Venezuelan president Nicolas Maduro has decided to get rid of the country’s most used currency bill. But since there have been widespread riots and general unrest throughout the country, Maduro has now postponed the move until January.
Reuters/ Carlos Eduardo Ramirez
In a national television and radio broadcast, Maduro explained to the country that as a response to his ban of the 100-bolivar notes, both the country’s banks and Colombian-border currency traders were almost devastated as Venezuelans all over were trying to get rid of their cash.
Not only did Maduro’s unusual decision cause long lines at banks all over the country, but an influx in shopping electronically, and most importantly, widespread fear among poorer Venezuelans without bank accounts. Maduro’s plan is especially dramatic because these 100- blivar notes are the most commonly used bills throughout the entire country — despite the fact that they have become practically worthless.
Blaming the country’s economic crisis on “the criminal [U.S.] dollar,’ Maduro is once again refusing to admit that his corrupt government had anything to do with the fact that thousands of Venezuelans are starving and living on the streets.
Not only have Maduro’s socialist policies caused social and economic unrest, Venezuela’s oil exports have also contributed to many underlying issues.In a country that is almost solely dependent on oil exports, Venezuela has been hit hard by the recent global oil price crash. Add that to the state-owned oil company exporting less and keeping more for themselves, and thousands of Venezuelans are living in such deep poverty that they must sort through garbage and slaughter zoo animals in order to find enough food to survive.
November saw Venezuela exporting over 700,000 barrels of oil to the United States, a number that was 23% higher than October, but a 10.5% decline from November 2015. But why?
It is not that Venezuela doesn’t physically have gallons of oil to spare.
Instead, they cannot afford the maintenance equipment needed to harvest and send out this precious resource. Even though back in 2014, 352 million gallons of industrial coatings were sold at a value of over $6 billion dollars, Venezuela couldn’t afford to invest in this preventative measure.
So now they are allowing hundreds of gallons to literally burn as their oil processing equipment sits to rust. Because of Maduro’s failure to manage, Venezuela’s daily crude oil production fell 11% within the past few months.
It is not surprising, then, that the global oil price drop has caused Venezuela to suffer from the highest inflation crisis the country has ever seen. While the 100-bolivar notes are the most commonly used form of currency, they are worth next to nothing. Venezuelans must carry stacks and stacks with them when they go grocery shopping, and some merchants have even begun weighing the money rather than counting it. Since 40% of the population does not have bank accounts, banning paper money is making an already dire situation even worse.
To put this crisis in perspective, a 100-bolivar note is the equivalent of 4 U.S. cents.
In addition to the looting, riots, and nationwide violence, industries in Venezuela are collapsing into themselves.
A week before Christmas, the Venezuelan government seized over four million children’s toys over reports that toy companies were selling them at extremely high prices. Now, the government is selling the toys at a discount, ensuring every child will receive a toy Christmas morning.
But toy companies aren’t the only ones hoarding their goods to sell them at higher prices. Venezuelan beer giant Empresas Polar tried that earlier in the year, but failed and was taken over by the government. So while the craft beer market in the U.S. is worth $19.6 billion, in Venezuela it is worth pennies.
“The government claims that businessmen and traders hoard goods for long periods to speculate on prices,” explains the Local Committees of Supply and Production (CLAP), the organization that will handle the redistribution of the toys, NPR reports. “Venezuela suffers the highest inflation in the world, estimated at 475 percent for 2016 by the IMF, and the currency lost 75 percent of its value against the so-called ‘black dollar’ since last September.”
Many across the world find it incongruous that Maduro will intervene when it comes to consumer goods like children’s toys and beer, but has no qualms leaving thousands of his citizens unable to pay for food or medicine by eliminating the 100-bolivar note.
The country-wide note ban will be put in place January 2, 2017.