 Group 6 member: Class:

BA1401 – FIN201
- Lê Trần Gia Thành ( leader)
- Huỳnh Bạch Mai
- Phạm Trần Thiên Lý
- Nguyễn Khưu Vĩ
- Võ Thị Kiều Trang
- Phạm Huỳnh Hữu Trí.

Topic: Economic of
Venezuela.
I.Introduce of venezuela.
- Population scale and currency unit:
Venezuela is one of the countries with the highest
urbanization rate in Latin America. The majority of the
Venezuelan population is concentrated in the
northern big cities, with a population of about 28
million. Venezuela's economy is based on oil, heavy
industries like aluminum and steel, and the revival in
agriculture. Oil export revenue accounts for more
than 50% of the country's GDP and accounts for
about 95% of total exports. The Venezuelan Bolivar
Fuerte is the currency in Venezuela (VE, VEN). Known
as VEF. VND 1,000 = 10.694VEF.

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 - Summary of the political situation:
Currently, Nicolás Maduro is President. However,
Venezuela is caught in a power struggle between
President Maduro and Venezuelan National Assembly
leader, Mr. Juan Guaidó. President Donald Trump
announced sanctions on the Venezuelan government,
froze Venezuelan accounts in the U.S. and banned
transactions on measured assets, the new step to
increase pressure on President Nicolás Maduro must
resign. The United States is one of more than 50
countries that does not recognize Maduro as the
legitimate president of Venezuela. Instead, the United
States supported the National Assembly head, Juan
Guiadó, who called himself an interim president in
January.
- Economy and GDP growth rate in recent
years:
The instability of oil prices is the cause of a serious
crisis in all aspects for Venezuela, causing inflation,
economic recession, shortage of basic commodities
for people and a sharp increase of unemployment,
poverty, disease, child mortality, malnutrition, as well
as crime in this country. The country is experiencing
one of the worst crises in history, with a quarter of its
30 million people in need of aid, according to the
United Nations. More than four million Venezuelans
have left the country in the past few years. The
decline in national GDP and per capita GDP from 2013
to 2017 was more severe than that of the United
States during the Great Depression of Russia, Cuba,
and Albania after the collapse of communism. In
recent years, the annual inflation rate for consumer
prices has increased by hundreds or even thousands

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 of percent, while the economy has receded at nearly
20% per year.
- Natural resources and Sales and Exports.
For mineral resources in Venezuela, it is very
diverse and rich but there are two things that are
extremely interested in this country: gold and oil
because according to the new policy of President
Nicolas Mauro, he He planned to increase the gold
mining rate to 3 times compared to last year, while
the oil he had produced was about 300 million
barrels.
Venezuela is a trade deficit country because its
structure is not like a developed economy. Venezuela
does not have a diversified production network
capable of producing products of all types and
colors ... but only focusing on primary fields,
secondary industries and services. So Venezuela has
to buy almost half of its supplies from abroad.
In the following years, Lack of investment, the
Venezuelan oil industry turned down: Venezuela
produces 3.12 million barrels of oil a day, but that
number drops to 2.95 million barrels a day. 2007, of
which the state made a profit of 1.4 million barrels;
the remainder was given away or sold at cost price,
short of money, Venezuela had to compensate by
printing money, nationalizing private enterprises,
controlling foreign exchange, and increasing
borrowing in the world financial market. . Finally, the
continuous spiral of inflation – devaluation since mid-
2012 pushed Venezuela's economy into recession
since 2014 and has now reached the bottom of the
market.

