Editing Economy of Venezuela (section)

=== 1960s–1990s ===
{{see also|Viernes Negro|Venezuelan banking crisis of 1994}}
Buoyed by a strong oil sector in the 1960s and 1970s, Venezuela's governments were able to maintain social harmony by spending fairly large amounts on public programs including health care, education, transport and food subsidies. Literacy and welfare programs benefited tremendously from these conditions.<ref>{{Cite book |last1=Márquez |first1=Laureano |title=Historieta de Venezuela |last2=Sanabria |first2=Eduardo |publisher=Gráficas Pedraza |publication-date=November 2018 |pages=111–115 |chapter=La democracia pierde energía |author-link=Laureano Márquez}}</ref> The first tenure of [[Carlos Andrés Pérez]] from 1974 to 1979 benefited from the [[1970s energy crisis]], tripling the amount of public spending and nationalizing the oil industry, establishing [[PDVSA]].<ref>Yergin 1990, p. 767</ref><ref name=":7">{{Cite journal |date=2021-10-21 |title=Chávez's Bolivarian Republic Viewed With a Quality Lens |url=https://articlegateway.com/index.php/JMPP/article/view/4679 |journal=Journal of Management Policy and Practice |language=en |volume=22 |issue=3 |pages=2–3 |doi=10.33423/jmpp.v22i3.4679 |issn=1913-8067}}</ref><ref name=":11">{{Cite journal |last1=McCoy |first1=Jennifer L |last2=Smith |first2=William C. |date=Summer 1995 |title=Democratic disequilibrium in Venezuela |journal=[[Journal of Interamerican Studies and World Affairs]] |volume=37 |issue=2 |pages=113|doi=10.2307/166273 |jstor=166273 }}</ref> He also increased government debt significantly, nationalized the iron industry, created new state-owned companies, nationalized the central bank and replaced its board with cabinet members, eliminating the bank's independence as a result. His government was also allowed to establish the first minimum wage and salary increases with an [[enabling act]] approved by the [[Congress of Venezuela|National Congress]]. Pérez was accused of excessive and disorderly public spending.<ref name=":7" /> Venezuela's external debt grew from $2 billion in 1972 to $33 billion by 1982.<ref name=":11" />

Venezuela's economic situation was reversed when [[1980s oil glut|oil prices collapsed during the 1980s]]. [[Luis Herrera Campins]] was elected just as the oil prices collapsed, with the economy experiencing turmoil throughout his tenure.<ref name=":8">{{Cite news |date=2024-02-23 |title=Luis Herrera Campins |url=https://www.thetimes.com/comment/register/article/luis-herrera-campins-8wxmtzw5ff5 |access-date=2024-02-23 |work=[[The Times]] |language=en |issn=0140-0460}}</ref><ref name=":9">{{Cite web |title=Luis Herrera Campíns {{!}} Venezuelan leader, politician, reformer {{!}} Britannica |url=https://www.britannica.com/biography/Luis-Herrera-Campins |access-date=2024-02-23 |website=[[Encyclopædia Britannica]] |language=en}}</ref> The economy contracted and [[inflation]] levels (consumer price inflation) rose, remaining between 6 and 12% from 1982 to 1986.<ref name=FTWD>{{cite book|last1=Heritage|first1=Andrew|title=Financial Times World Desk Reference|date=2002|publisher=Dorling Kindersley|isbn=978-0789488053|pages=618–621}}<!--|access-date=2 February 2015--></ref><ref name=inflation>[http://www.indexmundi.com/venezuela/inflation_rate_(consumer_prices).html "Venezuela Inflation rate (consumer prices)"]. Indexmundi. 2010. Retrieved 16 August 2010.</ref> Policies implemented by Herrera to reduce inflation and reverse increased government spending were not effective, resulting with the election of [[Jaime Lusinchi]] in the [[1983 Venezuelan general election]].<ref name=":8" /><ref name=":9" /> The Lusinchi administration continued strict [[foreign exchange controls]] and excessive spending while oil prices continued to decrease.<ref>{{Cite news |last=Neuman |first=William |date=2014-05-24 |title=Jaime Lusinchi, Ex-Leader of Venezuela, Dies at 89 |url=https://www.nytimes.com/2014/05/24/world/americas/jaime-lusinchi-ex-leader-of-venezuela-dies-at-89.html |access-date=2024-02-23 |work=[[The New York Times]] |language=en-US |issn=0362-4331}}</ref> Lusinchi focused the nation's funds on paying foreign debtors, sending $15 billion out to international lenders from 1985 to 1988 to tend the remaining $32 billion of debt.<ref name=":10">{{Cite journal |last=Ewell |first=Judith |date=March 1989 |title=Debt and Politics in Venezuela |journal=[[Current History]] |volume=88 |issue=536 |pages=121–124, 147–149|doi=10.1525/curh.1989.88.536.121 }}</ref> By the end of his presidency, the public began to suffer from inflated prices and shortages of basic goods.<ref name=":10" />
