Page 9 - Preliminary Report on the Venezuelan Migrant and Refugee Crisis in the Region

destroyed, and continues to destroy, the value of Venezuelans earnings and savings. The

International Monetary Fund (IMF) estimated that hyperinflation topped 1,370,000 percent by
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end-2018 which means that nominal prices are doubling every 26 days.

The 2014 drop in oil prices may have made the crisis worse but it was not its primary cause. On

the contrary, the humanitarian crisis is the direct upshot of economic policies implemented

between 1999 and the present time. If oil prices were the main cause of the crisis, an
improvement would have been seen in Venezuelan living standards with the moderate

recovery of the oil price in early 2016. However, the humanitarian situation in the country

continues to worsen, partly because of the implosion of the country’s oil-producing capacity,
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which fell from 3.5 million barrels per day (mbpd) in 1999 to just over 1 mbpd at end-2018. To

some degree, the country’s worsening shortages can be attributed to the regime’s decision to
service for years the overwhelming foreign debt with international banks, at the expense of

plowing oil revenues into the country’s productive sector so that they could continue importing

intermediate and final goods in the form of food and medicines.

Despite the deteriorating humanitarian conditions in the country, the regime remains unable or

unwilling to adopt suitable policies to improve the situation. On August 20, 2018, the regime

announced that it was knocking five zeros off the currency, the “Strong Bolivar” (Bolívar

Fuerte), and creating the “Sovereign Bolivar” (Bolívar Soberano), along with other measures,
such as an increase in the minimum wage and the elimination of a number of gasoline price

subsidies. Unless significant corrections are made to the profound distortions in the Venezuelan

economy, the situation will continue to grow worse.

16 Diario El Universal. “FMI prevé hiperinflación de 1.370.000% al finalizar 2018.” El Universal, December 20,
2018, http://www.eluniversal.com/economia/28694/fmi-preve-hiperinflacion-de-1370000-al-finalizar-
2018.
17 Garcia, Ariadna. “Así cayó la producción de crudo de Pdvsa durante el 2018,” TalCual, December 24, 2018,
http://talcualdigital.com/index.php/2018/12/24/asi-cayo-la-produccion-de-crudo-de-petroleos-de-
venezuela-durante-2018/.

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