II. Reasons for weakening Venezuela's

economy.
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 - What is inflation ?
Inflation is an increase in the price of goods and
services of an economy over some time. For that
reason, inflation is also defined as a decrease in the
purchasing power of a given currency. Inflation is
borne by several conditions.
First, the price increase must be continuous. In the
process of inflation, the continuous increase in price
does not stop at a stable level.
Second, inflation implies a general increase in prices
of goods and services and inflation will increase the
prices of nearly all commodities in the economy.
Thirdly, inflation is a long-term phenomenon with
the general price increase going on continuously for a
long time. Most countries today make annual inflation
measurements. Studies show that inflation usually
lasts for years.
- The oil crisis of 1980.
 The 1980s oil crisis brought about a shrinking
economy, currency depreciation, and skyrocketing
inflation peaking at 84% in 1989 and 99% in 1996, three
years before Hugo Chávez took office. causing serious
losses to oil-exporting countries in Northern Europe, the
Soviet Union, and the OPEC bloc. Many Venezuelan fuel
companies are on the verge of bankruptcy.
Venezuela is the fifth-largest member of OPEC in terms
of oil production. Oil export revenue accounts for more
than 50% of the country's GDP and accounts for about
95% of total exports. Falling oil prices also caused OPEC
to lose their solidarity.
From 1981 to 1986, due to slow economic growth in
industrialized countries (the aftermath of the crises in
1973 and 1979), global oil demand slowed. As a result, oil
prices plummeted from 35 USD in 1981 to less than 10
USD a barrel in 1986.
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 - The government lacks leadership capacity.
The government-controlled prices and subsidy policies
under President Caldera - before President Hugo Chávez,
leading to budget deficits and government debt began to
skyrocket.
The crisis was the result of those who followed the
populist policies of the Bolivarian Revolution that began
during the Chávez administration. Through presidents
Hugo Chávez and Nicolas Maduro, Venezuela's economy
is getting worse.
The social reform programs initiated by the Chávez
government depend heavily on oil export revenues, the
mainstay of the Venezuelan economy, leading to the
country's economy. This becomes too dependent on one
resource, leading to the decline of other economic
sectors. Poverty, inflation, and deficits in Venezuela have
increased rapidly during the last years of Chavez's term.
Maduro has been criticized for focusing on public opinion,
ignoring the real problems that economists have warned
or have any ideas to improve the economic predicament.
- The level of inflation of the economy and the
unemployment rate.
In 2014, Venezuela officially entered a recession and in
November 2016 Venezuela officially entered a period of
hyperinflation. The inflation rate in 2014 reached 69%
and was the highest in the world at that time. The
inflation rate then increased to 181% in 2015, 800% in
2016, 4,000% in 2017 and 1,698,488% in 2018.
The unemployment rate is forecast to reach 44% in
2019; The IMF claims that this is the highest
unemployment rate in the world since the end of the
Bosnian War in 1995.

