Venezuela’s economy runs on oil – and music

Venezuela’s 25-year-old Bolivarian Revolution – the name that the late President Hugo Chávez gave to his political movement – promised many things, but has failed to deliver what the country arguably most needed: a broad-based economy.

Instead of diversifying away from the oil industry, the governments of Chávez and Mr Maduro doubled down on Venezuela’s mineral wealth.

Paying little heed to the future, they treated PDVSA as a cash cow, milking its funds to finance social spending on housing, healthcare and transport.

But at the same time, they neglected to invest in maintaining the level of oil production, which has plummeted in recent years – partly, but not solely, as a result of US sanctions.

These problems were already evident when President Chávez died in 2013, but have grown worse on his successor’s watch.

“Under Chávez, Venezuela was able to ride on the coat-tails of an oil boom, up until the global financial crisis,” Mr Tuvey says.

“Fifteen to 20 years ago, Venezuela was a major oil producer. It used to produce three-and-a-half million barrels a day, along the lines of some of the smaller Gulf states.

“Now the oil sector has been completely hollowed out, and it produces less than a million barrels a day.”

GDP declined rapidly, down by 70% since 2013. But Mr Maduro resorted to compensating for lower oil prices by printing money to fund spending, resulting in the runaway inflation which the country has only recently curbed.