Venezuela’s debt has doubled in only one year!

Venezuela has been in the news over their economic collapse for the past couple of years. Some economists and historians have even deemed Venezeulas economic collapse as the biggest in decades outside of war. Most recently, Venezuela hit the news as their national debt doubled in one year and is not almost double the level of the country’s GDP. As Simon Constable says in his Forbes.com article “Venezeula Sinks Further into Oblivion” “At the end of the second quarter, total borrowing[in Venezuela] reached 198.4 percent of GDP”(Constable). When businesses and household debt become included in debt, the total debt comes out to be 221 percent of GDP.

Hyperinflation is at 9,072 percent!

You read that right! Another economic indicator that is plaguing the Venezuelan economy is its 9,072 percent inflation rate! Well at least its better than deflation right? Only if you can recover from 9,072 percent worth of inflation! Foreign investors have placed such high interests rates on Venezuela’s lackluster cryptocurrency- the Petro which also further raises in the inflation rate and debt since it is impossible for Venezuela to pay their debt back. Venezuela has also taken out massive loans of 63 billion dollars from China since 2007, which also looks like they will not pay back anytime soon. Also, since 2016, every quarter has produced double-digit declines in GDP. Furthermore, when inflation was at 7,000 percent, President Maduro implemented a policy to eliminate the zeros from paper Bolivar bills so that a ten thousand Bolivar bill would be now worth ten. This further raised inflation and caused more economic turmoil. It is also important to note that the 9,072 percent inflation rate is just right now and the total inflation rate is expected to eclipse 15 million percent by the end of the year.

Why is Venezuela in this economic collapse if they have the most oil-rich country in the world?

You read that correctly. Venezuela, in the biggest non-war related economic collapse in decades, has the most oil reserves of any other country in the world. So how are they in crisis with an extremely valuable resource in oil? Well, that is a great question and is a big factor of why the Venezuelan citizens are so critical of the people in power. In fact, the only reason why Venezuela is not recovering from the economic collapse is because not only is President Maduro taking most of the money and resources in for himself, but also the actual leading oil company in the country, PDVSA, is so terribly run.

Conclusion

In conclusion, Venezuela is not just in an economic collapse, but also a political one. Because the country has virtually no assets or wealth, besides their terribly run oil reserves which aren’t helping decrease inflation, civilians are starving and homeless, while the political leaders use the mere money and resources left to live lavishly. To fix this issue, first off President Maduro needs to be out of office, and a new economically driven candidate can be elected to at least stop hyperinflation from getting worse. The head of PDVSA needs to be fired so the resource-rich company can promote value within Venezuela.