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 - The United States has imposed sanctions on
Venezuela and black market.
CNN reported on 5/8 that President Donald Trump
announced the United States would expand existing
sanctions on Venezuela by imposing a complete economic
embargo on the country. The embargo will freeze assets
of the Venezuelan government and related entities.
Besides, the US also prohibits economic transactions with
Venezuela, unless specifically exempted. Exemptions
include the official business of the federal government and
transactions related to the provision of humanitarian aid.
Black market of Venezuela Continuous inflation and
widespread deprivation have turned into daily Venezuelan
struggles. A dozen eggs can cost up to $ 150 on the black
market, according to CNN. A kilogram of cornflower or
pasta costs more than $ 300, and just over two pounds of
milk powder will make you $ 700 - almost half the national
minimum wage. In addition to the complexities of
statistics and naivety, this system also creates holes for
corruption and pushes the US dollar on the black market
to a price hundreds of times higher than the official
exchange rate.
- The largest creditor of Venezuela China - Russia
and the shortage of basic supplies.
Venezuela: Journey from the "giants" of South America
to giant debtors of Russia and China. Venezuela has the
largest oil reserves in the world, but today 90% of the
population lives in poverty, inflation reaches 1.3 million%,
3 million people leave the country, most residents have to
abstain. hunger, 26,000 people were killed last year, and
Venezuela even had to import oil instead of producing it.
The socialist petroleum nation is home to the largest oil
and gas reserves on the planet, but chronic corruption has
devastated its economy. Beijing and Moscow have helped
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 prevent Venezuela's collapse by continually extending the
lifeline to tens of billions of dollars over the past ten years.
Venezuela still owes Beijing $ 20 billion, and debt to
Russian-backed oil company Rosneft another $ 2.3 billion
excluding interest. (2019)
- Convergence of two trends "Dutch disease",
"Bolivar socialism".
The fact that Venezuela has a Dutch disease has great
implications for the country, reducing the competitiveness
of a country's exports and increasing imports. In the long
run, these factors can lead to unemployment, as
manufacturing jobs move to lower-cost countries. Non-
resource industries, meanwhile, suffer the loss of wealth
created by resource-based industries.
Bolivar socialism is the place with the main points such
as National independence, People's autonomy, Social
justice, Education for the whole people, Anti-corruption,
Anti-militarism, Latin American Link. Programs that bring
prosperity and happiness to the poor, increase
government control over economic activities and
nationalize companies and corporations in key economic
sectors such as oil fire, cement, steel, ... But these policies
mislead the economy, destroy the competitiveness of the
economy and go to a state of exhaustion when oil prices
fall for a long time.
- Businesses manipulate exchange rates, gain illicit
profits and citizen of Venezuela do not trust their
own currencies.
US prosecutors say a businessman laundered up to $100
million for Colombian drug trafficking groups by financing
Venezuelan companies in desperate need of dollars, in
another illustration of how criminal opportunists profit from
the socialist country’s strict currency control system.The
artificially fixed exchange rate has created not only a black
market currency exchange, but also a wealth of
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opportunities for illicit profits, and unscrupulous businesses
and government officials have spent years depleting
Venezuela’s treasury by taking advantage of the short
supply of dollars available in the country.
Due to the weakness and instability of the Bolivar, foreign
companies typically refuse to do business with Venezuelan
importers in local currency. As a result, Venezuelan
businesses must apply to the country’s currency control
agency to purchase dollars. If they are accepted, however,
these companies are able to buy US currency at the
extremely low, government-controlled exchange rates. This
system has led to endemic fraud, as importers frequently
inflate the price of shipments from abroad in order to snatch
up as many dollars as they can while trading at the
government’s fixed exchange rate. A former head of
Venezuela’s central bank has claimed over one-third of the
money — roughly $20 billion — assigned to product imports
in 2012 was siphoned off via fraudulent transactions.
The cold attitude in the aforementioned bolivar illustrates
how the Venezuelan people have lost faith in the economy
as well as the government's ability to find a way out.
A year ago, every US dollar bought about 100 bolivars on
the black market. For now, the rate is over 700 bolivars,
evidence of the collapse of confidence in the economy of the
people.
This creates a surprising difference between the virtual and
real value of goods in the market. For example, a movie
ticket costs 380 bolivars. If calculated at the state rate, it is
equivalent to 60 USD. But in essence on the black market,
the amount is only 54 cents.
III. Government measures venezuela.
- Raise wages and taxes for workers and
industries.
To address rising inflation, Venezuelan President Nicolas
Maduro recently ordered a minimum wage increase of
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275%, from 40,000 bolivars to 150,000 bolivars in the
context of the country facing hyperinflation. At the same
time the government issued a request to raise taxes on
domestic industries. This is the third time the Venezuelan
government has raised the minimum wage since the
beginning of the year until now.
- Issuing new currencies.
The Venezuelan government shifted from the "strong
bolivar" to the "bolivar" that upholds sovereignty. The new
money was discarded at zero, a “sovereign bolivar”
equivalent to a “strong 100,000 bolivar”, in addition they
issued a "Patriotic Book" which was valid as an
identification card, used to purchase basic necessities.
subsidy rates, confirmed by each election and not every
Venezuelan citizen has. If they had a patriotic book, they
would be able to buy goods at subsidized prices from the
government. Venezuela's new currency is anchored to the
Petro, a Venezuelan government-issued digital currency
that many foreign experts consider intrinsically worthless.
EX: A cup of coffee in Caracas costs 2.5 million Bolivars
before exchanging money, then after exchanging money,
the price of coffee will be 25 Bolivars.
Petro is a Venezuelan cryptocurrency that was released in
December 2017. The value of petro will be based on the
country's reserves of oil, natural gas and minerals. The
Venezuelan government expects the possibility that the
financial community will see the petro as an investment
opportunity, with strong demand to keep the currency
stable at a time when the value of the country's official
currency, Bolivar, has fallen. due to high inflation.
- Effective.
The direct government's control of cryptocurrencies not
only goes against the founding principles of the
cryptocurrency movement, Satoshi Nakamoto's is that
there is no central government, but it can undermine the

