We usually think of bankruptcies in terms of a failed business or personal debt. For example, in the United States in 2014, 97% of total bankruptcies were personal bankruptcies and 3% were filed by businesses.
However, people and corporations aren’t the only entities that can run out of money. Although it’s rare, cities, states, and even entire countries can go broke, too. That seems to be the case with Venezuela; if current trends continue, the country could completely run out of money in the next few months.
Reuters/ Jorge Silva
The country is suffering a dark, deep, and persistent economic downturn. Ever since 2014 when President Nicolas Maduro took over, the Venezuelan economy has experienced multiple crashes. The inflation rate is at a staggering 700%, and according to the International Monetary Fund, inflation is expected to grow to 1,660% in 2017 and up to 2,880% by 2018.
The country is also fast running out of their federal reserves, meaning they won’t have anything to fall back on in case the money runs dry. Venezuela only has $10.5 billion in foreign reserves left and still owes $7.2 billion in outstanding foreign debts. The situation is so bad that in order to make their debt payments for 2016, President Maduro literally had to send boats of gold over to Switzerland.
This leaves very little to tide the country over in what seems like a never-ending financial crisis. Just six years ago, Venezuela boasted a $30 billion economy, but the low price of oil on top of mismanagement by President Maduro has forced Venezuelans to go without food, medicine, and simple hygienic supplies.
For perspective, there are certain South Americans who personally have more money than the entire country of Venezuela.
Experts predict that the economy is in such a bad place that it will take anywhere between eight and 15 years to even make a turnaround. There are no jobs to be had, and there is no food to eat. So what are Venezuelans expected to do while they wait for change to happen?
Move to the United States, it seems.
The United States has the most Venezuelan immigrants compared to any other country in the world, and lately the flow of migrants has moved entirely in one direction. Each year, more than 30 million U.S. citizens travel overseas for leisure purposes, but few of them are visiting Venezuela anymore, where residents have to travel across country borders just to stock up on necessities like toilet paper.
The United States remains an attractive destination for immigrants, and not just because it’s possible to actually buy toilet paper, food, and medicine there. The U.S. economy has been adding hundreds of thousands of new jobs monthly. Construction jobs are being created especially fast, and the country has about 7.8 million construction industry production workers.
It is important to note that Venezuelan-Americans are more likely than Americans of any other demographic to have attended college, and a full 70% of this demographic speaks fluent English. But while immigrating to the United States may be a good idea for many, most Venezuelans simply cannot afford to pack up and move.
What’s the cause of all this unrest and economic instability? Maduro’s economic officials blame runaway inflation and exorbitant prices on falling oil prices, which is one of Venezuela’s main exports. The president is also blaming the brunt of the situation on an “economic war” waged by capitalist powers such as the United States. President Maduro and his Foreign Minister Delcy Rodríguez have publicly stated that the United States was directly responsible for multilateral aggression against the Venezuelan economy, including but not limited to international drug trafficking operations.
So far, they have not offered evidence to back up those bold claims.
For now, it is a waiting game to see when exactly the money will run out for Venezuela. But don’t worry, until then President Maduro will continue to speak to deceased president Hugo Chavez, who reportedly comes and whispers to him in the form of a tiny bird.