The sad farce of the Venezuelan economy has peaked as the government has run out of money to pay for its money.
“Venezuela is scrambling to print new bills fast enough to keep up with the torrid pace of price increases. Most of the cash, like nearly everything else in the oil-exporting country, is imported. And with hard currency reserves sinking to critically low levels, the central bank is doling out payments so slowly to foreign providers that they are foregoing further business,” Bloomberg reported.
The effects of high inflation have been unforgiving. The government has struggled to prevent shortages of toilet paper, rice, milk, electricity, and other basic goods. Inflation is expected to reach 500 percent this year. Some Venezuelans skip meals due to high prices.
Venezuelan orders for more bills have become risky for currency printers. The country has fallen behind in paying for its shipments, and that’s led to companies wary of the risk in printing Venezuelan bolivars. This year, Bloomberg noted, the United States requested 7.6 billion new bills, but Venezuela ordered more than 10 billion new bills late last year. Without foreign currency, printers don’t trust they’ll receive payment.
Inflation and detrimental economic policies have crippled the Venezuelan economy. Price controls and hours-long lines have become the new normal. Rolling blackouts continue and the work week has been reduced to two days for state workers.
“Reality has bit us in the face, and we have awakened to the new normal: what an extremely poor country we really are. The vast majority of Venezuelans are broke, and that explains why they are also spiritually broken,” Economist Anabella Abadi M. wrote.
The process to recall President Nicolás Maduro began on Thursday with a signature drive. The opposition needed to gather about 200,000 signatures within a month. By the first day, they had 1.1 million.
The economic squeeze will continue for Venezuelans. The dysfunctional petrostate has resisted economic reality and reforms to control inflation into the foreseeable future. Venezuelans, however, are losing their patience as the country becomes unworkable.