9
value of the coin. money. Before buying into petro,
investors will have to know its calculated value and its
reliability. Because the government is not considered
reliable or stable. The United States banned individuals and
organizations from buying Petro, disrupting President
Maduro's plan to evade sanctions, thereby turning the
world's first state-owned coin into a disastrous failure.
Salary increases for workers do not really bring much
effect to the current venezuela. The continuous rise in
wages has led to high unemployment, as companies have
to cut staff to reduce costs. Companies and shops must
temporarily close or increase the prices of their products.
The shocking wage increase has made the country fall
deeper into the spiral of economic crisis. According to
Venezuela's parliamentary data released in September
2018, venezuela's inflation rate has not decreased, showing
that the economic reform package of President Nicolas
Maduro has not been effective.
- The prediction of the monetary fund (IMF)
on Venezuela.
Observers predict Venezuela's inflation will continue to
rise beyond control. The International Monetary Fund (IMF)
said in June that inflation in Venezuela would reach 1
million percent this year, emphasizing that the country "is
trapped in a deep economic and social crisis". .
IMF said this South American national economy in
2018 will continue to decline for the fifth consecutive year,
down 18% compared to 2017 due to declining oil
production and unstable socio-political situation.
The IMF report also predicts Venezuela's current
account deficit will be equivalent to 6.1% of GDP this year
and 4% of GDP in 2019.
In addition, the unemployment rate is expected to be
34.3% this year and 39% next year, significantly higher
than the 27.1% in 2017.

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IV. Summary
Venezuela, a country with unstable politics and Maduro's
ineffective policies, is gradually bringing the country to a
dead end. According to economists' study, Venezuela's
economy began to decline before the oil crisis and the
continuous printing of money to address market demand
was the result of a series of Failure economic policies of
the Venezuelan government. This is not the cause of
inflation "Galloping" as today. Researchers have shown
that to save the Venezuelan economy from the present
deep hole. The government should start stabilizing the
country's politics, eliminating the black market. Invest in
other export sectors, encourage the free economy to
attract foreign investment. Reduce taxes and strengthen
investment cooperation with countries in the region.
Reference:
https://www.binance.vision/vi/economics/what-is-inflation
https://vi.wikipedia.org/wiki/Venezuela
https://www.bbc.com/vietnamese/business-46823162
https://vi.wikipedia.org/wiki/Kinh_t%E1%BA%BF_Venezuela
https://vi.wikipedia.org/wiki/Cu%E1%BB%99c_kh%E1%BB
%A7ng_ho%E1%BA%A3ng_t%E1%BA%A1i_Venezuela
https://www.bbc.com/vietnamese/world-49419951
https://vi.coinmill.com/VEF_VND.html#VND=1000
https://plo.vn/quoc-te/su-kien/my-cam-van-kinh-te-toan-dien-doi-
voi-venezuela-850305.html
https://www.dkn.tv/the-gioi/cho-venezuela-vay-hang-ty-do-la-
trung-quoc-va-nga-lo-no-kho-doi.html
https://ndh.vn/hang-hoa/7-cuoc-khung-hoang-gia-dau-trong-lich-
su-1023410.html
https://vi.wikipedia.org/wiki/Cu%E1%BB%99c_kh%E1%BB
%A7ng_ho%E1%BA%A3ng_t%E1%BA%A1i_Venezuela
https://dantri.com.vn/viec-lam/luong-co-ban-tang-60-lan-doanh-
nghiep-venezuela-choang-vang-20180820224654944.htm?

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fbclid=IwAR3UIuXaUoKRSmRaUIQuytSIEvwJKT9zfVz3YTGgX
pQvYRWAb1BCOtBVwVs
http://thoibaotaichinhvietnam.vn/pages/quoc-te/2018-10-10/imf-
du-bao-lam-phat-tai-venezuela-tang-phi-ma-vao-nam-2019-
62957.aspx?fbclid=IwAR05AeTmvs-spZg-
EOhv54pNYulbjWGhpN4PjcVG8ggXHPa2O7ceanFxnl8

The End

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