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The Bolivarian Republic of Venezuela was a founding member of the International Monetary Fund (IMF) in 1946. [1]
Venezuela's economy is highly dependent on oil production and exportation. [2] Venezuela is a member of the Organization of Petroleum Exporting Countries. Its economy is prone to disruption given that price of oil fluctuates rapidly. In 2014, oil prices dropped. Since then Venezuela has had to adapt to a significant decrease in state revenue. The economy has contracted each quarter since then. This caused Venezuela's Central Bank's monetary reserves to decline as well. [3] A severe shortage of goods followed, with necessities such as medical supplies in short supply. Since 2007, Venezuela has not had official financial relations with either the IMF or the World Bank after it paid off its debt five years ahead of schedule under President Hugo Chávez. [4] The IMF and World Bank have stated their readiness to offer assistance if called upon. [5] [6]
Venezuela has nationalized many industries, specifically in oil production, banking, telecommunications, metallurgy and mining. The high price of oil in recent decades allowed the government to embark on ambitious public programs, paid for by oil revenues when prices were high. Due to such measures and through redistributive policies the poverty rate was cut from 50 percent in 1998 to 30 percent in 2013, based on state figures. Inequality, as measured by the Gini Index, was reduced. [7]
The per capita income of Venezuela was $7,808 as of 2015. [8] According to IMF data, since 2013 the economy has shrunk by 30%. Predictions in 2017 stated inflation was expected to reach 720% in 2017, and the economy was forecasted to contract by an additional 7.4%. [9] The official exchange rate is severely overvalued, such that the black market value of the Bolivar is significantly less than the government rate of 10 bolivars to $1 USD. This has affected the ability of the economy to remain viable. [10] As of 2016, Venezuela, in spite of having symbolically walked away, still has an IMF quota allocation of 3,722,700 SDR. [11]
The economy of Ecuador is the eighth largest in Latin America and the 69th largest in the world by total GDP. Ecuador's economy is based on the export of oil, bananas, shrimp, gold, other primary agricultural products and money transfers from Ecuadorian emigrants employed abroad. In 2017, remittances constituted 2.7% of country's GDP. The total trade amounted to 42% of the Ecuador's GDP in 2017.
The economy of Libya depends primarily on revenues from the petroleum sector, which represents over 95% of export earnings and 60% of GDP. These oil revenues and a small population have given Libya one of the highest nominal per capita GDP in Africa.
The economy of Seychelles is based on fishing, tourism, processing of coconuts and vanilla, coir rope, boat building, printing, furniture and beverages. Agricultural products include cinnamon, sweet potatoes, cassava (tapioca), bananas, poultry and tuna.
The economy of Venezuela is based primarily on petroleum. Venezuela is the 25th largest producer of oil in the world and the 8th largest member of OPEC. Venezuela also manufactures and exports heavy industry products such as steel, aluminum, and cement. Other notable manufacturing includes electronics and automobiles as well as beverages and foodstuffs. Agriculture in Venezuela accounts for approximately 4.7% of GDP, 7.3% of the labor force and at least one-fourth of Venezuela's land area. Venezuela exports rice, corn, fish, tropical fruit, coffee, pork and beef. Venezuela has an estimated USD$14.3 trillion worth of natural resources and is not self-sufficient in most areas of agriculture. Exports accounted for 16.7% of GDP and petroleum products accounted for about 95% of those exports.
The Organization of the Petroleum Exporting Countries is an organisation enabling the co-operation of leading oil-producing countries in order to collectively influence the global oil market and maximise profit. It was founded on 14 September 1960 in Baghdad by the first five members. The 13 member countries account for an estimated 30 percent of global oil production and 80 percent of the world's proven oil reserves.
The Bolivarian Revolution is a political process in Venezuela that was led by Venezuelan President Hugo Chávez, the founder of the Fifth Republic Movement and later the United Socialist Party of Venezuela (PSUV), and his successor Nicolás Maduro. The Bolivarian Revolution is named after Simón Bolívar, an early 19th-century Venezuelan revolutionary leader, prominent in the Spanish American wars of independence in achieving the independence of most of northern South America from Spanish rule. According to Chávez and other supporters, the Bolivarian Revolution seeks to build an inter-American coalition to implement Bolivarianism, nationalism and a state-led economy.
Petrocurrency is a word used with three distinct meanings, often confused:
Petrodollar recycling is the international spending or investment of a country's revenues from petroleum exports ("petrodollars"). It generally refers to the phenomenon of major petroleum-exporting states, mainly the OPEC members plus Russia and Norway, earning more money from the export of crude oil than they could efficiently invest in their own economies. The resulting global interdependencies and financial flows, from oil producers back to oil consumers, can reach a scale of hundreds of billions of US dollars per year – including a wide range of transactions in a variety of currencies, some pegged to the US dollar and some not. These flows are heavily influenced by government-level decisions regarding international investment and aid, with important consequences for both global finance and petroleum politics. The phenomenon is most pronounced during periods when the price of oil is historically high.
Since 2 February 1999, Venezuela saw sweeping and radical shifts in social policy, moving away from the last governments officially embracing a free-market economy and liberalization reform principles and towards income redistribution and social welfare programs.
