Ambassador John Francis MAISTO
embassy: Calle F con Calle Suapure, Colinas de Valle Arriba, Caracas
1060
mailing address: P. O. Box 62291, Caracas 1060-A; APO AA 34037
telephone: [58] (2) 977-2011
FAX: [58] (2) 977-0843

Flag description: three equal horizontal bands of yellow (top), blue,
and red with the coat of arms on the hoist side of the yellow band and
an arc of seven white five-pointed stars centered in the blue band

Economy

Economy - overview: The petroleum sector dominates the economy,
accounting for roughly 25% of GDP, 70% of export earnings, and 50% of
central government revenues. It is likely to become even more
important as the state petroleum company plans to double its
production over the next ten years. The non-petroleum sectors have
been contracting, however, with GDP shrinking by 1.6% during 1996.
Realizing the failure of interventionist policies, the CALDERA
administration embarked on a comprehensive reform program and
successfully negotiated a $1.4 billion stand-by agreement with the
IMF. The state eliminated price and exchange controls, reduced the
long-standing subsidy on gasoline, and revitalized its stalled
privatization program. Foreign investors reacted positively and the
Caracas stock exchange ended 1996 as the world's best performing stock
market. The influx of foreign investment and a windfall of oil
revenues resulting from higher-than-expected international oil prices
raised Venezuela's reserves to over $15 billion. As a result,
Venezuela used only the first tranche of the IMF credit - $400
million. The currency depreciated sharply following the exchange
liberalization, and caused an inflationary burst that led to a 103%
yearly rate of inflation, the highest in Venezuelan history. The
bolivar has since strengthened and inflation fell near the end of the
year. The macroeconomic adjustments should take hold in 1997, and the
economy is expected to grow by 4% or more. Increased salary demands by
public and private sector workers, however, threaten a renewal of
inflationary pressures.

GDP: purchasing power parity - $197 billion (1996 est.)

GDP - real growth rate: -1.6% (1996)

GDP - per capita: purchasing power parity - $9,000 (1996 est.)

GDP - composition by sector:
agriculture: 5%
industry: 41%
services: 54% (1993)

Inflation rate - consumer price index: 103% (1996)

Labor force:
total: 8.8 million
by occupation : services 64%, industry 23%, agriculture 13% (1993)

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