Venezuela’s economy is sliding into oblivion

Protests are held almost daily across Venezuela.
Protests are held almost daily across Venezuela.
Image: AP/Ariana Cubillos
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In Venezuela, runaway inflation, a collapsing currency, and chronic shortages have battered the South American nation’s economy for years. Over the past five years, Venezuela’s economy has shrank by a quarter, according to the IMF.

Now, as president Nicolás Maduro moves to tighten his grip on power, things are about to get even worse. This anxiety is reflected in the country’s increasingly worthless currency.

On July 29, the unofficial rate that most ordinary Venezuelans use to exchange money was 10,389 bolivars to the US dollar, according to DolarToday. This compares to one of the official exchange rates of about 2,000 bolivars per dollar. Few Venezuelans have access to official rates, which are reserved for government-approved purposes.

In just the past week, the exchange rate has collapsed from 8,790 bolivars to the dollar, as Maduro pressed ahead with a controversial election on July 30 to form a constituent assembly. The assembly, which includes the president’s wife and other close allies, will be tasked with rewriting Venezuela’s constitution and, in practice, overriding the opposition-led National Assembly. Sunday’s vote was met with large protests, in which 10 people died, and abstentions by the opposition, who refused to field any candidates.

Maduro insists about 8 million Venezuelans took part in the vote, but some analysts say the actual figure was half of that, at most. (Some 20 million Venezuelans are registered to vote.) Nikki Haley, US ambassador to the United Nations, said the vote was a “step toward dictatorship.”

At the start of May, Maduro said he was going to form a new assembly to “restore peace” after months of violent protests. While he accused his opponents of waging economic warfare against the country, Maduro has been running Venezuela’s economy into the ground with haphazard economic and political policies, including price controls and convoluted currency interventions inherited from his predecessor, Hugo Chávez. Hyperinflation has made even basic food and medicine completely unaffordable for millions. People are fleeing the country in droves.

The US is now considering imposing more sanctions on Venezuela, this time targeting the oil industry, the source of almost all of the country’s revenue. Despite having the largest-known oil reserves in the world, erratic and ideological mismanagement by Venezuela’s “Bolivarian” socialist government has made its people poorer.