World News

FACTBOX - Some key facts about Venezuela's oil economy

(Reuters) - Venezuela will almost triple the amount of debt it takes on this year and trim its budget to offset lower oil revenues in the OPEC nation, leftist President Hugo Chavez said on Saturday.

The average price for Venezuelan oil so far this year is less than half its 2009 level, causing serious funding problems for the high-spending socialist president, who promises not to cut back social programs and will raise the minimum wage.

Oil-dependent Venezuela has been buffeted over the years by volatile prices. The following are some key facts about the economy:

* When crude prices soared in the 1970s, a flood of oil dollars paid for major infrastructure projects and newly wealthy Venezuelans began jetting to Miami on shopping trips. Corruption took off in a big way. But prices crashed in the 1980s and the economy began a long decline, lurching from a debt crisis to harsh IMF measures and the collapse of half of its banks in the 1990s.

* When Chavez took office in 1999, oil was below $10 a barrel. After a dizzying ascent, it peaked last year at $147 a barrel, helping Chavez fund popular social programs, foreign aid, a massive increase in imports of consumer goods and even a space satellite.

* Venezuela’s inflation last year was one of the world’s highest at 31 percent. Fueled by excess liquidity and government spending, Venezuela has traditionally suffered from quickly rising consumer prices. Inflation peaked at 103 percent in 1996 when the government of former President Rafael Caldera lifted price and foreign exchange controls.

* High oil revenues and Chavez’s policies have caused some odd economic distortions in recent years. New cars increase in value after they are sold because buyers can resell them to people willing to pay a premium to jump months-long waiting lists caused by the oil bonanza combined with the world’s cheapest gasoline and soft loans.

* The wide gap between an overvalued official exchange rate and the price of dollars on a legal parallel market has created a very lucrative business for people with access to government dollars. The strong bolivar makes imports cheap and crushes local farmers and industry -- a condition known as “Dutch disease” and common to petro-states.

Reporting by Frank Jack Daniel; Editing by Peter Cooney