From Metafilter:
“Background: Venezuela is a former Spanish colony, population of 30 million, GDP per capita of $15k PPP (comparison point, Malaysia is $10k PPP, Australia is $67k PPP). Primarily oil driven economy – they have the largest oil reserves on the planet and have pulled over a trillion dollars in oil profits in the past and they were the founders of OPEC. So far so good.
“The current, horrible situation: Oil represents 95% of exports and current low oil prices have plunged the country into crisis: they do not have the cash to keep running. It’s not a matter of defaulting on debt like in the case of Greece: they literally do not have the ability to continue functioning as a country.
“Projected net income from oil exports this year = $18 bil
Debt repayments = $10 bil
Remaining income = $8 bil
Imports per year = $37 bil (nearly all food is imported)
Current level of foreign reserves = $14 bil …
“This means they have only a few months left until their foreign currency runs out. They have broken their relations with the IMF, no private lenders will lend them money, and even China has lent them $50 bil and is unlikely to lend them any more.
“They no longer have any other income producing assets to seize. To generate money, the president has seized foreign oil producing companies – and any other profitable private companies – to generate cash directly for the state to reduce their budget deficit – 1,200 private companies have been seized so far and their incomes added to the state treasury. At various points they’ve seized all foreign owned oil wells and refineries and made them state property.
“Inflation is set to hit 720% this year and shortages of goods are rampant due to insufficient foreign exchange for imports. Empresas Polar SA, currently the largest private company in Venezuela, has been progressively shutting down their factories – the government has not provided them with enough USD to purchase raw materials from abroad to keep the factories running. There is talk about them being seized by the government as well. …
“Surely, you’d think, the country with the largest oil reserves in the world could do better than this. Their administration over the last few decades has seen stunning amounts of waste and corruption turn Venezuela from one of the richest emerging countries into what we see today.”
Image from CNN: Venezuelan opposition tells military that it’s time to choose