Here is a look into issues facing Venezuela including hyperinflation, food shortage and unrest.

1. HOW SOCIALISM FAILED
VENEZUELA – AUGUST 2018
BY: PAUL YOUNG, CPA, CGA

2. PAUL YOUNG - BIO
• CPA, CGA
• Financial Solutions
• Academia
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
Contact information:
Paul_Young_CGA@Hotmail.com

3. • This presentation is on perspective when it comes to Venezuela

4. AGENDA
- GDP
- Government Policies
- Banking Sector
- Lawsuits
- Canada and Venezuela Trade

5. VENEZUELA - GDP • The Venezuelan economy is set to
experience another difficult year in 2016
due to low commodity prices and structural
macroeconomic imbalances. The economy
has taken a turn for the worse since
President Nicolás Maduro, in an effort to
tackle an ongoing energy crisis, ordered the
working week for civil servants to be
shortened to two days per week and
announced daily power cuts.
• The measures, which will constrain
economic activity even further, have
unleashed a wave of looting and rioting
across the country. Meanwhile, the political
opposition has stepped up their effort to
end the president’s term by using all the
legal mechanisms at their disposal. The
government has responded by imposing
numerous hurdles and declaring a state of
emergency to thwart any impeachment
attempt.

6. GDP / VENEZUELA
• http://www.focus-economics.com/countries/venezuela
• (April 11, 2017)
Venezuela was thrown into uncharted political territory after the government-
controlled Supreme Court backtracked on its decision to suspend the opposition-
controlled National Assembly. The unprecedented ruling opens a new chapter in
the long and bitter standoff between both factions and has exposed the first visible
cracks in the ruling party. It is extremely uncertain how future events will play out
and whether the government will be able to quell growing domestic and
international pressure amid a catastrophic economic scenario. Oil prices in March
declined to pre-OPEC deal lows, wiping out hopes for an improvement in public
finances and risking recourse to already depleted international reserves to comply
with looming bond payments. Financial markets have also experienced turbulence,
with bond prices tumbling and credit default swaps increasing as an almost USD 3.0
billion payment is due in mid-April

7. INFLATION - VENEZUELA

8. SOLVENCY / VENEZUELA
• https://www.nytimes.com/2017/04/12/business/venezuela-oil-debt-payment.html?_r=0
Venezuela has put off a reckoning on its tens of billions of dollars in debt, but its
ability to avoid a disastrous default will probably require much higher oil prices than
appear likely in the next year or two, financial experts say.
With its oil production and international reserves falling at an accelerating rate, the
government is juggling as fast as it can to pay for imported food and medicines while
meeting its short-term bond payments. Even as the country has slashed imports, its
reserves have declined by half over the last two years, to $10.4 billion. Most of that
sum is in gold and is pledged as security for many of the government’s creditors,
which include international institutional investors and everyday Venezuelans.

9. GOLD RESERVES
• http://money.cnn.com/2017/04/21/news/economy/venezuela-cash-debt/
Venezuela only has $10 billion in reserves -- the cash that's intended to keep
an economy stable and weather tough times.
What's worse: most of those reserves aren't in hard cash. About $7 billion is
in gold bars, which doesn't make it easy to make payments.
And Venezuela has a lot of bills to pay soon. It owes $6 billion in debt
payments for the rest of this year. There's also no sign that the country's lone
source of revenue -- oil exports -- will be able to pay down those debts.

10. GOVERNMENT POLICIES
• FDI (Foreign Direct Investment)
• Despite certain attractive features of the country, such as its large oil reserves, the large size of its domestic market and
the richness of its natural resources, FDI inflows into Venezuela have decreased in the last few years, mainly because of
the country's unstable legal system.
• Venezuela's uncertain business climate born of the 'Bolivarian' reforms (infringement of private property rights, foreign
currency controls, increasing regulations, nationalizations, etc.) and the ineffectiveness of the port system are some of
the various hindrances to investment. The new Government is combining regional and revolutionary politics, without
closing its door to foreign investment, which it needs badly. Still, the 'Bolivarian' socialism pursued by the rather
interventionist Government hinders the increase of FDI flows. In 2014, FDI to Venezuela declined by USD 6 billion (-
88% compared to 2013), falling to under USD 1 billion.
• Inflation rate 500%
• Unemployment 17% and predicted to grow to 21% in 2017
• Debt to GDP close to 50%
• 70% of the economy relies on oil revenue

