| Huge wealth inequality is a major feature of | | | | exporting, primary goods. |
| Venezuelan society. This continues to undermine | | | | The main unit of currency in Venezuela is the Bolivar. In |
| sustainable development and contributes to political | | | | February 2002 the Venezuelan government abolished |
| instability. It already looks unlikely that Venezuela will | | | | the exchange rate controls and the Bolivar fell 25% |
| meet all of its Millennium Development goals (1990 - | | | | against the US dollar. The Bolivar has continued to |
| 2015) on poverty reduction despite the reforming zeal | | | | depreciate against the dollar and the average annual |
| and promises of the current administration. | | | | exchange rate in 2005 was 2,090 Bolivar's per US$, |
| This explains the popularity of reforms designed to | | | | five times in 1996 when it stood at 417 Bolivar's per |
| bring about a less unequal society in opposition to | | | | US$. |
| powerful vested interests in maintaining the status quo. | | | | Surprisingly, given the dominance of the oil industry, |
| The current administration has labelled the reform and | | | | Venezuela sources two thirds of its electricity from |
| poverty reduction agenda as the "Bolivarian | | | | hydroelectric plants. However it is still a major emitted |
| Revolution" and is using oil industry profits to finance | | | | of carbon dioxide due to its oil industry. Mining |
| social programmes aimed at reducing poverty. | | | | operations especially illegal mining is causing |
| The Venezuelan economy is dependent on its oil | | | | environmental damage in rainforests and river courses. |
| industry and approximately one third of its Gross | | | | Indigenous communities face the destruction of their |
| Domestic Product (GDP) and more than 50% of | | | | way of life and violence from the mining industry, and |
| government revenues are generated from oil and its | | | | require greater protection from the state. Bari, Yukpa |
| derivatives. The government has made efforts to | | | | and Wayuu indigenous people from the state of Zulia, |
| diversify into the exploitation of other mineral reserves | | | | many of whom voted for the Fifth Republic, held a |
| including iron, aluminium, coal, and cement; and is trying | | | | demonstration in Caracas against coal mining in Sierra |
| to close the infrastructure gap in transportation and | | | | de Perija in 2005. |
| energy supply. | | | | Gold mining is causing mercury contamination, |
| The government is also privatising loss making state | | | | excessive sedimentation and deforestation. In July |
| owned enterprises and seeking foreign investment in | | | | 2005 the Minister of Environment and Resources, |
| petrochemical, mining, forestry and tourism - albeit with | | | | Jacqueline Faria indicated that the government was |
| a strict emphasis on state control of assets. Tax | | | | intending to ban mining in the state of Amazonas and |
| collection is being improved and now accounts for the | | | | revise mining operations in the state of Bolivar. Mining |
| other 50% of governmental revenue. | | | | operations are banned along the Caroni river due to |
| GDP has risen by more than 600% since 1996 | | | | high levels of mercury and cyanide. Illegal miners are |
| reaching 206,125 billion Bolivar's in 2004. The figures for | | | | generally vulnerable people who are extremely poor |
| 2001 and 2002 would have been higher had it not | | | | and work in dangerous conditions. Any long term |
| been for the nine week national strike and general shut | | | | solution to stop illegal mining must provide alternative |
| down which affected industrial production. During this | | | | employment for miners. |
| period economic activity and oil output fell dramatically | | | | Whilst devastating floods hit northern Venezuela in |
| but have recovered since. For 2005 the official GDP | | | | 1999, water shortages have affected the country in |
| exchange rate figure is expected to be around $116.2 | | | | more recent years. The government is therefore |
| billion which represents an annual growth rate of over | | | | encouraging domestic consumers to be more careful. |
| 9%. | | | | At present the cost of water in Venezuela is 700 |
| Other Latin American countries have been | | | | Bolivar's per 1,000 litres but the government is indicating |
| experiencing similar gains and the economic outlook for | | | | that this price will increase. Currently only 21% of |
| the whole region is positive for the short to medium | | | | sewage is properly treated but the government claims |
| term. If the current social and anti poverty policies | | | | that it will increase this to 40% by 2010. |
| prove effective, barriers to economic participation | | | | Lake Maracaibo faces many environmental threats |
| should lower and this in turn will increase GDP and tax | | | | including pollution from oil tankers, excessive growth of |
| revenues. However unemployment has hovered | | | | duckweed which thrives on nutrients carried |
| stubbornly high for the last decade and around 12% of | | | | downstream and subsidence as a result of |
| the 12 million strong workforce were unemployed in | | | | hydrocarbon extraction in the Maracaibo basin. Pollution |
| 2005. | | | | from industry has also compromised Lake Valencia |
| Consumer prices in Venezuela were high in the 1990s | | | | and the government is trying to improve water quality |
| but have fallen since 1998. Figures for 2006 are | | | | in the lake. |
| expected to fall a further 5% according to the | | | | The threat to Venezuela's environment, and indigenous |
| International Monetary Fund (IMF). High inflation levels | | | | communities, will continue to grow as the government |
| have historically been a big problem for Latin American | | | | pursues a development strategy based on exploiting |
| economies and other developing countries. During the | | | | minerals such as gold and oil revenue. Grand |
| 1970s, 1980s and 1990s high inflation was largely the | | | | infrastructure projects will also be difficult to manage |
| result of commodity price shocks and loose fiscal and | | | | and construct. However, reducing social inequalities by |
| monetary policies. The former of these was | | | | investing in people through education and health will |
| particularly problematic for Venezuela because its | | | | improve the economy through an expanded skills base |
| economy is based primarily on producing, and | | | | and a more cohesive society. |