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Page added on February 28, 2015

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Venezuela’s oil economy in dire straits

Public Policy

Venezuela stands out in terms of regional economies affected most by the weak crude oil market, a research note from the International Monetary Fund said.

The price for Brent crude oil, the global benchmark, is up about 20 percent since the beginning of February, but nearly 40 percent below June 2014 levels. The IMF said the low price of crude oil is a net benefit to countries that rely on importers as the savings spills over to consumer pocketbooks. For net exporters, the weak market is creating fiscal pressures.

“One country that stands out is Venezuela, which had been experiencing severe economic imbalances before oil prices began to fall and now finds itself in an even more precarious position,” a note published Thursday by the IMF said.

The Central Bank of Venezuela in December said the collapse in oil prices was in part to blame for a 2.3 percent drop in third quarter gross domestic product, sending the country into a formal recession.

High inflation in the country is eroding consumer purchasing power, which in turn has led to frustration with the administration of President Nicolas Maduro.

MarĂ­a Corina Machado, a former assemblywoman who helped lead protests against Maduro last year, called on Pope Francis to step into a fracturing Venezuela. Roberto Enriquez, president of the opposition Copei Party, is to meet with IMF and World Bank leaders during the weekend, saying Thursday the Maduro government “has mortgaged the country.”

The IMF said the economic prospects for the Venezuelan economy are grim.

“The fiscal position of Venezuela will suffer the most from the decline in world oil prices, as its public sector derives a large share of its fiscal revenues from oil exports,” it said. “In addition, the domestic price of gasoline is expected to remain close to zero, which virtually eliminates any potential revenues from domestic sales.”

3 Comments on "Venezuela’s oil economy in dire straits"

  1. Plantagenet on Sat, 28th Feb 2015 12:23 pm 

    Venezuela would be a wealthy oil petrostate if not for the nutty socialist policies of Chavez and now Maduro.

    Just as the Castros turned Cuba from the wealthiest country in the Latin America to one of the very poorest, the socialists in Venezuela have accomplished the impossible by impoverishing the people of the largest oil producing country in latin America.

  2. BobInget on Sat, 28th Feb 2015 12:36 pm 

    Since this article published, China stepped up to protect its existing 40 Billion dollar ‘investment’ and ‘lent’ Venezuela 20 Billion additional US dollars.

    1) Permitting Venezuela’s future oil production to fall into Chinese hands is perhaps one of the biggest financial blunders of this young century.

    2) Except on these pages (
    this blunder is NEVER mentioned abroad.

    Like agreeing Climate Change is real in

    Like understanding why the US is about to invade Iraq for the third time?

    Like explaining to a dead US Marine’s mom, “he died to assure a constant flow of ME oil”

    3) All we read about is how low oil prices are
    helping importing countries and harming exporters. I’ll remind you (once again)
    low oil prices are temporary. Meaning,
    even a few more months or years are meaningless when compared to decades.

    4) Losing Venezuelan crude oil imports, at least at a current levels, will be disastrous
    for the US economy.

    5) If as reported, Israel is permitted air-space
    to bomb another Muslim nation, Saudi Arabia’s supreme political position in the Islamic world will quickly erode. Even if
    Israel doesn’t do the deed, Islamists world wide will question the current Royal’s
    abilities to protect sacred land-marks.

    6) As Saudi Arabia struggles with religious
    politics, enemies on borders, Russia, Iran, Venezuela, Algeria, Ecuador, possibly Iraq will form a new OPEC version 3.0
    Iraq will

  3. Kenz300 on Sun, 1st Mar 2015 8:51 pm 

    Putting all your eggs in one basket is never a good idea…….

    Venezuela’s economy is OIL and only OIL…….

    Every country needs to diversify their economies..

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