Thousands of people cross into Colombia after Venezuela opened the common border to allow its people to buy food and medicine, 10 July 1016. Photo: AFP

10 July 2016 (BBC News) – Thousands of people have crossed to Colombia after Venezuela opened their common border to allow its people to buy food and medicine, officials say.

The frontier, closed by Venezuela last August as part of a crime crackdown, was to open for 12 hours.

Venezuela is going through a deep economic crisis and many say they struggle to feed their families.

Last week, about 500 Venezuelan women broke through the border controls in search of food.

Venezuelan President Nicolas Maduro ordered the border closure because, he said, the area had been infiltrated by Colombian paramilitaries and gangs.

The measure also prevents subsidised goods from being smuggled from Venezuela into Colombia.

Some 16,000 people had crossed the border between San Antonio del Tachira, in Venezuela, and Cucuta, in Colombia, an official told the BBC's Natalio Cosoy, in Cucuta.

Supermarkets were crowded with Venezuelans buying basic goods such as rice, oil and flour, which are expensive in their country because of the shortages, our correspondent added.

An unnamed woman who crossed with her husband and two young children told the Efe news agency it was "unfair" to keep the border closed.

"We are from San Antonio, and the reality is that we do not have any food to give to our children." [more]

Venezuelans flock to Colombia for food

In this 1 June 2016 photo, police stand guard by customers waiting their turn outside a supermarket to buy price-regulated groceries in the Petare shantytown in Caracas, Venezuela. Government officials blame the country's food shortage on right-wing business owners hoarding products to sow chaos, while their detractors say it's the result of chronic economic mismanagement. Some are turning to urban farming to get vegetables, an unaffordable luxury for many, back into their diets. Photo: Fernando Llano / AP Photo

By Fabiola Sanchez
4 July 2016

CARACAS, Venezuela (Associated Press) – Kelly Vega says she lost 30 pounds in three months as she focused on feeding her 6-year-old daughter rather than herself.

"We are eating two meals a day. If we eat breakfast, there's no lunch. If we have lunch, there's no dinner," she said.

This socialist country is suffering from severe food shortages that are making it hard to get enough to eat, even though Venezuela has the largest oil reserves in the world. Government officials blame the shortfalls on right-wing business owners hoarding products to sow chaos, while their detractors say it's the result of chronic economic mismanagement.

At the same time, food production and imports are down and inflation is high.

Some Venezuelans who had given up produce as an unaffordable luxury are now turning to urban farming to get vegetables back into their diets. […]

A team of researchers from three leading local universities found that 12 percent of the people in Caracas skip meals. Researchers say that is a sharp increase from a few years ago, when the price of oil had not yet crashed, and many Venezuelans still found it consistently easy to get the food they needed.

"The thing is, Venezuelans aren't used to this," said Central University professor Marianella Herrera.

Francisco Salazar, head of a community council that works in Caracas slums, says he and his neighbors are growing beets, black beans, lettuce and dozens of other vegetables in a large community garden.

But he worries it won't be enough.

"We don't have flour, we don't have pasta, we don't have rice," he said. "What we have is a Band-Aid that's not going to really solve the problem." [more]

Economic crisis bares hunger problem in Venezuela

People buy food and other staple goods inside a supermarket in Caracas, Venezuela, 30 June 2016. Photo: Mariana Bazo / Reuters

By Daniel Ofman
7 July 2016

(PRI) – Not too long ago Venezuela was an oil-rich nation, with a seemingly bright future filled with economic prospects and great potential for growth.

This is no longer the case.

Now Venezuela has an 180 percent inflation rate —  and there are shortages of food, basic goods and power.

Tulane University professor David Smilde lives in Caracas, where he also works with the Washington Office on Latin America, an NGO. He believes the immediate cause of the current crisis in Venezuela is the decline in oil prices. But he says at least 10 years of economic mismanagement are to blame, too.

“Nicolas Maduro inherited a set of policies from Hugo Chavez that were created during the good times. These were policies that were completely unsustainable, they were based on continual growth of income from oil,” Smilde said.

According to Smilde, when oil prices were high in the early 2000s the national revenue was mismanaged through the so-called "Bolivarian missions," a series of government-funded social programs which Chavez started and Maduro has continued.

The Bolivarian missions included anti-poverty initiatives, the construction of free medical clinics, educational campaigns, and the enactment of food and housing subsidies. Critics have called these initiatives irresponsible handouts that didn’t account for potential recessions. 

“Now oil revenues have dropped and Venezuela has very little productive capacity, so it can’t produce its own food really and it doesn’t have enough money to import what it needs,” Smilde said.

Venezuela is also suffering because it lacks economic diversity. During the years when oil prices were high, the country relied on oil revenues and imported most of its food. Declining oil prices took down the nation’s economy as a whole. […]

People are standing in lines for hours just to buy food at the grocery store. Others go to the streets and protest, carrying signs demanding food. "Bachaqueros," nicknamed for carpenter ants which carry big loads on their backs, sell black-market goods to fill the void and turn a profit.

They may be making the crisis more tolerable, but the government doesn’t approve of them.

