TL;DR: Letters from Venezuela is an exclusive CoinSpice series, an inside look from a reporter on the ground, documenting the South American nation’s last stand among sanctions, political unrest, international condemnation and concern, economic collapse, and the specter of cryptocurrency possibly demonstrating its main use case. In this installment we go over some official economic figures released by the BCV, the Venezuelan Central Bank, and show how the gas crisis is worsening day by day, and why more of the population is giving up hope and fleeing from their ailing country en masse.



Letters from Venezuela: Economic Debacle’s Official Figures

The Venezuelan economic debacle has been a recurring subject at worldwide news outlets. WSJ, Miami Herald, The New York Times, all the most important journals have reported about the incredible downfall of a country that was not so long ago a marquee of a developing country. But this debacle was always told in the form of unofficial figures, provided mostly by actors who ran non profits, and who received outside funding. But now, after years of not offering official numbers for inflation and GDP, the BCV (Central Bank of Venezuela) opened up, illustrating the baffling downsize of the economy in just a few years.

Information released by the BCV claimed the country got over hyperinflation long ago, having an inflation index of 130,060% in the last year, according to local news outlet Efecto Cocuyo — numbers that illustrate the crisis people here are facing to eat three meals a day. But some experts have doubts about the validity of these numbers. Rafael Guzman, president of the Finance Commission of the National Assembly, claims real numbers paint a worse case. Real inflation was about 1,698,488%, one of the highest in the whole history of Latin America.

But inflation is just the tip of the iceberg in country’s economic downside: the GDP, a key metric to identify economic health, suffered heavy losses since 2013. The GDP fell 53,4% in just 5 years, effectively cutting the economy to half of what it was. And with oil exports dropping due to lack of investment, it is easy to comprehend the magnitude of the disaster that is still raging. There is also widespread skepticism as such numbers are being released after 3 years of blackout.

The answer, according to economist Victor Alvarez, is very simple. The IMF needed these numbers to ascertain economic risk for other countries to invest in Venezuela. Also, the IMF needs countries to publish numbers regularly, so Venezuela was facing the real punishment of being excluded from the IMF.

Gas Crisis Worsens: The Journey for a Gas Tank

In the last installment of Letters from Venezuela, we talked about the incredible gas crisis of an oil driven country, and how Venezuelans had to spend hours of their daily journey just to fill their gas tanks. Now, almost three weeks after that report, the situation has gotten even worse. There are people who sleep in queues waiting for stations to open the morning after. The queues go for miles and miles, and in some states there is already a rationing schema going on.

#Anzoátegui Así están estaciones de servicio. Colas que pasan los 6km. Transporte público, actividades escolares y laborales prácticamente paralizadas. Colapsó el estado por la falta de gasolina. Insólito que un estado, un país petrolero se para por combustible. Acabaron con todo pic.twitter.com/30eMeJp4XW — Antonio Barreto Sira (@BarretoSira) June 14, 2019

Protests have erupted at stations when after waiting in long queues only to find they’re unable to buy gas. And there is already a death toll associated with these events. In a state called Merida, in the west of the country, a man was gunned down during such a protest. The situation has become so dire the military is going to take control of the gas stations to guarantee steady oil supply. Another man died in the same state while waiting at a queue for 4 days.

Amidst this chaos regarding gas supply, there are still no official statements regarding what will happen with this subject in the immediate nor long term future. While government sources have called this a “fake news” attack, the reality is the problem is growing bigger and bigger each day, and authorities have not presented a supply plan to alleviate the situation.

Part of the problem has to do with the price of gas in the country: a Liter of gas is practically free. Official gas prices are less than 0.01 dollars per gallon, a high cost for the state that subsidizes almost all of the gas produced and imported.

Exodus Now a Full Blown Refugee Crisis

The difficult situation the country is going through is making more and more Venezuelans flee the country, looking for better wages and living conditions. The government does not have official numbers on the issue, but the UNHCR, United Nations High Commissioner for Refugees, offered their numbers on the Venezuelan diaspora. According to them, more than 4 million have fled the country in recent years, almost 12% of the population.

The preferred destinations for Venezuelans have to do with the whole mess the country is in. Nearest countries, of course, are the choice of most migrants due to the lack of resources to go much farther. Colombia is the most affected country, being a neighbor state and harboring 1.3 million Venezuelans. Other destinations are Ecuador, Peru, Chile, and Argentina. However these countries have problems of their own, and their infrastructures are not prepared to support the weight of constant migration.

“Latin American and Caribbean countries are doing their part to respond to this unprecedented crisis but they cannot be expected to continue doing it without international help,” Eduardo Stein declared, joint UNHCR-IOM Special Representative for Venezuelan refugees and migrants. And while there was a positive sentiment on Venezuelan refugees before, barriers are being constructed by receiving countries to filter the massive wave of migrants. Ecuador, Peru and Chile, countries that before accepted unidentified entries of Venezuelans, now are requiring passports and respective visas to allow entry.

But while this whole situation unravels, the most impacted are the migrants already on their way who do not meet such requirements and who will, most likely, be sent back.

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