Venezuela is facing a political crisis. Protests against President Nicolás Maduro have ruled the country for months now. The nation is also facing an economic crisis. Why has the once-prosperous South American nation plunged into economic chaos?
Oil is not enough
Venezuela has the largest proven oil reserves in the world. Under former President Hugo Chavez, oil revenue fuelled the country’s economy, according to CNN. When oil was $100 a barrel, the revenue was used to fund the country’s social programs
Socialism and subsidies
When Chavez was the president, the prices of essential items were slashed. The official price for a bag of corn flour is 639 bolivares—which is affordable for many people. But the price of flour is below the cost of production. And as a result, domestic producers have stopped making cornflour, CNN adds.
Then came the big blow. Oil prices plummeted. And the country’s imports were hit. Now, the country has less than $10 billion in foreign reserves, according to the Central Bank data released July.
‘Maduro diet’
Because of rampant inflation people are even skipping meals. Many people have even dubbed the phenomenon the “Maduro diet” “Since (President) Maduro took power we are in a very bad situation. We call it here ‘the Maduro diet,” a community leader told the BBC.
A bridge of relief
Many Venezuelans cross the border to Colombia to buy key items. A short bridge, the Puente Internacional Simon Bolivar, that connects the two nations has now become a relief route. Venezuelans carry bags of flour, oil, rice and sugar from the border town of Cucuta back to their country