The economy of the Middle East is very diverse, with national economies ranging from hydrocarbon-exporting rentiers to centralized socialist economies and free-market economies. The region is best known for oil production and export, which significantly impacts the entire region through the wealth it generates and through labor utilization. In recent years, many of the countries in the region have undertaken efforts to diversify their economies.
Venezuela has the world's largest proven oil reserves at an estimated 304 billion barrels as of 2020. The country was one of the world's largest exporters of oil, but the oil industry saw a significant decline since its peak in 2012.
From his election in 1998 until his death in March 2013, the administration of the late Venezuelan President Hugo Chávez proposed and enacted populist economic policies as part of his Bolivarian Revolution.
The economic history of Ecuador covers the period of the economy of Ecuador in Ecuadoran history beginning with colonization by the Spanish Empire, through independence and up to modern-day.
When elected in 2013, Nicolás Maduro continued the majority of existing economic policies of his predecessor Hugo Chávez. When entering the presidency, President Maduro's Venezuela faced a high inflation rate and large shortages of goods that was left over from the previous policies of President Chávez. These economic difficulties that Venezuela was facing were one of the main reasons of the current protests in Venezuela. President Maduro has blamed capitalism for speculation that is driving high rates of inflation and creating widespread shortages of staples, and often said he was fighting an "economic war", calling newly enacted economic measures "economic offensives" against political opponents he and loyalists state are behind an international economic conspiracy. However, President Maduro has been criticized for only concentrating on public opinion instead of tending to the practical issues economists have warned the Venezuelan government about or creating any ideas to improve the economic situation in Venezuela such as the "economic war".
The 2018–present Argentine monetary crisis is an ongoing severe devaluation of the Argentine peso, caused by high inflation and steep fall in the perceived value of the currency at the local level as it continually lost purchasing power, along with other domestic and international factors. As a result of it, the presidency of Mauricio Macri requested a loan from the International Monetary Fund.
The 2010s oil glut was a significant surplus of crude oil that started in 2014–2015 and accelerated in 2016, with multiple causes. They include general oversupply as unconventional US and Canadian tight oil production reached critical volumes, geopolitical rivalries among oil-producing nations, falling demand across commodities markets due to the deceleration of the Chinese economy, and possible restraint of long-term demand as environmental policy promotes fuel efficiency and steers an increasing share of energy consumption away from fossil fuels.
The Venezuelan economic crisis is the deterioration that began to be noticed in the main macroeconomic indicators from the year 2012, and whose consequences continue, not only economically but also politically and socially. The April 2019 International Monetary Fund (IMF) World Economic Outlook described Venezuela as being in a "wartime economy". For the fifth consecutive year, Bloomberg rated Venezuela first on its misery index in 2019.
Venezuela, officially the Bolivarian Republic of Venezuela, is a country located on the northern coast of South America. It is known for its large proven oil reserves. Before oil was discovered, Venezuelan production was primarily agriculture, such as coffee and cocoa. After the first commercial drilling for oil in 1917, oil production increased drastically due to the oil boom of the 1920s and was later furthered by World War II, as Venezuela supplied oil to the United States. From 1958 to 1989, democratic leaders attempted to use the large oil revenues to invest in other industry through various policies such as import substitution and other programs designed to diversify the Venezuelan economy away from a highly specialised export range. These attempts, for the most part, were unsuccessful as Venezuelan government revenues continued to be highly volatile due to the fluctuating price of oil, which was reflected especially throughout the 1980s due to the oil price crash. After struggling with fiscal debts due to a variety of trade protection measures and other policies, the President of 1989, President Andrés Pérez, worked with the International Monetary Fund in an attempt to rectify some of the issues plaguing the Venezuelan government. Perez was eventually unsuccessful due to political instability due to proposed austerity measures, and Hugo Chávez was later elected in 1998, after a defeat of both major political parties. The Chávez government begun enacting various socialist programs, such as free education and healthcare. These programs would continue up until Chávez's death in 2013. President Nicolás Maduro, Chávez's successor, was elected on 14 April 2013 and pledged to continue Chávez's work. However, due to hyperinflation, shortages of food and medicine and political instability, about 3 million Venezuelans have fled the country since 2015.
Hyperinflation in Venezuela is the currency instability in Venezuela that began in 2016 during the country's ongoing socioeconomic and political crisis. Venezuela began experiencing continuous and uninterrupted inflation in 1983, with double-digit annual inflation rates. Inflation rates became the highest in the world by 2014 under Nicolás Maduro, and continued to increase in the following years, with inflation exceeding 1,000,000% by 2018. In comparison to previous hyperinflationary episodes, the ongoing hyperinflation crisis is more severe than those of Argentina, Bolivia, Brazil, Nicaragua, and Peru in the 1980s and 1990s, and that of Zimbabwe in the late-2000s.
Viernes Rojo in Venezuela refers to Friday, 17 August 2018, when President Nicolás Maduro announced a series of economic reforms known as "Program of Recovery, Growth and Economic Prosperity", in response to increasing hyperinflation. This event is also known as Paquetazo Rojo or Madurazo by some media outlets. These reforms include the introduction of the a new currency with five fewer zeros, increase the minimum wage based on the Petro and increase VAT to 16%. According to President Maduro, these reforms have the goal of recovering the population's salary in two years through the Economic Recovery of Growth and Prosperity program, to eliminate the fiscal deficit and to eliminate the use of paper money.
