Venezuela is rapidly approaching the moment when economic Armageddon becomes a grim reality and there is practically nothing its government can do at this point to reverse course. Data released by the nation’s central bank indicates Venezuela has only $10.5 Billion in foreign reserves left. In 2011 the amount was $30 Billion, and by 2015 that number had diminished to $20 Billion. Venezuela will pay $7.2 Billion to countries it owes debt payments to this year, suggesting that the moment when Venezuela runs out of money entirely could arrive at some point in the near future. The government has promised not to default on its debts, but at the current pace default is a very real possibility.
As the monetary reserves are thinning, hyperinflation has resulted in food and medical shortages that are compounding the everyday trials and tribulations being endured by Venezuelans. Food, and staple goods are becoming more and more scarce. Many hospitals are unable to render more than the most basic care. The sick and elderly are dying in ever-increasing numbers. The crime rate has soared with looting and unrest now the norm in many cities. As bad as the humanitarian crisis is, the economic crisis that Venezuela is mired in bodes even worse for the nation’s long term fortunes.
An Economic collapse is imminent. Some economists say that it has already arrived and will only worsen as time goes on. My personal belief is that Venezuela is teetering on the brink of collapse, and has been for some time. Conditions have deteriorated at a rapid clip, but it will take something major for the collapse to begin in earnest. Defaulting on its debts will probably do the trick. The moment that happens, the economy will collapse entirely, bringing about a complete and irreversible collapse of Venezuela as a nation-state. There will be a massive exodus of citizens into neighboring countries, potentially causing a refugee crisis like South America has never before seen. Colombia will bear the brunt. Tens of thousands of incoming Venezuelan refugees would tax Colombia’s national infrastructure and act as a potential destabilizing force at a time when Colombia is finally getting its act together domestically.
Internationally, there is little that the world community can do but watch and wait. In the United States the number of Venezuelan immigrants entering the country over the last year has skyrocketed. Now, with the immigration laws and policies about to be restructured, there is concern in the US-Venezuelan community that the number of future immigrants will be limited. Activists in Florida are expected to petition President Trump to exclude Venezuelans from future immigration restrictions as the humanitarian crisis there appears likely to continue and worsen.