Venezuela remains highly dependent on oil revenues, which account for roughly 95% of export earnings, about 45% of federal budget revenues, and around 12% of GDP.
Fueled by high oil prices, record government spending helped to boost GDP growth by 4.2% in 2011, after a sharp drop in oil prices caused an economic contraction in 2009-10.
Government spending, minimum wage hikes, and improved access to domestic credit created an increase in consumption which combined with supply problems to cause higher inflation — roughly 26% in 2011 and 21% in 2012.
President Hugo CHAVEZ's efforts to increase the government's control of the economy by nationalizing firms in the agribusiness, financial, construction, oil, and steel sectors have hurt the private investment environment, reduced productive capacity, and slowed non-petroleum exports.
In the first half of 2010 Venezuela faced the prospect of lengthy nationwide blackouts when its main hydroelectric power plant — which provides more than 35% of the country's electricity — nearly shut down.
In May 2010, CHAVEZ closed the unofficial foreign exchange market — the "parallel market" — in an effort to stem inflation and slow the currency's depreciation.
In June 2010, the government created the "Transaction System for Foreign Currency Denominated Securities" to replace the "parallel" market.
In December 2010, CHAVEZ eliminated the dual exchange rate system and unified the exchange rate at 4.3 bolivars per dollar.
In January 2011, CHAVEZ announced the second devaluation of the bolivar within twelve months.
In December 2010, the National Assembly passed a package of five organic laws designed to complete the transformation of the Venezuelan economy in line with CHAVEZ's vision of 21st century socialism.
In 2012, Venezuela continued to wrestle with a housing crisis, high inflation, an electricity crisis, and rolling food and goods shortages — all of which were fallout from the government's unorthodox economic policies.
The budget deficit for the entire government reached 17% of GDP in 2012, and public debt as a percent of GDP climbed steeply to 49%, despite record oil prices.