As the Washington Post pointed out a few days ago, Venezuela is not gradually going bankrupt, it is very quickly going bankrupt if it’s not already there. People complain of having no food, no beer and no money.
The poll by Venebarometro was conducted from May 28 to June 11, 2015, and besides the huge percentage of people unable to make their earnings stretch far enough to feed their families, 81 percent said they lacked medicines, 76 percent said they couldn’t afford cleaning products, 76 percent education, 72 percent transportation, and 42 percent said they didn’t have enough to pay for housing.
Venezuela’s Labor Documentation and Analysis Center (CENDA) estimated the price of the monthly basic food basket jumped 19.9 percent in June alone, from 17,833 bolivars to 21,383 bolivars, roughly $3,400 at the official exchange rate. This is three times the country’s minimum wage of roughly 7,421 bolivars.
Fox News Latino (FNL) spoke with a number of people about their food budgets and some said they took the time to check prices at a number of grocery stores, traveling farther to save money. Carlos Rosendo told FNL, “I live in Chacao but I try to find out what the prices are in Palo Verde, near Petare (in the east of Caracas) to see if I can cut my food budget.” He said it wasn’t as bad as CENDA reported, adding his food budget had only increased about 2.46 percent a week.
On the one hand, the government has not released any economic data since the early part of the year. They blame inconsistencies on the statistics being given out, but experts say they are just trying to hide the truth. El Nacional reported last week the consumer price index jumped 12.8 percent in July, the highest increase since April 1989.
The prequel to hyperinflation is just the beginning
El Nacional warned that based on inflation rates, the annual consumer price index could rise 139 percent by the end of 2015, although international and national firms are revising their forecasts for the end of 2015, putting the rise in inflation closer to 220 percent.
Asdrúbal Oliveros, economist and director of local firm Ecoanalítica says the high inflation rate is because of a fiscal, monetary and exchange imbalance. “The country’s income is stalled because the official dollar exchange rate is fixed and yet public spending is rising, and Venezuela’s Central Bank is financing it by printing money [it doesn’t have].”
Oliveros points out that Venezuela is in the beginning stages of hyperinflation. This occurs when the monthly inflation rate rises above 50 percent or more, and consumer prices double in two months or less. This is what has started happening, and the government is keeping the news from the public.
Is Venezuela going bankrupt?
Venezuela is in dire financial straits. With the government wanting not only to control petroleum dollars but all the country’s dollars, what may have started out to be a Socialist state has instead turned into more of a dictatorship. The government is telling businesses that in order to stay in business, they will sell what the government tells them to sell, and for how much.
It is just not profitable to be a government-subsidized company, and it is even worse to not be subsidized. So now, there are long lines at grocery stores, with people waiting to get in to push carts down empty aisles, looking for the basics of life. It is the government’s fault the country is in the mess it sees itself in today.
What money they have is used to pay off foreign creditors instead of domestic ones, and to appease the populous, they have the banks print money that isn’t even worth the paper it is printed on. Bankrupt? Venezuela is very close to being bankrupt.
