Venezuela is on Edge of Economic and Political Meltdown

Venezuela is on Edge of Economic and Political Meltdown

One of the common questions running in most people’s mind is whether economy or government of the Venezuela would completely fall first. You have to note down that they have meant it as ‘completely.’ It is said both are going into a hard phase. It is hard to find any improvements on both sides.

Moreover, no improvement is seen though sufficient time is given. International Monetary Fund has stated that incumbents do not do well at all. Their economy has been reduced to 10% within a year and in the next year an addition 6% is added to the present. Inflation has exploded to about 720%. It is clear that the market of Venezuela would be in high debt in near future. In simple words, the entire country is bankrupt.

It is not easily to survive though you own the world’s largest oil reserves. In such situations, Venezuela has managed to certain extent. It is due to a combination of worst policies and bad luck. Huga Chavez, who is a part of socialist government, started to spend more for the poor people. They were given everything like free housing to two-cent gasoline. At present, there is nothing wrong to do that. It is an excellent idea. It is possible only you have the money to spend for them. Venezuela did not makeup or see profits by 2015.

Chavez converted the oil company that was run by state to run barely. It was first run in a professional manner. Loyal people were replaced by people who are conscious and know what they are doing. The new investment did not work out and little profits came out. The most severe part was extra heavy crude of Venezuela that has to be refined or blended. It was sold before since it was cheap. Venezuela did not churn out profits in the oil since they did not maintain infrastructure or upgrade. The entire oil production was collapsed and it was facing a hard time especially between the years 1999 and 2013.

As Venezuela was spending more on people and failed to produce less crude, the oil prices raised to triple digit. Most poor states face this situation when their entire money runs out. The situation became worse year after year. They even started to print money but still the oil was collapsed by 2014. The market rate of Venezuela has become less because of back market. It has lost its value badly especially in the last two years.

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