[[File:Caracazo looting 1.png|thumb|left|People looting stores during the [[Caracazo]] in 1989]]
[[Carlos Andrés Pérez]] based his campaign for the [[1988 Venezuelan general election]] in his legacy of abundance during his [[Carlos Andrés Pérez#First term as president|first presidential period]]<ref name="Marquez131">{{Harvsp|Márquez|Sanabria|2018|p=131}}</ref> and initially rejected liberalization policies.<ref name=":22">{{Cite magazine |last=Fastenberg |first=Dan |date=2011-01-10 |title=Carlos Andrés Pérez |url=http://content.time.com/time/magazine/article/0,9171,2040189,00.html |url-status=live |archive-url=https://web.archive.org/web/20210929074617/http://content.time.com/time/magazine/article/0,9171,2040189,00.html |archive-date=September 29, 2021 |access-date=2021-04-09 |magazine=[[Time (magazine)|Time]] |issn=0040-781X}}</ref> Venezuela's international reserves were only US$300&nbsp;million at the time of Pérez' election into the presidency; Pérez decided to respond to the debt, public spending, economic restrictions and [[rentier state]] by liberalizing the economy.<ref name="Marquez131" /><ref name=":12">{{Cite web |title=Venezuela's Chavez Era |url=https://www.cfr.org/timeline/venezuelas-chavez-era |url-status=live |archive-url=https://web.archive.org/web/20220517003924/https://www.cfr.org/timeline/venezuelas-chavez-era |archive-date=May 17, 2022 |access-date=2021-04-09 |website=[[Council on Foreign Relations]]}}</ref><ref name=":22" /> He announced a [[Technocracy|technocratic]] cabinet and a group of economic policies to fix macroeconomic imbalances known as ''{{ill|El Gran Viraje|es}}'' ({{langx|en|The Great Turn}}), called by detractors as ''El Paquetazo Económico'' ({{langx|en|The Economic Package}}). Among the policies there was the reduction of fuel subsidies and the increase of public transportation fares by thirty percent (VEB 16 [[Venezuelan bolívar]]es, or US$0.4).<ref name="Marquez132">{{Harvsp|Márquez|Sanabria|2018|p=132}}</ref><ref name="Rivero102">{{Harvsp|Rivero|2011|p=102}}</ref><ref name="margarita_l_m_2003_p120-1">Margarita López Maya, 2003. "The Venezuelan Caracazo of 1989: Popular Protest and Institutional Weakness", ''Journal of Latin American Studies'', Vol.35, No.1 (2003), pp 120-121 (See #Further reading).</ref> The increase was supposed to be implemented on 1 March 1989, but bus drivers decided to apply the price rise on 27 February, a day before payday in Venezuela. In response, protests and rioting began on the morning of 27 February 1989 in [[Guarenas]], a town near Caracas;<ref name="IACtHR">[http://www1.umn.edu/humanrts/iachr/C/58-ing.html El Caracazo Case, Judgment of 11 November 1999] {{Webarchive|url=https://web.archive.org/web/20160604024351/http://www1.umn.edu/humanrts/iachr/C/58-ing.html|date=June 4, 2016}}, Inter-American Court of Human Rights, accessed 1 May 2007</ref> a lack of timely intervention by authorities, as the {{ill|Caracas Metropolitan Police|es|Policía Metropolitana de Caracas}} was on a [[Strike action|labor strike]], led to the protests and rioting quickly spreading to the capital and other towns across the country.<ref name=":7" /><ref name=":02">{{Cite journal |last1=Lander |first1=Edgardo |last2=Fierro |first2=Luis A. |date=Jul 1996 |title=The Impact of Neoliberal Adjustment in Venezuela, 1989-1993 |url=http://journals.sagepub.com/doi/10.1177/0094582X9602300304 |journal=Latin American Perspectives |language=en |volume=23 |issue=3 |pages=50–73 |doi=10.1177/0094582X9602300304 |issn=0094-582X}}</ref><ref name="Rivero109">{{Harvsp|Rivero|2011|p=109}}</ref><ref name="GUARD1992">{{cite news |last1=Branford |first1=Sue |date=5 February 1992 |title=Hugo Chavez fails to overthrow Venezuela's government |url=https://www.theguardian.com/world/2016/feb/05/hugo-chavez-venezuela-failed-coup-1992 |access-date=7 February 2016 |agency=The Guardian}}</ref><ref name=":22" /><ref name=":12" />
[[File:CANTV_old_logo.svg|left|thumb|CANTV's old logo, state telecommunications company privatized in 1991.]]
