Inflation is at its peak in Venezuela and youth are leaving the country and going to other countries.
Venezuela is currently being discussed all over the world. America has attacked and arrested Venezuelan President Nicolas Maduro and his wife. This is the same country which has the world’s largest oil reserves. Despite this, inflation has reached its peak in Venezuela. While Venezuela’s GDP was 372.59 billion dollars in 2012, now it is only around 100 billion dollars. Meanwhile, in the year 2020 it was only 43.79 billion dollars.
The youth of the country are also continuously migrating. Let us know why Venezuela has never been able to control inflation, declining economy and the young generation leaving the country? Know 5 big reasons.
excessive dependence on oil
Venezuela has the largest oil reserves in the world. It is said to be around 303 billion barrels. Despite this, today this country is counted among the poor countries, whereas in the year 1952, this country was the fourth richest country in the world. The reason for this was the world’s largest reserve of oil found underground there. Venezuela earned a lot of money from oil. Not only this, it completely focused its economy on oil. The result was that when oil prices fell, Venezuela’s economy completely collapsed.
Then Venezuela’s oil reserves are in a very inaccessible area. That’s why it is very expensive to remove it. Venezuelan oil, found in the Orinoco Belt in the eastern part of the country, is very heavy. It is thick and sticky like honey. Sulfur is found in large quantities in Venezuelan oil. Therefore, if it is extracted somehow, a lot of money is spent in refining it. For this, huge investment along with advanced technology is necessary. Therefore Venezuelan crude oil is sold at a very low price. That means more hard work and less profit.
Neglect of agriculture and industry
While Venezuela’s dependence on oil increased and the entire focus was focused on oil export, agriculture along with other industries began to be neglected. In the 1970s, while there was an oil crisis all over the world and prices were skyrocketing, it was raining dollars in Venezuela. Even common people used to go to Miami for shopping. Venezuela had become one of the largest buyers of the world’s most expensive Scotch whiskey and champagne. Venezuela’s per capita income had overtaken countries like Spain, Greece and Israel. In such a situation, the people of Venezuela also started feeling that there is no need for them to do business. The result was that common people completely stopped paying attention to farming, industry and other work.
Due to this, Venezuela started depending on other countries for its other needs. By selling oil, Venezuela started buying the things it needed from other countries. Due to this, its foreign exchange reserves decreased and GDP continued to fall. The result of this is migration of youth due to inflation and lack of work.
Venezuelan President Maduro.
Money invested in free schemes instead of progress
Mismanagement can be clearly seen in the functioning of the Venezuelan government. While the government should be spending money to strengthen the country’s economy, it started distributing free food. After the year 2000, the government distributed a lot of money in free schemes. The situation reached such a level that the Venezuelan government did not even have money left to pay salaries to its employees. In such a situation, the government printed currency extensively to meet its expenses. The result was that the value of Venezuela’s currency started declining. When the value of the country’s currency decreased, people’s savings also started disappearing and things became expensive. Due to this, it became difficult for common people to buy even essential things.
promotion of nepotism
The company that manages the oil on which the country’s economy depends is also government owned. Instead of upgrading its technology, nepotism was promoted. Qualified employees were removed from state oil company PDVSA. Brothers and close relatives of the leaders were appointed in their place. Instead of working, these people started looting the money earned from oil. Due to this, till the 1990s, Venezuela used to produce 35 lakh barrels of crude oil daily, but now it has fallen to only 8 to 10 lakh barrels. The extent is such that this country, which has the world’s largest oil reserves, itself has to buy petrol from other countries.
Political instability and collapse of institutions
Political instability in Venezuela had reached its peak. President Nicolas Maduro was acting as a dictator. Due to this, the government had complete control over the judiciary as well as institutions like Parliament and Election Commission. The opposition was continuously suppressed. Also the media became a victim of censorship. Due to this, no investor was liking to invest there. Due to this, the path of economic reforms became even more closed.
Also read: Who is a prisoner of war, how did Maduro change the game by telling himself this in the court?