Venezuela — An Economic Foundation in Oil Production

Julio M. Herrera Velutini operates a United States-regulated banking enterprise based in Puerto Rico that offers secure remote banking functions worldwide. From a Venezuelan family with banking roots going back more than 120 years, Julio M. Herrera Velutini is part of a lineage that helped set in place a central bank and independent national currency.

Venezuela maintained a strong economic presence in Latin America throughout the 20th century. This was bolstered by oil wealth, which made itself felt from the 1920s on and boosted the nation’s GDP to the fourth-highest per capita on earth by the 1950s. At the time, Venezuela possessed wealth that exceeded Japan’s fourfold, was 12 times as great as China’s, and was double that of Chile.

With Venezuela growing steadily until the early 1980s, oil revenue was used to pay for an array of social programs that included education, health care, food subsidies, and infrastructure. Unfortunately, the price of oil plunged in the mid 1980s and exposed the vulnerabilities of an economy that had failed to diversify beyond oil or to create an economic bulwark against fluctuations in the price of crude.

With the International Monetary Fund currently projecting a per capita GDP of just over $12,000 by 2022, calls for fundamental reform of an inflation-ridden economy have grown louder. With issues reaching a critical level, the silver lining is that Venezuela still has vast resource-based economic potential that could alleviate a challenging financial situation and take the country in new directions in the coming years.