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#Venezuela Se suspende juicio político #Maduro, gobierno y oposición se reunirán para intentar frenar crisis https://t.co/LDM1lixLAJ

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#Venezuela Se suspende juicio político #Maduro, gobierno y oposición se reunirán para intentar frenar crisis https://t.co/LDM1lixLAJ https://t.co/aVfx6h0yo7

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#Venezuela Se suspende juicio político #Maduro, gobierno y oposición se reunirán para intentar frenar crisis https://t.co/LDM1lixLAJ pic.twitter.com/aVfx6h0yo7
— Orsetta Bellani (@orsettabellani) November 2, 2016

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#Venezuela Se suspende juicio político #Maduro, gobierno y oposición se reunirán para intentar frenar crisis https://t.co/LDM1lixLAJ https://t.co/aVfx6h0yo7

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#Venezuela Se suspende juicio político #Maduro, gobierno y oposición se reunirán para intentar frenar crisis https://t.co/LDM1lixLAJ https://t.co/aVfx6h0yo7

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#Venezuela Se suspende juicio político #Maduro, gobierno y oposición se reunirán para intentar frenar crisis https://t.co/LDM1lixLAJ

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These 6 charts explain Venezuela's financial crisis https://t.co/Y7bU1KyAYE pic.twitter.com/aanOH6BSwQ
— Bloomberg (@business) November 2, 2016

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It is time for Venezuela's neighbors to step in to resolve the crisis. https://t.co/vcpladzBIg
— Foreign Affairs (@ForeignAffairs) November 6, 2016

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The economic situation in Venezuela continues to go from bad to worse, and things are unlikely to get better, experts have warned.

This week, Venezuela's congress was stripped of its powers over the budget, viewed as a move by the country's President Nicolas Maduro as an attempt to consolidate power.

On top of this, the country lacks many basic goods and inflation is out of control. Year-on-year inflation is expected to reach 700 percent this year and UBS forecasts it will reach 1,500 percent next year.

"This situation is vastly deteriorating," Diego Moya-Ocampos, senior Latin America analyst at IHS Country Risk, told CNBC Thursday. "We expect the economy to contract at least 11.5 percent, inflation to hit 700 percent, already the highest in the world."

The country also faces shortages of food and medicines, he added.

"Children are dying," Moya-Ocampos added. "The elderly are dying in Venezuela, and a recall referendum against incumbent President Nicolas Maduro, which was expected to (terminate early) his mandate and pave the way for a new leadership ... Is being basically blocked."

Blame for the crisis lies on 15 years of populist policies by Venezuela's government, according to Michael Henderson, lead economist at risk analysis firm Verisk Maplecroft.

"The government has scared away private enterprise and nationalized large swathes of the domestic economy leading to stagnant growth and chronic inefficiency," he told CNBC via email on Thursday.

Federico Parra | AFP | Getty Images

"Investment in productive capacity and infrastructure has been insufficient to meet growing demand, fuelled by super-loose monetary and fiscal policy. This is a toxic mix which almost inevitably results in a rapid acceleration of inflation."

The Venezuelan economy heavily relies on oil, so the collapse in oil prices in recent years hit the country hard, resulting in a balance of payments problem. Overall, the outlook for Venezuela is grim, says Henderson.

"Regardless of whether the government is able to avoid a debt default in the near term, an inevitable macroeconomic reckoning is approaching which will have painful repercussions for ordinary households and businesses," he added.

Follow CNBC International on Twitter and Facebook.

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Inflation in Venezuela seen hitting 1,500% in 2017 as crisis goes from bad to worse

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The economic situation in Venezuela continues to go from bad to worse, and things are unlikely to get better, experts have warned. This week, Venezuela's congress was stripped of its powers over the budget, viewed as a move by the country's President Nicolas Maduro as an attempt to consolidate power.

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Venezuela's crisis causing widespread anxiety – but few can afford treatment https://t.co/OhOZFACCeA via @foxnewslatino
— Fox News (@FoxNews) October 13, 2016

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Venezuela crisis: Caracas hospital shows sorry state of health system - BBC News https://t.co/4P35515DsM

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Venezuela crisis: Caracas hospital shows sorry state of health system - BBC News https://t.co/4P35515DsM

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Venezuela crisis: Caracas hospital shows sorry state of health system - BBC News https://t.co/4P35515DsM
— Enzo Calamo (@EnzoCalamo) October 13, 2016

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Venezuela crisis: Caracas hospital shows sorry state of health system - BBC News https://t.co/4P35515DsM

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Venezuela crisis: Caracas hospital shows sorry state of health system - BBC News https://t.co/4P35515DsM

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Venezuela crisis: Caracas hospital shows sorry state of health system - BBC News https://t.co/4P35515DsM

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Venezuela's Crisis Is the Latest Example of Why Socialism Doesn't Work

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Caracas has now the highest murder rate in the world-120 per each 100,000 inhabitants in 2015. It is literally safer to walk the streets of Kabul.

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Venezuela's opposition leader says he is confident he will be able to force President Nicolas Maduro to step down.

Henrique Capriles told the BBC that 80% of the population wanted change and he would be able to collect 4m signatures and force a recall referendum.

"We are having the worst situation in our history," he said.

Oil accounts for most of Venezuela's export revenues but plummeting prices and economic mismanagement have brought the country to economic collapse.

