Venezuela’s economy has been suffering for the past several
years. While oil has always been a major export for Venezuela, oil now makes up
as much as 96% of total exports, according to a recent article in The
Economist. This is because it
is so difficult for other businesses to function in this country due to
government policies and the chaotic nature of the economy and society under
Nicolas Maduro.
Although oil makes up the vast majority of total exports,
even oil exports have fallen most recently. This is because oil production fell
by one hundred thirty thousand barrels a day over the September to October
period. With large supplies of oil provided to China and Russia as a form of
payment of interest on loans made by these countries to the Venezuelan state,
there is little left over to sell as exports. Another negative impact on oil
exports is caused by the drop in the global oil price over the past several
years, although it is not as low as it was in 2015, a record low. Because
Venezuela is $1.5bn behind on making its payments on loans, the situation
does not look it will improve any time soon and it could in fact get worse.
This is a big deal for Venezuela
because it is one of the world’s largest oil exporters and reportedly has the
largest proven oil reserves in the world. Oil is so important to the economy of
Venezuela that its president even resorted to issuing a new digital currency,
called the petro, backed by the country’s oil reserves, as well as gas, gold
and diamonds.
https://www.reuters.com/article/us-venezuela-economy/enter-the-petro-venezuela-to-launch-oil-backed-cryptocurrency-idUSKBN1DX0SQ
I have heard a lot about Venezuelas situation, very sad to say the least. I wrote an article for another class about this situation. The people of Venezuela are starving and the economy shows no signs of rebuilding. They made massive trades with other countries just for miscellaneous resources that are needed. One trade was for 3 million dollars worth of oil for 3 million dollars worth of resources, in the agreement the resources were said to be anything that the government may need, as times are that bad supplies are low in all aspects.
ReplyDeleteIt looks like a policy with very little support and stability. To me, it seems like the Venezuelan president just got hyped with the whole bitcoin value appreciation. I think Venezuela needs a more realistic policy that would actually help them out.
ReplyDeleteI agree, it seems to me like a desperate move from the Maduro regime, to try and keep up appearances, amidst a collapsing state. It is very unlikely to work seeing as the one of the major selling points of cryptocureencies is that they are not backed by reserves.
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