Venezuela and the International Monetary Fund

The Bolivarian Republic of Venezuela was a founding member of the International Monetary Fund in 1946.^[1] Venezuela's economy is highly dependent on oil production and exportation.^[2] This has led the economy to be prone to rapid changes given the price of oil fluctuates due to changes in demand and other macroeconomic conditions. In 2014, oil prices globally dropped considerably and Venezuela has since dealt with a significant decrease in state revenue. The economy has been contracting each quarter since then. This has caused Venezuela's Central Bank reserves to decline as a way of meeting their financial obligations.^[3] A chronic shortage of goods has occurred as well, with necessities such as medical supplies in short supply. Since 2007, Venezuela has not had official financial relations with either the International Monetary Fund or the World Bank when it paid off its debt five years ahead of schedule under Hugo Chávez.^[4] However, due to the current crisis and financial difficulties of the current administration the World Bank and IMF have stated their readiness to offer assistance if called upon.^[5][6]

Statistics

As stated, the government of Venezuela remains highly dependent on both the price and production of oil. Many industries have been nationalized as well, specifically in sectors such as banking, telecommunications, metallurgy, and mining. The high price of oil in recent decades allowed the government to embark on ambitious public programs, sustainable only when the price of petroleum was high.^[7] Due to such measures and through policies which were redistributive 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 too in the same time period.^[8] It is a member of Organization of Petroleum Exporting Countries.

The per capita income of Venezuela is $7,808 as of 2015.^[9] According to data provided by the International Monetary Fund, since 2013 the economy has shrunk 30%. Its inflation is expected to reach 720% in 2017, and the economy is forecast to contract by 7.4% in 2017.^[10] The official exchange rate is considered overvalued, the black market value of the Venezuelan Bolivar relative to other currencies is significantly less than the government rate of 10 Bolivar to $1 USD. This has affected the ability of non-oil producing sectors to remain viable.^[11] As of 2016, Venezuela in spite of having symbolically walked away still has a quota allocation of 3,722,700.^[12] The IMF constituency Venezuela is in is with six other Latin American countries and Spain.^[13]

References