Venezuela has been in the news for many months for a number of different issues. Political strife and deep economic issues have plagued the country for some time. This political tension has caused many anti-government protests that have resulted in the death of dozens of people. These issues have also resulted in many starving citizens. Let’s take a look at some of the problems and what is causing them.
Venezuelan politics are split into two groups: Chavistas are those who support the socialist ideals of the late president Hugo Chavez, and the other group opposes their ideals. The current president, Nicolas Maduro, is a Chavista who has continued Chavez’s policies. This has resulted in many protests against the government by those who think Chavistas have destroyed Venezuela’s democratic institutions and mismanaged the economic budget.
Oil has long been the leading source of revenue for the country, accounting for 95 percent of Venezuela’s export revenues. Their oil revenue has declined significantly due to decisions made during the Chavez government, which has had significant effects on the economy.
Inflation has been another considerable economic problem in Venezuela, as the currency has become increasingly worthless. In early July, the minimum wage increased 50 percent. Knowledge of macroeconomics shows that this adjustment does not solve the inflation issue and could make the problem even worse. According to the International Monetary Fund, the country’s inflation could reach up to 720 percent by the end of this year. The main cause of this hyperinflation has been government overspending and mismanaged funds. Food, medicine, and cash shortages have also contributed to the issue.
These are the political and economic issues that Venezuela is currently dealing with. We can only hope that these problems can be resolved in a way that restores stability within Venezuela.
John Pawlewicz is a senior at the University of Kansas studying Economics.