11. BANKING SECTOR/VENEZUELA
• http://money.cnn.com/2016/02/25/news/economy/venezuela-gold-debt/
• Venezuela insolvent?

12. FDI ISSUES WITH VENEZUELA
• http://www.wsj.com/articles/exxon-mobil-awarded-1-4-billion-in-venezuela-case-1412879396
• World Bank Orders Venezuela To Pay Crystallex $1.4 Billion For Gold Mine

13. GM AND VENEZUELA
• "We didn't expropriate!" Venezuela's economic minister, Ramon Lobo,
tweeted Thursday night, sharing photos of a meeting with GM workers at the
plant.
• Venezuelan officials said the plant is under embargo. In other words, GM's
assets in the country are frozen, but authorities emphasize that the plant
should continue production.
CNN – April 21 2017

14. UNITED NATIONS / VENEZUELA
• As Venezuela gears up to face a massive protest from U.S.-funded, right-wing opposition
groups, embattled President Nicolás Maduro has called for the expansion of armed
civilian militias as the threat of more violence on the streets of Caracas continues to
grow.
• The militias, created by deceased former president Hugo Chávez to resist “imperialist
aggression,” currently consist of about 100,000 members. Maduro’s proposed expansion
of the civilian force would increase its size to 500,000. Maduro’s announcement was
accompanied by a rousing speech in which he called upon Venezuelans to decide if they
are “with the homeland” or against it, adding that “now is not the time to hesitate.”
• The United Nations quickly condemned Maduro’s plan, arguing that it would only
exacerbate tensions in the country. But the UN – along with other human rights
organizations such as the Organization of American States – have refused to speak out
against the violence perpetrated by the foreign-funded opposition.

15. UN AND HUMAN RIGHTS
Source - http://www.latimes.com/world/la-fg-venezuela-united-nations-20180622-story.html
Government security forces in Venezuela carry out unjustified killings without any apparent consequences as the
rule of law in the country quickly vanishes, a United Nations report charged Friday, drawing a rejection from
Caracas.
The Office of the U.N. High Commissioner for Human Rights said Venezuelan officers accused in some 500
questionable killings appear to be evading any charges. That is a sign that checks and balances have been chiseled
away, leaving state authorities unaccountable, said Zeid Raad Al Hussein, the high commissioner.
The report highlights the case early this year in which rebel police officer Oscar Perez and six in his group were shot
to death as they tried to surrender. U.N. officials say they believe the group was executed on orders from top
government officials in violation of their basic rights.
"The rule of law is virtually absent in Venezuela," Zeid said in the report. "The impunity must end."
LA Times – June 22, 2018

16. VENEZUELA - COLLAPSE
Source - https://www.cnbc.com/2018/08/19/venezuelan-shopkeepers-alarmed-by-maduros-latest-economic-moves.html
Venezuela's President Nicolas Maduro talks to the media during a news conference at Miraflores Palace in Caracas,
Venezuela October 17, 2017.
After Venezuelan President Nicolas Maduro's 60-fold increase to the minimum wage, storeowners on Saturday wrestled
with an anguishing decision: Close up shop or hit customers with steep price hikes at the risk of sinking the business.
In a set of sweeping announcements that shocked many Venezuelans, the socialist Maduro on Friday ordered a 96
percent currency devaluation, pegged the bolivar currency to the government's petrol cryptocurrency and boosted taxes
as part of a plan aimed at pulling the OPEC member out of its economic tailspin.
The measures especially spooked shopkeepers already struggling to stay afloat due to hyperinflation, government-set
prices for goods ranging from flour to diapers, and strict currency controls that crimp imports. Many stores were closed
on Saturday as owners hunkered down to consider the implications.

17. CANADA AND VENEZUELA
• In 2009, Canada’s bilateral merchandise trade with Venezuela totaled $1.5 billion, consisting of
$629 million in Canadian exports to, and $908 million in imports from, Venezuela. Both exports and
imports in 2009 were at about the same level as ten years earlier.
• Although Venezuela ranks among Canada’s largest trading partners in Latin America, it is not a significant
export destination, and nor is it a major source of imports for Canada. Venezuela was Canada’s fourth-
largest export destination in Latin America in 2009, but was Canada’s 29th-largest export destination
worldwide. It was Canada’s fifth-largest source of imports in Latin America that year and was the 38th-
largest source of imports worldwide.

18. ISSUES AT HAND
• Government has done little to modernized industry in Venezuela, especially oil sector
• Government policies have stifle business including many businesses shutting down
• Poverty levels have gone through the roof in Venezuela
• Government is no longer respective by the people

19. SOURCES
• Contact: paul_young_cga@Hotmail.com
• Other links
• Socialism - https://www.youtube.com/watch?v=fhk2b97BYKU