World Economy

Venezuela Crisis Getting Worse

Nicolas Maduro, speaking to the country’s legislature.Nicolas Maduro, speaking to the country’s legislature.

They call it the Maduro diet. Many people in Venezuela cannot get access to food and are suffering from malnutrition on a widespread level. Over the past year, 74% of Venezuelans lost an average of 8.7 kilos in weight and critics are blaming the government of President Nicolas Maduro.

As Venezuela’s economic crisis keeps getting worse, anger is growing with a president who is failing to meet the people’s most basic needs, Aljazeera reported.

But will this lead to Venezuela defaulting on its loans? Inflation is out of control and is expected to rise to a staggering 1,660% this year. According to the International Monetary Fund, next year’s projection is even higher as the government is running out of cash.

There is no money left for imports such as food and medicine. But somehow Maduro has managed to keep making bond payments to creditors and prevent the country from falling into debt default.

There are worries, too, about the state-run oil company, a key source of government revenue. A lack of investment there means production is falling. Almost all of Venezuela’s exports are oil products.

Venezuela has so far resisted international efforts to resolve its deep dysfunction, and the US says the country’s turmoil could affect the whole region.

Regional groups and international actors have worked in recent months to bring the government of Maduro and the political opposition to the table and a resolution. Those efforts have thus far achieved little.

Efforts by outside parties to shepherd Venezuela toward a resolution have been complicated, especially because Maduro has in the past used the specter of international interference to blunt criticism at home and abroad.

The Organization of American States has, in recent weeks, attempted to get the Maduro government to allow elections and back off its crackdown on protests and civil society, with the (OAS) body’s chief, Luis Almagro, aiming to use access to international credit lines and expulsion from the regional body as his carrot and stick.

“Venezuela has to re-democratize itself in order to refinance itself,” Almagro told The Wall Street Journal. “No one is putting money into Venezuela. With a dictatorship in power, every minute is like an earthquake for the country.”

“Nothing could be further from the truth, but the reality is the enormous economic instability that is taking place in Venezuela affects the entire region. The OAS is watching very closely and taking, I think, important action.”

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