Last month pro- and anti-government demonstrations attracted hundreds of thousands of people.
Jobless and bereft in industrial city of Valencia Going hungry in Venezuela What has gone wrong in Venezuela?
Opposition supporters blame Mr Maduro for Venezuela's economic crisis and accuse the electoral commission of delaying a referendum that could shorten his stay in power.

But Mr Capriles said he believed he could force a referendum to take place.

"We have to collect signatures," he said.

"It's four million people and that is going to be so important that it is going to open the door for the referendum and the people are going to vote and we are going to have a new government in our country.

"It looks very difficult to have it, but so important that it is going to be very difficult for Maduro to avoid the referendum."

Mr Maduro accuses the opposition of trying to stage a coup.

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Venezuela's opposition leader says he is confident he will be able to force President Nicolas Maduro to step down. Henrique Capriles told the BBC that 80% of the population wanted change and he would be able to collect 4m signatures and force a recall referendum.

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The state-run psychiatric hospital here in Barquisimeto, Venezuela, has long been a forgotten place, filled with forgotten people.

But with Venezuela suffering from a severe economic crisis, this mental institution has almost no drugs to control the afflictions tormenting its patients.

At the invitation of doctors, reporters from The New York Times visited six psychiatric wards across the country. All reported shortages of medicine, even food.

The one here, El Pampero Hospital, hasn't employed a psychiatrist in two years. It has running water for only a few hours a day, and food is scarce. Omar Mendoza, pictured above, is one of many undernourished patients. He lost half his weight this summer and is down to about 75 pounds.

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el pampero hospital (barquisimeto  venezuela)

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Inside Venezuela's Crumbling Mental Hospitals

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The state-run psychiatric hospital here in Barquisimeto, Venezuela, has long been a forgotten place, filled with forgotten people. But with Venezuela suffering from a severe economic crisis, this mental institution has almost no drugs to control the afflictions tormenting its patients. At the invitation of doctors, reporters from The New York Times visited six psychiatric wards across the country.

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Venezuelan bonds plunged the most in almost nine months after state oil company Petroleos de Venezuela SA extended an early deadline for bondholders to exchange notes due next year for longer-dated ones after investor demand fell short of the required level.

Prices on the government's $4 billion of notes due in 2027 headed for the biggest decline since January, sinking 2.62 cents to 54.5 cents on the dollar at 11:04 a.m. in New York. PDVSA's notes due in November 2017, which had been targeted in the swap proposal, tumbled 2.32 cents to 83.8 cents on the dollar.

Investors' lack of interest in the swap damped expectations that Venezuela would win more time to wait for oil prices to recover by delaying payments, which would have improved the financial outlook in a country suffering from a shortage of hard currency. PDVSA pushed the early-tender deadline for a swap of as much as $5.33 billion of bonds to Oct. 12 from Oct. 6, saying bondholder participation was "substantially less" than the minimum threshold of 50 percent.

"Repetitive delays now logically suggest that the deal is struggling," Siobhan Morden, the head of Latin America fixed income strategy at Nomura Holdings Inc., said in an e-mailed note. "The stakes are high on whether a successful transaction allows for the muddling through strategy to continue or whether an unsuccessful transaction reaffirms repayment stress through next year."

In another potential setback for the swap, ConocoPhillips sued PDVSA in a Delaware court on Thursday, claiming that terms of the swap offer that give participants new bonds backed by a lien on its U.S. subsidiary, Citgo Petroleum Corp., is set up to defraud creditors and move assets to Venezuela from the U.S.

ConocoPhillips accused PDVSA of engaging in a campaign to liquidate assets and repatriate its profits to keep them out of the hands of arbitration creditors. The country faces more than 20 other arbitration claims, exceeding $10 billion in damages, over nationalizations, according to the suit, which seeks a court order barring PDVSA from further disposing of assets.

The cost to insure Venezuela's debt against nonpayment for five years with credit default swaps rose 4 percent to 3,034.24 basis points after reaching a 10-month low on Monday.

The company wants to reduce debt due in the next 18 months by swapping the bonds for new 8.5-percent securities payable in annual installments until 2020. The exchange's upper limit is three quarters of the outstanding notes. The previous early deadline, which grants investors better terms, was 5 p.m. in New York on Thursday with a final expiration on Oct. 14.

PDVSA, as the company is known, didn't mention a new final deadline for the exchange in Thursday's statement. It said the early deadline could be changed at the company's discretion.

Years of declining output and a crash in oil prices pushed the company, as well as the government, to the brink of default. While some ratings companies have said they would treat the transaction as a default, investors had been betting that it will allow both the company and the country to keep making payments on the best-performing debt in emerging markets this year.

Prior to the swap extension, Venezuelan bonds had returned 27 percent to investors in the past two months amid optimism that the swap would succeed.

After initially offering investors $1,000 of the new securities for every $1,000 of the old bonds offered, PDVSA on Sept. 26 sweetened the deal by pledging $1,170 bonds for every $1,000 of the April 2017 securities tendered before the early deadline and $1,220 for the November 2017 bonds. After the early deadline, investors can get $50 less per $1,000.

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Venezuela Bonds Tank as PDVSA Swap `Substantially' Short of Goal

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Venezuelan bonds plunged the most in almost nine months after state oil company Petroleos de Venezuela SA extended an early deadline for bondholders to exchange notes due next year for longer-dated ones after investor demand fell short of the required level.