Venezuelan Financial Stability On The Brink

Venezuelans are taking over stores and gas stations in a frenzy to make purchases before a proposed monetary overhaul goes into effect.  The change will result in the removal of five zeros from prices, with the intention of reducing hyperinflation.  However, the general public fears that this move will, in fact, make the simplest of commerce impossible.

Venezuelan President Nicolas Maduro stated the change would go into effect this Monday.  As a result, Venezuelans nationwide descended on grocery stores in an effort to stock their homes up with food and essentials.  They also swamped gas stations making sure their cars were fully gassed up as well.  The entire nation is on the verge of a full-blown panic.

Image: Bloomberg

The country’s economic base began to unravel to the point that inflation in July was calculated to have hit the 82,700 mark.  At this level, the purchasing of just basic items, such as a bar of soap or tomatoes would require piles of cash.  Cash that at this point is very difficult to acquire.

When leaving a supermarket in Maracaibo, Alicia Ramirez stated:

“I came to buy vegetables, but I’m leaving because I’m not going to wait in this line.  People are going crazy.”

This change is not expected to cause the all-out chaos that the December 2016 monetary changes caused.  It was then that Maduro decided to take the largest note out of circulation, without providing a replacement.  This move led to protests, lootings, and a massive amount of arrests, due to the country being left without a form of legal tender.

Image: Radio Free Europe

The Venezuelans have another hit to their finances on the horizon according to Maduro.  Sometime this month their gas prices will be increased.  Although when service stations owners were asked about the price hikes, they stated they were not aware of any and did not foresee any rise in price anytime soon.

All this boils down to is an unknown monetary future and even more, trying times for the people of Venezuela.  Maduro’s opponents state the inflation is a result of failed socialist policies and the indiscriminate printing of money.