Venezuela: Economic Overview

Global Finance, January 1997 | Go to article overview

Venezuela: Economic Overview


ECONOMIC OVERVIEW

Venezuelan President Rafael Caldera in April 1996 announced a series of fiscal and monetary reforms calculated to restore economic growth. Major measures implemented include increasing the price of gasoline fivefold; eliminating foreign exchange controls; establishing currency convertibility under a managed float system; freeing interest rates; eliminating most price controls; increasing the wholesale tax from 12.5% to 16.5%; and stepping up the timetable for the government's privatization program. The adoption of these reforms led to approval by the International Monetary Fund for a standby agreement to provide the country with financial assistance for an estimated $1.4 billion.

While the economy is too narrowly dependent on the oil industry, the country does well when oil prices are firm. Indeed, the fourth-quarter 1996 surge in oil prices was estimated to translate into an extra $3 billion in foreign income.The government has reiterated its plans to use excess oil profits to pay off debt, a strategy for managing the additional oil income and avoiding inflation and additional pressure on the bolivar's exchange rate.The oil profits permitted the government to avoid drawing down a $500 million tranche from its IMF standby program. One indication that the international markets support Venezuela's fiscal adjustment program was the Deutschemark bond issue, worth about $420 million, placed in Germany in September.

FOREIGN INVESTMENT CLIMATE

The country's accelerated privatization program offers opportunities to investors in the scheduled sale of aluminum companies, electric utilities, a steel company, banks, and hotels. In a US initial public offering in November, some $100 million worth of the government's 49% share of CANTV, the national telephone company, was purchased by GTE, a long-standing investor in Venezuela. Overall, the government raised about $1 billion through the CANTV sale, the country's largest privatization in several years.

Positive expectations for the government privatization program have encouraged investors to buy stocks in anticipation of rising investment in the Caracas stock market.Average stock prices have increased more than threefold since September 1995.

Several sectors continue to attract foreign investment, including oil and mining. Texaco and Phillips Petroleum, for example, are in talks with the Atlantic Richfield joint venture with state company Corpoven to invest in a $3.5 billion crude oil exploration and development project. And in mining, the Andean Development Corporation approved a $50 million loan for Placer Dome's Las Cristinas gold mine project in Bolivar state.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Venezuela: Economic Overview
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.