Venezuela Is Making Many Changes, But Its Economy Is Still Crumbling

Silhouette of offshore jack up rig at sea during sunset Venezuela’s central bank recently stated that it would begin printing Bolivar bills of higher denominations, while phasing out bills of lower denominations, in an attempt to mitigate the country’s inflation rate. According to Venezuela Analysis, the bank will begin printing bills will values of 500 and 1,000.

As the Wall Street Journal reported, Venezuela’s central bank recently announced that the country’s inflation rate rose to 180.9% during 2015. President Maduro finally provided this financial information after months of silence; although exact numbers haven’t been available to economists since 2013, it’s no surprise that Venezuela’s rate is so high.

What was surprising was that Venezuelan officials actually decided to raise the price of gasoline within the country’s own borders — by a whopping 6,000%, according to Vice News.

Relying almost entirely on oil exports for revenue, Venezuelan businesses have tanked while Americans have rejoiced at the gas pumps over the past year. Throughout the economic crisis, gas is one thing that Venezuela has had plenty of.

And still, even charging six bolivars for one liter of gas (it currently costs one bolivar) isn’t likely to change much in the country’s economy; too many people don’t even have cars.

Venezuela is currently facing debts of at least $10 billion but economists are unsure if the country will be able to pay them back as promised. In the United States, we see around 1.5 million people declare bankruptcy every year. But down in Venezuela, the whole country is virtually bankrupt.

So will it be enough to print bolivars of higher denominations? Or to raise the price of gasoline? Or to declare a state of economic emergency while still sticking to the same economic model that drove the country into this situation? Only time will tell.