International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
(IMF) in 1946.
Venezuela's economy
Venezuela's economy is highly dependent on oil production and
exportation
An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an ...
. 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. 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
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
after it paid off its debt five years ahead of schedule under President
Hugo Chávez
Hugo Rafael Chávez Frías (; 28 July 1954 – 5 March 2013) was a Venezuelan politician who was president of Venezuela from 1999 until his death in 2013, except for a brief period in 2002. Chávez was also leader of the Fifth Republ ...
. The IMF and World Bank have stated their readiness to offer assistance if called upon.
Venezuela has nationalized many industries, specifically in oil production,
banking
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Because ...
,
telecommunications
Telecommunication is the transmission of information by various types of technologies over wire, radio, optical, or other electromagnetic systems. It has its origin in the desire of humans for communication over a distance greater than that fe ...
,
metallurgy
Metallurgy is a domain of materials science and engineering that studies the physical and chemical behavior of metallic elements, their inter-metallic compounds, and their mixtures, which are known as alloys.
Metallurgy encompasses both the sc ...
and
mining
Mining is the extraction of valuable minerals or other geological materials from the Earth, usually from an ore body, lode, vein, seam, reef, or placer deposit. The exploitation of these deposits for raw material is based on the economic via ...
. 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
Poverty is the state of having few material possessions or little
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.
Statistics
The
per capita income
Per capita income (PCI) or total income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. It is calculated by dividing the area's total income by its total population.
Per capita i ...
of Venezuela was $7,808 as of 2015. According to IMF data, since 2013 the economy has shrunk by 30%. Predictions in 2017 stated
inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
was expected to reach 720% in 2017, and the economy was forecasted to contract by an additional 7.4%. The official
exchange rate
In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
is severely overvalued, such that the
black market
A black market, underground economy, or shadow economy is a clandestine market or series of transactions that has some aspect of illegality or is characterized by noncompliance with an institutional set of rules. If the rule defines the se ...
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. As of 2016, Venezuela, in spite of having symbolically walked away, still has an IMF quota allocation of 3,722,700 SDR.