Venezuela crisis



Context:
Venezuela is reeling under political turmoil fuelled by an economic crisis due to falling oil prices, and President Nicolas Maduro’s attempts to restrain the Opposition.

Origin of economic crisis:
In Venezuela, socialist governments have been in power since 1999, taking over the country at a time when it had huge inequality. The socialist policies which aimed to help the poor backfired. Take price controls, for example. They were introduced by President Chávez to make basic goods more affordable to the poor by capping the price of flour, cooking oil and toiletries.
But this meant that the few Venezuelan businesses producing these items no longer found it profitable to make them. The foreign currency controls brought in by President Chávez in 2003 led to flourishing black market in dollars.
Since then, Venezuelans wanting to exchange bolivars for dollars have had to apply to a government-run currency agency. Only those deemed to have valid reasons to buy dollars, for example to import goods, have been allowed to change their bolivars at a fixed rate set by the government. With many Venezuelans unable to freely buy dollars, they turned to the black market.

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Location: Thiruvananthapuram, Kerala, India

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