As economy fails, Venezuela seeks to reopen factories
May 16, 2016, 2:39 pm

Venezuelans attend a book fair in the capital Caracas. Many say they cannot afford the most basic daily staples due to surging inflation [Xinhua]

The Venezuelan government has threatened business and factory owners with severe repercussions if they do not continue producing output as the country continues to reel from the worst economic crisis in decades.

On Friday, President Nicolas Maduro declared a state of emergency because of what he said were foreign plots to undermine his rule.

The drastic fall in commodity prices has severely hit the oil-rich OPEC-member country which has relied on energy exports for 90 per cent of its revenue.

And in the past 18 months, the government has struggled as inflation has skyrocketed and GDP growth has stagnated.

The International Monetary Fund forecasts that inflation in 2016 will hit more than 720 per cent and that the economy will contract by 8 per cent.

The sharp decline in the economy has delivered a strong blow to the leftist, socialist policies of the government and contributed to its waning popularity.

In December, the opposition Democratic Unity Roundtable (MUD) party swept into a majority in parliament delivering a resounding defeat to Maduro’s United Socialist Party of Venezuela (PSUV).

Since Maduro won an April 2013 election by a margin of only 1.5 per cent, the inflation rate has skyrocketed. When he became president, it stood at 48 per cent.

By February 2014, it jumped to over 68 per cent; with food prices quickly rising street protests broke out.

Since then, the central bank has not released inflation figures but in October, opposition parties said it had reached an annual rate of 180 per cent.

Citizens are now complaining of a severe shortage in basic amenities such as sugar, milk, and toilet paper, as well as most medicines, saying they have had to stand in long queues or buy overpriced products on the black market.

With less cash in its coffers – the strategic foreign reserves have fallen from $24 to $20 billion in recent months – the government has imported less and less commodities.

The BRICS Post with inputs from Agencies