation for more than decade. However, it showed its effects in the year 2014, and till date, it is the highest inflation record in the world.
There is a reason for the skyrocketing inflation, and the main was the response of the government response towards the rising budget shortfall that concerned the printing of money. This made the fall of the value of the currency, and by the year 2015, it was 300% increased.
Mismanagement of Economics
The worst of all the reasons was the mismanagement of the economic. A country’s economy is what that decides its welfare and everything, and in the case of the Venezuela, it was badly managed.
There are other reasons that added to the list of the increased inflation, and the country will take a lot of time to get stable.