MY COUNTRY :/...
The roots of the current situation in Venezuela....
How did Venezuela fall in this difficult economic situation? What happened after the death of Hugo Chávez? Did the project derail, get stuck, hit a speed-breaker, or totally crash?
The current economic, political and social situation in Venezuela is very complicated, which makes it a bit difficult for outsiders to understand. On the one hand, there are many people who defend the Bolivarian Revolution, pointing to the successes it has had in the reduction of poverty, inequality and in the increase of citizen participation and self-government. On the other hand, there is a chorus of critics, not only the usual ones of the political right, but also of the left, who criticize the economic management of the Maduro government, corruption, the high rate of inflation and scarcity, and the judgment of a high profile opposition politician, whom the government accuses of fomenting violence. How did Venezuela get here? What happened after the death of Hugo Chávez? Did the project derail, get stuck, hit a speed-breaker, or totally crash? In order to answer these questions, I will first analyze the origins of the current economic situation.
The Bolivarian Revolution, without a doubt, is going through one of its most difficult periods at this time. With inflation reaching an unprecedented 160-200 percent by 2015, the long queues, almost constant in subsidized supermarkets, and the sporadic shortage of many consumer goods, the entire population - be it Chavista, opposition sympathizers , or "ni-ni" (neither from one side nor the other) -is frustrated with the situation. While the Maduro government says that the problems are the result of an economic war waged against their government, the opposition maintains that it is their economic mismanagement that is to blame. The truth, as always, is more complicated.
The roots of today's economic problems can be found in Chávez's efforts as early as 2001, to radically reorganize Venezuela's economy and politics. That is to say, at that time Chávez demonstrated to the old elite of the country that he was not going to be his pawn or to carry out his orders as many Presidents before Chavez had done. On the contrary, at the end of 2001 the agrarian reform and the reform legislation of the oil industry that touched the two most important sources of economic power of the elite were introduced. In reaction to this movement, the opposition launched the coup attempt of April 2002 and the closure of the oil industry in December of the same year. These efforts of political and economic destabilization led to a massive flight of capital in early 2003. Initially, the government tried to counteract capital flight by intervening in the foreign exchange market, using its dollars to buy the bolivar, with the order to keep it stable. However, this caused the Government to lower the foreign exchange reserves in dollars precipitously and thus abruptly changed gears and introduced a fixed exchange rate in March 2003.
Since then, the currency has been corrected and adjusted very rarely. Only those who meet government conditions to buy dollars with bolivars are allowed to do so. The conditions to access the official exchange rate include international travel, support for a son or daughter with their studies abroad, or - most importantly - importation of basic necessities in Venezuela, among several other types of uses. Of course, almost immediately a black market of dollars was born, with an exchange rate that was very different from the official one. At the beginning, the official exchange rate was 2.15 bolivars per dollar, while in the black market rate it quickly reached double or triple that rate.
For a long time, from 2004 to 2008, the Venezuelan economy did quite well, growing at a very fast rate of, on average, 10 percent per year. This was partly possible because the price of oil was quite high (and rising), which meant that the government could accommodate most requests for dollars at the official exchange rate. In addition, government policies to capture a much larger proportion of dollars that the country earned and then reinvest that money in social programs, education, and efforts to diversify the economy also made a difference.
However, in mid-2008 the global financial crisis hit and brought the price of oil, from US $ 140 per barrel in mid-2008, to less than US $ 40 per barrel at the beginning of 2009. Suddenly, the Government no longer can cover all imports with the profits of the oil industry, so in June 2010 the Government introduced a new exchange mechanism, the SITME, which sold dollars-denominated bonds that could be purchased in bolivars at an exchange rate that was twice the previous rate. The combination of SITME and the loan to cover the budget deficit meant that the total external debt increased rapidly in the period from 2006 to 2014, of 10% of GDP.
BUT I LOVE AMI COUNTRY: D !!!!