Fading economy puts pressure on Venezuela leaders
CARACAS, Venezuela — Food shortages were already common in Venezuela, so Tabata Soler knew painfully well how to navigate the country’s black market stalls to get basics like eggs and sugar.
But then came a shortage she couldn’t fix: Suddenly, there was no propane gas for sale to do the cooking.
And so for several nights this summer, Soler prepared dinner above a makeshift fire of broken wooden crates set ablaze with kerosene to feed her extended family of 12.
“There was no other option,” Soler, a 37-year-old nurse, said while scouting again for gas for her stove. “We went back to the past where we cooked soup with firewood.”
Five months of political turmoil in Venezuela have brought waves of protesters into the streets, left more than 120 people dead and a set off a wide crackdown against dissent by the government, which many nations now consider a dictatorship.
An all-powerful assembly of loyalists of President Nicolás Maduro rules the country with few limits on its authority, vowing to pursue political opponents as traitors while it rewrites the constitution in the government’s favor.
But as the government tries to stifle the opposition and regain a firm grip on the nation, the country’s economic collapse, nearing its fourth year, continues to gain steam, leaving the president, his loyalists and the country in an increasingly precarious position.
Petróleos de Venezuela, the state oil company that is the government’s main source of income, reported in August that its revenue fell more than a third last year amid production declines — part of a long collapse that chokes the country’s supply of dollars needed for imports of food and other goods.
The falling production mirrors trends in nearly every product the nation depends on, from potatoes and corn to automotive manufacturing, with fewer than 1,100 cars made in the country through July this year.
And while production falls, prices continue to rise with inflation. The price of food in Venezuela increased more than 17 percent in July alone, according to the main nongovernmental group that tracks inflation, aggravating a food crisis that had already shattered the image of Venezuela, an oil-rich nation that, until recent years, was the economic envy of many countries in the region.
In one nine-day stretch in late July and early August, the price of the bolívar, the national currency, fell by half against the dollar on the black market, cutting earnings for people who make the minimum wage to the equivalent of just $5 per month.
Even though the government has been raising the minimum wage relentlessly, it has not nearly kept up with inflation, leading to an 88 percent drop in earnings over the past five years for the workers who rely on it, Hausmann said.
Cash has dwindled so much in value that it has disappeared in places, like Mariel Bracho’s taxi stand at the country’s main airport. Bracho takes only debit cards or bank transfers, and still has a sign with prices dating back a year ago because the company hasn’t been able to find paper or ink to print a new one. “But there’s not even many people who take a taxi from the airport anymore,” she said, given the cost.
Many economists trace the inflation to problems at the state oil company.
As the company’s production declined, it became increasingly dependent on the outside world, depending on foreign companies to pump its oil and even on the United States for the crude oil used in refining. Now the use of these foreign contractors is generating steep bills at a time when the company has little income to pay them.
The Venezuelan government’s answer has been to pay in bolívars whenever possible and to print more cash. In a single week in late July, the country’s monetary base, or the amount of cash that exists in the country, rose 13 percent, the highest increase many economists said they had ever seen. While printing more cash shores up the oil company in the short-term, it lowers the value of the currency for Venezuelans.