Venezuela: One step forward, two steps back
by dayna.macdonald on December 2, 2013 - 4:34pm
Venezuela’s economic plans to produce oil first appeared to be a great economic and political advancement. However, the plan is starting to fall apart as costs for construction increase, as well as the increasing debt. Many (if not all) of the countries in South America were involved in this plan, however when the prices increased, countries like Guatemala backed out of the deal saying that they did not agree to higher priced rates. Furthermore, countries like Colombia and Brazil came to collect on debts that had not been paid off, leaving Venezuela economically and politically weaker. This is a social problem because with the decline, Venezuela has been involved internationally. Venezuela has reduced its foreign credit and loans by three times the amount that was used only six months ago.
The reason this is important is because they have not yet laid off the workers or reduced the salaries, which are bound to decrease as loans and subsidies disappear. The resources needed to sustain economics are beginning to look like less of an option, meaning that they will soon need to find a new economic plan to replace the dying option of oil. It is like a trickle effect: the consequences will start at the top (the government) and then sliver down until it is society that feels its impact as well.
My opinion on this matter is that they cannot let themselves be fooled any longer. Either they give it their all, or switch game plans as quickly as possible and pay off any debts they may owe. Debt is bad enough, but when that debt grows to ridiculous proportions it may be even more difficult to find economic balance. Although Venezuela wanted to export large amounts of oil, perhaps they can reduce their production to the Middle and South Americas until they gain enough economic prosperity to expand.