Quote:Before socialism, Venezuela was prospering and had a good economy. Now, it costs 2.6 million bolivars to buy a roll of toilet paper.

However, the country's government has come up with a solution to combat out-of-control inflation: they are planning on raising the minimum wage by 3,000 percent and continuing to raise taxes.

There are multiple reasons why the country's economy is in a downward spiral, and due to empty reserves, government officials are desperate to gain as much money from their citizens as possible.

Carlos Cardenas, head of IHS Markit, claims that one main reason for the severe lack of cash-flow is sanctions being placed on Venezuela:

“The key issue about US sanctions is they've operated in two ways. One, they've targeted top individuals of the government elite in an effort to promote regime change ... the other one, and most critical for the economy, is the sanctions prevent Venezuela from restructuring its debt.”

The government has also introduced a new currency, the “sovereign bolivar,” which takes away five zeroes. President Nicolas Maduro claims the destruction of the economy is the fault of other countries, but reports show widespread government corruption.

“Regardless of the sanctions, the key issue is the authorities are still unable to present a credible economic package or programme that would take out the economy out of the current crisis — so that and,[in] combination with US sanctions, make the economic and political situation more difficult,” Cardenas said.

“The critical point here is that oil production continues to decline, international reserves are not enough to cover any type of imports, and the government is unable to cover its debts and obtain more financing,” he added.