A Grim Tale Of Latin America
Venezuelans are paying BOB 14 million for just 2.4kg of chicken now a days, as their country is reeling under an acute financial crisis. President Nicolás Maduro recently introduced a new currency that lops five zeroes off the Bolívar in order to tackle the situation. It means that values of banknotes in denominations of BOB 100,000 have become BOB 1. However, the move has failed to boost the Latin American country’s economy that has been in the intensive care unit for the last few months.
Virtually, Bolívar has become worthless, as the price of toilet papers (one roll) has touched BOB 2,600,000. “There’s no money, there’s no water, there’s no electricity – there’s nothing,” said Jose Moreno (71), a retired engineer in the central city of Valencia.
According to experts, the direction-less economy has failed to cope with the hyperinflation. The chaotic situation has prompted Venezuelans to leave the country and to take shelter in neighbouring countries. The current economic situation of Venezuela can be compared to the economy of war-ravaged Germany after the WWI. Cartoons of the time depicted people with wheelbarrows full of money who could not buy a loaf of bread in the European country. By November 1923, the US Dollar was worth 4,210,500,000,000 German Deutschmarks. The situation in Venezuela is somewhat similar to that.
In the past, Zimbabwe, Turkey, erstwhile Yugoslavia and Hungary, too, had experienced hyperinflation. Even, Russia had faced similar situation after the fall of Soviet Union. However, the situation in Venezuela has gone out of control completely, believe experts. The Venezuelan economy is heavily dependent on crude oil. So, the fall in crude oil prices in the global market hit the country hard and the Maduro administration in Caracas has failed to find a way out. As a result, the economy has lost the track.
Bolivars in dustbin
President Maduro has described his paquetazo rojo (big red package) as a ‘magic formula’, saying that it features not only a new currency, but also a sharp increase in the price of fuel and a rise in the minimum wage of more than 3,000%.
However, the common people are yet to get respite from the economic crisis. Their problem increased after the government introduced oil-based digital currency. The inflation had rocked Venezuela in 2013 and the government increased the supply of cash to the market by 14 times in 2017 in order to overcome the crisis. Unfortunately, almost everything went out of control. The rate of inflation was 46,000% in June and the International Monetary Fund has predicted that the rate will cross 1 million percent soon.
President Maduro, who was re-elected to a second term in May in a vote widely condemned as rigged, claimed that his government was the victim of an economic war led by political adversaries with the help of the US. He also blasted the US for trying to overthrow him. As expected, Washington has denied the allegations and described the president as a dictator, who has lost control of his government.
(BOB 1 = USD 0.15)
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