All Knowledge about Effects of Inflation in Venezuela

All Knowledge about Effects of Inflation in Venezuela

1. Unraveling the
Venezuela
Economic Crisis
Unraveling the
Venezuela
Economic Crisis
By: Harsh Singh, R.Keshav, Jeet Sen, Harsh
Sahil Singh, Sukhbir Singh

2. The Venezuela Economic Crisis has had devastating e ffects on the country's
economy, leading to hyperinflation and widespread pover ty. This presentation
aims to unravel the complex factors contributing to this crisis and explore
potential solutions.
The Venezuela Economic Crisis has had devastating e ffects on the country's
economy, leading to hyperinflation and widespread pover ty. This presentation
aims to unravel the complex factors contributing to this crisis and explore
potential solutions.

3. Understanding the roots of the crisis requires examining historical factors, such
as oil dependence and political instability. These elements have shaped
Venezuela's economic trajectory and contributed to its current challenges. We
will go through some stats to see how poor policy making, hunger of power,
and irresponsible spending can turn a healthy economy upside down.
Understanding the roots of the crisis requires examining historical factors, such
as oil dependence and political instability. These elements have shaped
Venezuela's economic trajectory and contributed to its current challenges. We
will go through some stats to see how poor policy making, hunger of power,
and irresponsible spending can turn a healthy economy upside down.

4. Causes of HyperinflationCauses of Hyperinflation
Inshort, hyperination is a very high
ination rate that accelerates quickly.
(DANGEROUS,UNEXPECTED,UNCONTROABLE1000
OPR 2000 EVEN MORE)It can be caused by a
government printing huge amounts of
new money to pay for its expenses. 
The subsequent rapid increase of prices
causes  the country’s currency to lose
value and shortages in goods to occur.

5. •Venezuelan descent into
hyperinflation
In Venezuela, the economic catastrophe began
with government price controls and
plummeting oil prices, which caused state-run oil
companies to go bankrupt. 
The government then starting printing new
money to cope, thus prices rose rapidly. WHICH
CAUSES –
1. UNEMPLOYMENT INCREASES2POPULATION
GROWTH IS AT DECADE LOW
 2. POPULATION GROWTH IS AT DECADE LOW

6. Thanks to more than 300 billion barrels or 47,69,61,88,478.4 litres of oil in
Orinoco belt, Venezuela has 18% of total global oil reserves. To understand
why even with such god gifted amount, things took u-turn we will have to
go few decades back.
Thanks to more than 300 billion barrels or 47,69,61,88,478.4 litres of oil in
Orinoco belt, Venezuela has 18% of total global oil reserves. To understand
why even with such god gifted amount, things took u-turn we will have to
go few decades back.

7. Production
Performance
Production
Performance
To convert a newly discovered oil eld
into production eld takes years. 
Future planning and quick policy making
is important here.
 But the lazy and corrupt behaviour of
Venezuelan government contributed to
the slowdown of their production
capacity over decades.

8. In 1970s Highest Venezuela produced
was 3.7 mb/d.  Which at then was 8%of
total global supplies. Then the
nationalization of oil industries
nished in 1976. Petroleos de
Venezuela(PDVSA) a govt undertaking
was born.  
From here, the downfall began,
production slowed and worsened when
OPEC slammed production cuts on its
members in 1980s due to fall in Oil
prices. 
A lile bit of privatisation was done to
improve production in 1990s and they
reached 3.4 mb/day after 1970 for the
rst time.

9. A New Chapter
In 1998, Hugo Chavez is elected as
the president of Venezuela. He was
known for his radical nationalistic
agenda for the economy.Under his
rule, public spending increased
resources got nationalized and
things improved. But his policies
were unsustainable from the
start. Venezuela was spending their
oil money like there's no tomorrow 

10. CHAVISM
Chavez's nationalist policies were very popular
that time in the country. Nationalization as a
concept is widely famous in Latin America.
Where progressive/liberal economic policies
don't hold much value to people and leaders. 
Chavez was no dierent. He eliminated
competition by nationalizing sector after
sector, imposing harsh taxes on private rms.
He started using PDVSA as a tool to win
elections. PDVSA was burdened with
social welfare work rather than
oil production with no peer
company in market.

11. A failed coup de'tat took place in 2002 in
hopes of overthrowing the govt. When meet
with resistance, Hugo responded with equal
force.
Military ocers were arrested on charges of
treason, riots took place.
Nationwide strikes happened. Workers of
PDVSA went on strike too against the
government. 18,000 them were red and
arrest warrants were issued. 
This resulted in lose of expertise and
experienced labour force. 
 

12. Problem ContinuesProblem Continues
Having survived the coup de'tat, Hugo
Chavez continues to handover projects
after projects to government companies.
Nationalization of resources continues.
Performance of their now oil-dependent
economy is geing worsens.
The collapse of the oil prices  in 2014
revealed a weakened, awed system.
Venezuela's GDP was highest in Latin
America before 1998. After Hugo's radical
policies it is now the worse performing
economy. Its public debt doubled from 28%
in 2000 to 63% of GDP in 2013.

14. Nicholas Maduro is elected as the new President of
Venezuela in 2013. But the policies introduced by Hugo
were never replaced.
The crisis worsened and people descended to streets to
protest. Like Hugo, Maduro hits back with iron st.
Human Rights violations, extra-judicial killings,
murders became a daily thing.
In response, in 2015 America and EU impose sanctions on
Maduro regime further impacting Venezuela's
economy. Venezuela was now not able to trade in dollar
eectively. It aected PDVSA's ability to do business
transactions.
Ination skyrocketed, prices shoot up, cost of living
becomes unbearable.

15. As sanctions got tighter/stricter,
Venezuela's already poor performing oil
industry started to collapse. 
Notice how till now, Venezuela's entire
focus was on its natural resources and
nationalizing them AND not on
diversifying their investment and using
the only oil producing company(PDVSA)
for social welfare work. The time they
realised it was already too late. 

16. The Venezuelan Bolivar is nothing
more than a piece of paper now.
Unemployment is at its peak,
lawlessness roams the streets.
Recent studies have shown since
Hugo took oce, the stability of the
country has only worsened, with
crime statistics geing lower year
by year. 
From a point of 26 in terms of rule
of law to .5 in 2017, this shows
rampant gang culture, gun violence
and unemployment among youth.
All due to a weak economy which
was dependent on only 1 thing i.e
OIL.

17. In an eort to control ination, black money and
smuggling, Maduro copies the Indian economy and
introduces demonetisation in 2016, just 1 month
after India implemented this decision.
But, unlike India, Venezuela was already printing
alot of money to control its skytouching ination.
Demonetisation only made things worse.

19. Damage Control
Only way forward which experts
believe for Venezuela is the path of
de-investment and accepting the
liberal side of economics and
opening their oil industry to
private players, a change in
government, a change in harsh
investment policies which have
kept investors away from
investing in Venezuela by
introducing taxes wherever
possible. Meanwhile, international
help in terms of food and water is
being sent.

20. THANK YOU !
MEN AFTER DESTROYING AN ECONOMY: