Economic crisis in Venezuela

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Venezuela's economic crisis from 2013 onwards was characterized by hyperinflation , supply shortages and famines with a poverty rate that rose over 50 percent from 2014 and reached around 80 percent in 2016. The policy of the Bolivarian Revolution had been largely financed by oil sales. Income from oil sales had started to decline after President Chávez's mass layoffs in 2002, even at the time of the highest oil prices in 2008. The economic crisis was not overcome by 2020, but increasingly turned into a complete economic collapse, with the consequence of mass emigration of up to 6 million economic refugees.

National debt

In 2014, the national debt was 66 billion US dollars or 51 percent of GDP. By 2017, the state of Venezuela and the state oil company PDVSA had issued $ 110 billion in bonds, together with loans and interest, this would result in claims of up to $ 170 billion. Traders demanded around 40 percent interest to hedge bonds in spring 2017. The Maduro government continued to serve foreign creditors in 2017, despite all the war rhetoric against the United States. The Washington Post called it "suicidal payment practices". The reason given was also that the government needs open financial channels to get the dollars with which it buys the loyalty and repression of the army and militias; "A payment default would mean an immediate change of government," said banking expert Alejandro Grisanti. The state budget deficit in 2018 was an estimated 20 percent of gross domestic product.

The last remaining lender for new loans was Russia in 2017 via the state-owned oil company Rosneft , which made $ 6 billion in advance payments. An end to Rosneft's support was at least conceivable due to the complicated situation with American sanctions against both Russia and Venezuela in spring 2018. On November 3rd, Standard & Poor’s lowered the country 's credit rating from CCC to CC. At the time, Venezuela had $ 155 billion in debt, which the government wanted to negotiate with creditors about rescheduling, but this never happened. At the same time, oil production, which is important for finances, fell to around a third of 2015 by 2018.

inflation

The inflation rate was around 800 percent in 2016, over 2000 percent in 2017 and 80,000% in 2018. According to official Venezuelan sources, estimates for 2019 for the inflation rate were between 7374% and 9585%, according to the International Monetary Fund at 200,000%

In Venezuela, “free” petrol was viewed by the population as a kind of natural right, and the government did not dare to adjust prices until 2018 for fear of unrest even during the supply crisis; In the course of hyperinflation , only this price remained unchanged for two years: at the beginning of August 2018, 600,000 liters of gasoline could be bought for a dollar exchanged on the black market. The newspaper El pais made a different calculation: with a single euro cent you could buy gasoline for three years (40 liters per week). The national currency could be used less and less because of its limited availability and because of the loss of confidence, only for the purchase of subsidized goods such as petrol, electricity, gas and telephony from state-owned companies. In everyday life, the American dollar or more and more cryptocurrencies were used, which were available abroad through the remittances of Venezuelans.

Supply crisis

The country has been in a supply crisis since 2016 . While gasoline is extremely heavily subsidized, everyday goods cost many times as much. At the beginning of 2016, for example, a liter of water cost more than filling a truck's tank.

In November 2017, food was sold in small portions of less than 200 grams due to the daily increasing prices. Four tablespoons of sugar cost 4,000 bolivares, which was two thirds of the daily minimum wage. By the summer of 2018, the supply situation had deteriorated again because the country was largely dependent on imports, which applied not only to drugs from the more or less collapsed medical supply , but also to food.

Already in 2017, 80 percent of the population were considered impoverished after 4 years of galloping inflation, in 2018 a study came to a poverty rate of 90 percent.

An increase in the minimum wage in summer 2018 could break the neck of the few remaining small business owners , according to the Neuer Zürcher Zeitung . The government televised arrests of shopkeepers allegedly at exorbitant prices. The president of the unconstitutional "Constituent Assembly", which had overturned parliament, said that entrepreneurs would "only learn when they are behind bars". Meanwhile, the government swiftly and unnoticed had legalized the exchange of dollars for the first time: In 2018, the most important source of funding in the country was remittances from Venezuelans who had fled abroad to their families.

Sanctions

Since 2015, the economy has increasingly suffered from the sanctions imposed by the US government and the EU. For example, under Donald Trump, all US companies and US citizens were banned from buying government bonds and bonds from the Venezuelan government. The export of oil and gold is made more difficult. With the help of these punitive measures, an attempt is made to force a regime change by withdrawing financial resources.

Individual evidence

  1. ^ The Legacy of Hugo Chavez And A Failing Venezuela , Wharton PPI, February 9, 2017; “Even at the peak of international oil prices, in July of 2008, Venezuela's governmental revenue was already falling”.
  2. ↑ Venezuela Exodus Is as Big as Syria's, Yet Got 1.5% of the Aid. Bloomberg, September 20, 2019, accessed May 20, 2020 .
  3. ↑ National debt 2014 .
  4. ↑ a b c When does national bankruptcy occur? In: Neue Zürcher Zeitung. April 11, 2017.
  5. ^ A hamburger for $ 2,000. Tagesanzeiger, May 4, 2017.
  6. ↑ a b Sustainable economy creates jobs. SRF business magazine Trend, minute 7.
  7. ↑ Russia's Putin mulls financial aid for Venezuela. dw, October 14, 2017.
  8. ↑ A Swiss solution to Venezuelan-Russian problems? In: Neue Zürcher Zeitung. 5th April 2018.
  9. ↑ S&P further downgrades Venezuela's creditworthiness. In: The Standard . November 4, 2017. Retrieved November 14, 2017 .
  10. ↑ a b Venezuela's currency reform failed. In: Neue Zürcher Zeitung. August 27, 2018, p. 20; Quote Maduro: He found a "magic formula"; “Believe me, the plan will work”.
  11. ↑ Inflation rate in 2016 at 800 percent. In: Handelsblatt. January 20, 2017. Retrieved May 24, 2017 .
  12. ↑ Venezuela 2017 annual inflation at 2.616 percent: opposition lawmakers. Reuters, January 8, 2018.
  13. ↑ Venezuela's Hyperinflation Hits 80,000% Per Year in 2018. Forbes, January 1, 2019.
  14. ↑ France 24: Venezuela: según el Banco Central la inflación cerró 2019 en 9.585% , February 6, 2020, accessed on May 20, 2020 (Spanish)
  15. ↑ A white lie in an economic emergency? In: Neue Zürcher Zeitung. August 8, 2018.
  16. ↑ Venezuela: The country where one million liters of gasoline equals one can of tuna. In: El Pais. 5th July 2018.
  17. ↑ Venezuela Economic Report 2017/18 , Federal Department of Foreign Affairs , June 30, 2018
  18. ↑ Bolivar does not beat Bitcoin , Novaya Gazeta, March 25, 2018 (Russian); "The subject of cryptocurrency would never have become topical in Venezuela if the authorities had not forbidden citizens to use freely convertible money."
  19. ↑ Tjerk Brühwiller: The sick heart of the Venezuelan economy. In: Neue Zürcher Zeitung. February 7, 2017. Retrieved May 24, 2017 .
  20. ↑ María Eugenia Díaz, Nicholas Casey: Venezuela aumenta el precio de su gasolina, la más barata del mundo, y agudiza la crisis. In: New York Times. February 22, 2016, Retrieved December 9, 2018 (Spanish).
  21. ↑ Cucharadas de comida, la última opción de compra en la crisis venezolana. In: El Pais. 20th November 2017.
  22. ↑ Not worth a bolivar: Life in cash-starved Venezuela , LA Times, February 7, 2019
  23. ↑ The long list of sanctions against Venezuela , Deutsche Welle, February 17, 2019