By late 1991, as part of the economic reforms, Carlos Andrés Pérez' administration had sold three banks, a shipyard, two sugar mills, an airline, a telephone company and a cell phone band, receiving a total of US$2,287&nbsp;million.<ref name="Rivero180">{{Harvsp|Rivero|2011|pp=180–181}}</ref> The most remarkable auction was [[CANTV]]'s, a telecommunications company, which was sold at the price of US$1,885&nbsp;million to the consortium composed of American [[AT&T]] International, General Telephone Electronic and the Venezuelan [[Electricidad de Caracas]] and [[Mercantil Banco|Banco Mercantil]]. The privatization ended Venezuela's monopoly over telecommunications and surpassed even the most optimistic predictions, with over US$1,000&nbsp;million above the base price and US$500&nbsp;million more than the bid offered by the competition group.<ref name="Rivero179">{{Harvsp|Rivero|2011|p=179}}</ref> By the end of the year, inflation had dropped from 84% in 1989 to 31%,<ref name="inflation" /> Venezuela's international reserves were now worth US$14,000&nbsp;million and there was an economic growth of 9% (called as an "Asian growth"), the largest in Latin America at the time.<ref name="Rivero180" /><ref name="Disaster averted in Venezuela">{{Cite news |date=5 February 1992 |title=Disaster averted in Venezuela |work=[[Montreal Gazette]] |pages=B2}}</ref><ref name=":03">{{Cite journal |last1=Lander |first1=Edgardo |last2=Fierro |first2=Luis A. |date=Jul 1996 |title=The Impact of Neoliberal Adjustment in Venezuela, 1989-1993 |url=http://journals.sagepub.com/doi/10.1177/0094582X9602300304 |journal=Latin American Perspectives |language=en |volume=23 |issue=3 |pages=50–73 |doi=10.1177/0094582X9602300304 |issn=0094-582X}}</ref><ref name=":32">{{Cite book |last=DiJohn |first=Jonathan |title=The Political Economy of Anti-Politics and Social Polarization in Venezuela, 1998-2004 |date=December 2005 |publisher=[[London School of Economics]] |pages=14–15 |language=en}}</ref> While foreign debtors were repaid and the economy grew, by 1992, the majority of economic benefits were experienced by the upper class while middle to lower classes faced increased poverty and high unemployment rates between ten and forty percent.<ref name="Disaster averted in Venezuela"/>{{Verify source|date=March 2024}}<ref name=":032">{{Cite journal |last1=Lander |first1=Edgardo |last2=Fierro |first2=Luis A. |date=Jul 1996 |title=The Impact of Neoliberal Adjustment in Venezuela, 1989-1993 |url=http://journals.sagepub.com/doi/10.1177/0094582X9602300304 |journal=Latin American Perspectives |language=en |volume=23 |issue=3 |pages=50–73 |doi=10.1177/0094582X9602300304 |issn=0094-582X}}</ref>{{Verify source|date=March 2024}}<ref name=":322">{{Cite book |last=DiJohn |first=Jonathan |title=The Political Economy of Anti-Politics and Social Polarization in Venezuela, 1998-2004 |date=December 2005 |publisher=[[London School of Economics]] |pages=14–15 |language=en}}</ref>{{Verify source|date=March 2024}}

Overreliance on oil exports and a fractured political system without parties agreeing on policies caused many of the problems.<ref name="DRAGONp5">{{cite book|last1=Corrales|first1=Javier|last2=Penfold|first2=Michael|title=Dragon in the Tropics: The Legacy of Hugo Chávez|date=2015|publisher=[[Brookings Institution Press]]|isbn=978-0815725930|page=5}}</ref> By the mid-1990s, Venezuela under President [[Rafael Caldera]] saw annual inflation rates of 50–60% from 1993 to 1997, with the country suffering a [[Venezuelan banking crisis of 1994|banking crisis]]. In 1998, the economic crisis had grown even worse. Per capita GDP was at the same level as 1963 (after adjusting 1963 dollar to 1998 value), down a third from its 1978 peak; and the purchasing power of the average salary was a third of its 1978 level.<ref>Kelly, Janet, and Palma, Pedro (2006), "The Syndrome of Economic Decline and the Quest for Change", in McCoy, Jennifer and Myers, David (eds, 2006), ''The Unraveling of Representative Democracy in Venezuela'', [[Johns Hopkins University Press]]. p. 207</ref>