World Economy

Venezuela Crisis Worsens

Venezuela Crisis WorsensVenezuela Crisis Worsens

Today in Venezuela, families can wait in lines at the supermarket for 18 hours at a time to get the right to purchase small quantities of oil, rice or pasta, according to Foreign Policy.

Violent crime, meanwhile, is on the rise, with the country’s capital, Caracas, recently overtaking Honduras’ San Pedro Sula to become the most violent city in the world, according to the Citizen’s Council for Public Security and Criminal Justice, ABCNews reported.

Problems with starvation and malnutrition are worsening, and major Venezuelan companies are shuttering their doors. Moody’s, an American credit agency, said Monday that the country is “highly unlikely” to have enough currency available to make its debt payments this year.

This economic collapse in Venezuela has been happening for over a decade now, according to Dany Bahar, a fellow at the Brookings Institution and an associate at the Harvard Center for International Development, but the situation has greatly deteriorated in recent years because of plummeting crude prices, environmental factors and the failures of President Nicolas Maduro’s government to address the country’s woes.

Bahar told ABC News that he believes Venezuela will need “significant foreign intervention” from the International Monetary Fund or other organizations in order to begin to surface from its current economic state.

 Oil, Blackouts

Venezuela, which is sometimes described as a “petrostate,” or a nation that derives its wealth largely from oil, is a founding member of the Organization of the Petroleum Exporting Countries and one of the world’s largest exporters of oil.

Oil has been a critical component of the country’s economy since it was discovered in the early part of the 20th century and particularly since the industry was nationalized in 1976. Today, oil accounts for 95% of the country’s export earnings, according to OPEC, and the oil and gas industry account for 25% of its GDP.

The outlook for Venezuela appears to be dimming every day, and it’s not just because of the country’s daily four-hour mandatory blackouts.

The Guri Dam in the southeastern state of Bolivar, one of the world’s largest, has seen unprecedented low levels of water, hitting a record low 243 meters in April. ?The reservoir supplies up to 70% of the nation’s 16,000 megawatt power demand, and the government has begun rationing.