“The government sees this as sabotage,” Smilde said, “sees these people as traitors and so it has tried to clamp down on this bachaquerismo.” [more]

Hugo Chavez's legacy looms over Venezuela’s economic crisis

Shipping vessels and oil tankers line up on the eastern coast of Singapore in this 22 July 2015. Photo: REUTERS / EDGAR SU

BY Roslan Khasawneh; Editing by Christian Schmollinger
5 July 2016

SINGAPORE (Reuters) – Crisis-struck Venezuela is sending two supertankers filled with fuel oil across the oceans to Singapore, in what traders described as a surprise move that could help reduce a tight market.

Shipping data in Thomson Reuters Eikon shows that two fully-laden very large crude carriers, the New Dream chartered by PetroChina and the Trafigura-chartered Britanis, are heading to Singapore with 270,000 tonnes each of fuel oil from the Bonaire Terminal owned by Petroleos de Venezuela.

Venezuelan exports of residual fuel oil have been sporadic into Singapore since the start of the year but the city-state has taken in 997,000 tonnes over the past three weeks from the country, recent government data showed.

The total amount of fuel oil arriving in Singapore from Venezuela between early June and early August is at least 1.5 million tonnes, according to International Enterprise (IE) Singapore and ship-tracking data.

In the week to June 29, net fuel oil imports into Singapore were at a 8-week high of 1.14 million tonnes, of which Venezuela contributed 563,000 tonnes, IE Singapore reported.

Traders said that the strong imports came as a surprise to some and could help ease a tight Singaporean fuel oil market expected in July as a result of fewer arbitrage flows during the past three months. […]

Venezuela is in a deep economic and political crisis. This has affected its oil output, which has fallen about 11 percent since this time last year to around 2.37 million barrels per day. [more]

Crisis-struck Venezuela sends fuel oil tankers into tight Singapore market

Venezuelan national guardsmen monitor a crowd at a state-run grocery store in Caracas. Photo: Jorge Silva / Reuters

By Gillian B. White and Bourree Lam
5 July 2016

(The Atlantic) – Most Venezuelans have been in an awful situation for quite some time: The country just came out of a period of electricity rationing that has been in effect since last April, during which rolling blackouts were common. In May, the country declared a state of emergency as inflation hit 180 percent, supermarket shelves emptied out, and food shortages became rampant.

But the country’s economic situation has gotten so dire that now, one thing seems clear: Something has to give. Many economists now believe that a default on the country’s debt—about $125 billion, $10 billion of which is due this year—or worse, an economic collapse, might be inevitable. A referendum to recall the country’s president, Nicolas Maduro, has garnered nearly 2 million signatures, and there are rumors about a restoration of diplomatic relations with the U.S. in light of the economic crisis. But a default, a recall, or improved foreign relations would do little to ease the day-to-day suffering that many Venezuelans have been experiencing as their economy spirals downward.

Venezuela is rich in oil, but its heavy dependence on exporting that oil, along with its government’s monetary and commodity-pricing policies, has pushed its economy into chaos. Globally, the price of oil has declined sharply over the past 20 or so months, which is bad news for the several countries that rely heavily on selling it. Oil exports have been responsible for 95 percent of Venezuela’s exports earnings and nearly half of its government’s income. And in 2015 alone, the revenue from oil exports and of Petróleos de Venezuela (PDVSA)—the state-owned oil-and-natural-gas company—plummeted by more than 40 percent.

But is the declining price of oil entirely responsible for the country’s devastated economy? Not quite. There are plenty of other countries that have relied heavily on oil for their economic stability, and whose situation is still not as dire as Venezuela’s. Saudi Arabia, for instance, derives 90 percent of its export revenues and around 40 percent of its GDP from the sale of oil. But the country has been seemingly more proactive and willing to change its economic strategy—namely, looking into diversifying its economy and making cuts in its public sector—in order to cope with the plummeting price of its most valuable commodity.

In Venezuela, the cratering of oil prices has effectively drained government coffers. PDVSA pours money into many of the country’s so-called “social ventures,” including stores that provide price-controlled goods—a policy’s that’s been in place since Hugo Chavez was in power. But the price ceilings on basic goods have meant that many of the country’s producers stopped making those basic goods, because they could only do so at a loss. Thus, Venezuela imports a large amount of its necessities, but the collapse in oil prices has limited its global buying power, which has produced shortages of consumer products. So black-market vendors have popped up, charging exorbitant prices. At the same time, even the legal import system has been rife with fraud, largely due to the country’s ill-conceived currency controls.

Amid all of this, Venezuela seems reluctant to use what appears to be the most logical tool in its economic toolkit to stave off a humanitarian crisis: default. Instead of holding off on making payments to foreign creditors, Venezuela’s president has remained committed to making timely payments on its debt—payments that some have called “surreal” and “suicidal” because they further sap the country’s already limited financial resources. In a May speech, President Maduro announced that he had spent nearly $36 billion repaying debts in the previous 20 months—a striking amount in a country where hard currency is now down to around $12 billion. On top of that, Venezuela still plans on paying around $1.5 billion in debt payments and more than $4 billion to PDVSA in 2016, according to Bloomberg. [more]

What’s at Stake in Venezuela’s Economic Crisis



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