Chavez Economy

Description

Economic Policies

When Hugo Chavez became President of Venezuela in 1999, he inherited a country that was rich in natural resources but had a poor economy. Chavez would have to inact policies that would combat the problems of increasing poverty, inequality in land and income distribution, and foreign debt. Chavez has referred to his economic policies as "Socialism in the 21st Century".

1. Currency Control Systems
   • In order to prevent capital flight in Venezuela, President Hugo Chavez has used many forms of currency controls. Chavez has used tactics of suspending all trading of the Venezuelan national currency, the bolivar, as well as imposing a fixed exchange rate to protect foreign reserves and to keep the economy out of the control of foreign investors who would take advantage of the country. Credit Card spending by abroad Venezuelans have been limited to $2,000 a year.
2. Price Controls
   • Since 2003, President Chavez has put strict price controls on basic food items in order to curb inflation. Such items include coffee, beans, powder milk, and sugar.
3. Banking Controls
   • Private Banks must lend 1/3 of their of their loans to agriculture, micro, tourism industry and mortgage clients at below-market rates in order to stimulate these sectors of the economy.
4. Tax Collection
   • Tax collection has increased under President Chavez by requiring foreign and domestically-owned companies to pay Venezuelan taxes.
5. Exapropriation
   • Strengthening laws on unused land was a major economic policy enforced by President Chavez. The government has used laws to either exapropriate or tax unused private property. The exapropriated land would either be turned into agricultural cooperatives or handed over to small farmers. Taxes collected would be used in the form of subsidys to benefit the farmers of Venezuela.
6. De-Privatization of the Petroleum Industry
   • Chavez has used policies to curb the recent trend of privitization of the Venezuelan state-owned petroleum industry, Petroleos de Venezuela. By doing this, he has strengthened the president's control over the design and execution of oil strategy as well as made the state the sole beneficiary of oil revenues.

Economic Statistics

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