What’s Next for Venezuela?
Venezuela is facing one of the greatest currency devaluations in the country’s history. On August 17, Nicholas Maduro, Venezuela’s President, made an announcement regarding currency reforms. Some of the reforms include raising value-added tax (VAT) rate by four percent and wage increases for small and medium-sized businesses. This would mean the Venezuelan government would assist in paying increased salaries for the first three months. According to Maduro, these efforts would increase the monthly minimum wage by 6,000 percent in an attempt to raise the minimum wage from less than one dollar a month to thirty dollars a month by September 2018. These reforms not only further demolish the economy but they have triggered more people to flee the country. Venezuela’s borders are experiencing huge number of migrants and refugees who are continue crossing to neighboring countries in an effort to escape hyperinflation in their country.
According to Center for Strategic & International Studies (CSIS), the living conditions inside Venezuela are no different than living in a time of war due to the shortfall of food and medicine. Problems concerning malnutrition, diseases, and lack of medical resources are causing thousands of children and adults to die. Families are struggling to make a living due to the Venezuelan currency inflation. The devaluation is doing more harm than good because it devalues domestic price of imports therefore leaving people in poverty. Additionally, according to CSIS, “Almost 90 percent of Venezuela’s population has dropped below the poverty line”. However, Maduro’s new economic reforms do not help these already problematic situations because the high inflation is damaging both its people and businesses.
Economic analysts agreed that Maduro’s new currency policy will only cause the economy to continue declining while increasing Venezuela’s humanitarian crisis. Given Maduro’s reform, most businesses will be incapable of increasing the wages therefore, more likely to result in tremendous job loss and further result in mass migrants leaving the country. Last but not least, Maduro’s reckless efforts to grip power will only continue disrupt Venezuela into its downfall.
Sophorn Bou, World Affairs Council Intern