The South American country Venezuela has issued a new currency note of 1 million Bolivars to deal with the economic crisis and tackle inflation. Before this, no country in the world has printed such a big denomination note. According to the current inflation of Venezuela, the price of 1 million bolivars is half US dollars (about 36 rupees).
People, who once saw immense prosperity through oil, are now starving. The extent of devaluation in currency is that people carry notes in bags and bring back a packet of bread.
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2 lakh and 5 lakh notes will be released next week
The central bank of Venezuela has said that given the country’s economy, such a large currency note had to be issued. Two lakh Bolivar and five lakh Bolivar notes will also be issued in the next week. Currently, 10 thousand, 20 thousand and 50 thousand bolivar notes are in circulation in Venezuela. The exchange rate of 1 Indian Rupee in Venezuela is 25584.66 Bolivar.
One can purchase ½ Kg. Rice with this new note
In Venezuela, the 1 million bolivar notes have now become the largest denomination notes. However, its value is still half of a single US dollars. Only two kilograms of potatoes or half a kilo of rice can be purchased with this. The government there is planning to print big denomination notes to give ease to the people. Which will save the common people from carrying large amounts of cash.
The country is in continuous recession for the last 7 years
Venezuela’s economy is in recession for the seventh consecutive year due to the Coronavirus lockdown and the dipin oil prices. It is further speculated that the economy of this country will shrink by 20 per cent by the end of this year. The economy of this country is getting worse due to corruption.
Venezuela’s economy is getting worse
The condition of Venezuela’s economy has now become that the country has to buy goods by selling gold. In Venezuela, millions of people daily go to bed hungry. Because they do not have food to eat. According to a report, there are about 700,000 people in Venezuela who do not have the money to buy even food.
The United Nation Food Program Agency said in February that one in every three citizens of Venezuela did not have food to eat. Above that corona has further deteriorated the situation.
Why is Venezuela in such a situation?
Venezuela was once the richest country in Latin America. The resource-rich country has more oil than Saudi Arabia. There are also gold and diamond mines, but the economy revolves entirely on oil. 95% of the government’s income comes from oil.
Hugo Chavez, who became president in 1998, made many changes to the country’s system to remain in the chair for a long time. Apart from governmental and political changes, Chavez nationalised the industries, crippled the private sector, took a lot of debt in nationalization and gradually the country went into a debt trap. Chavez became the Messiah by taking money from the oil companies and spending it on the needy ones, but the Venezuelan economy became hollow eventually.
In 2013, Chavez chose Nicolas Maduro as his successor, who inherited a large debt. Politics was at its peak, with oil prices also falling. When oil became cheaper and income decreased and poverty increased, Maduro devalued the currency. Nothing positive happened with this step, on contrary, the country went into the hands of inflation. From here the economic and political division of the country started happening. A civil war-like situation also emerged in the country.
Major problems of Venezuela
- The plunging value of the currency. As of now, Venezuela has the weakest currency in the world.
- The power cut is also one of the major problems of the country. Venezuela has a lot of hydro-power potential. Electricity production fell here due to drought in 2015. The power crisis had increased so much that in April 2016, the government decided that from now on, government offices would open only on Mondays and Tuesdays.
- The problem of Hyper-Inflation is in fact the biggest issue of Venezuela. Inflation in the country is over 2,600 per cent.
- Another issue here is political instability. The Head of the state is still not clear.