Quick — which country’s bolivar currency isn’t worth the paper it is printed on?
The IMF has predicted that inflation in oil-rich Venezuela should reach a staggering 2349 percent in 2018; other experts predict the rate will be much higher. The Venezuelan government and its oil company have begun defaulting on debts as well.
This December in a Houston, TX court, China sued Venezuelan state-owned oil company Petroles de Venezuela, S.A. (PDVSA). China, on behalf of their own state run company SINOPEC, demanded a payment of $23.7 million, plus interest and damages. Said payment was part of a $43.5 million order of steel products purchased from China way back in 2012.
Financial Woes Grow
Clearly out of patience with Venezuela, China and SINOPEC accused PDVSA of having a ‘disingenuous nature, and that it feigned promises to make full payments’ on the purchase.
The suit also states PDVSA “hid behind a series of subsidiaries and affiliates.” China detailed how the PDVSA affiliates were “… acting in concert to defraud SINOPEC.”
Venezuela and PDVSA owe more than $60 billion to bondholders everywhere; a recent paper published by the Harvard Law Roundtable states the country owes $196 billion, with other estimates hovering around $120 billion. President Nicolas Maduro claims Venezuela and PDVSA want to restructure their debt payments and do not intend to default on them. Maduro’s regime reached out to both Russia and China to keep the sinking economy above water.
While Russia continues to support Maduro, there are signs that China is beginning to back away. As the Venezuelan humanitarian crisis grows more obscene, China may be questioning the wisdom of lending more money or support to the destructive and incompetent regime. In November, Maduro announced the government would release a new 100,000-bolivar bill — an attempt to solve the country’s currency crisis, which requires desperate people to use thousands of banknotes to purchase the most ordinary of products.
However, as of this writing, the new 100,000 note is worth less than one dollar, and still rapidly losing its value.
A Nation in Poverty
Right now, with the minimum wage in Venezuela hovering around $1.83 a month (this is after 5 minimum wage hikes over 2017), the bolivar is worth less than a US penny. This means the average Venezuelan worker receives just over one cent per hour for a minimum wage job. This is the lowest minimum wage on the planet.
After 18 years of a socialist government, first under Hugo Chavez and now Nicolas Maduro, Venezuelans are left with chronic shortages of fuel, electricity, medicine, sanitary products and food. In May 2017, a survey of Venezuelan living conditions revealed almost three fourths of the adult population (of those reporting) unintentionally lost 19 pounds last year. 82 percent of households live in poverty.
Venezuelan children have died from hunger, while many more perish out of lack of even the simplest of medications or sanitary environments. The few hospitals that do have the necessary supplies frequently still fail to save lives as they cannot provide sterile environments or equipment in which to deliver treatments.
Maduro loyalists quickly point out that the government provides the bolivars necessary for citizens to purchase CLAP boxes. The Local Committee for Production and Supply (CLAP) are supposed to be subsidized boxes of staples like milk, corn flour, vegetable oil and related products, but citizens report that the CLAP box has become a much smaller CLAP bag. The included items are staples that the ‘state’ purchases from out-of-country sources and packages to sell to hungry people at inflated prices. There are no fruits, vegetables or proteins included.
Desperation Takes a Toll
Vegetables are an unheard-of luxury for most Venezuelans, but garbage is plentiful in the streets where an estimated 15 percent of the population scavenges daily for bits of edible scraps.
Poor sanitation and garbage control leads to rotting organic material, which brings in scavenging stray dogs and cats. Stray pets have been greatly reduced in number, however, as the starving populace eat them as well. In some areas, zoo animals have reportedly been eaten. Disease such as Zika sweeps towns as insects congregate in garbage strewn streets.
Nicolas Maduro acknowledges that people are hungry in Venezuela, but he refuses international aid, claiming the economic woes of his people are due to foreign adversaries like the United States. Meanwhile, the world sees Tengo Hambre (I am hungry) scrawled on the walls of buildings, and the value of that bolivar continues to plummet.