Venezuela has just $10.5 billion left in foreign reserves after years of immense government overspending and a dramatic drop in international oil prices since 2014, CNN reported Wednesday. Foreign reserves represent the amount of money or assets a government has in its central bank for liabilities such as responding to humanitarian crises.
While Venezuela has witnessed a gradual decline in its reserves from $30 billion in 2001 to $20 billion in 2015, the northern South American country still has to meet approximately $7.2 billion in outstanding debt payments in 2017.
Roughly $7.7 billion of all the reserves the oil-rich country has left is in gold. In contrast, the United States had roughly $1.5 trillion in its foreign reserve as of Feb. 22, according to the Board Of Governors Of the Federal Reserve System’s website.
The price of oil internationally has been cut in half since 2014, resulting in tremendous financial impacts for Venezuela, which has more oil reserves than any other country in the world. The current economic crisis is indicative of lucrative government programs that were created when international oil prices were above $100 per barrel but became unaffordable and gutted the nation's budget when oil prices dwindled to $55.
Because oil shipments constitute more than 90 percent of Venezuela’s total exports, it appears inevitable for its federal government to eventually default on its loans. Venezuela’s economic collapse has had dire humanitarian consequences on its population as the enormous amount of inflation has made it so the government cannot import the minimal amount food, medicine, to support its citizens. The country’s imports are down 50 percent from 2016, causing medical shortages and the price of groceries to rise dramatically.
Inflation in Venezuela is expected to rise 1,660 percent in 2017 and 2,880 percent in 2018, the International Monetary Fund reported.
Venezuelan President Nicolas Maduro looked to address the problem by opening the country’s border with Colombia in July 2016 so that his citizens could have access to necessary medical and day-to-day supplies. This caused tens of thousands of Venezuelans to travel to the neighboring country hoping to find household commodities at an affordable price, The Associated Press reported on July 17, 2016.