Hugo Chavez's economic policies in Venezuela led to widespread shortages of foods and other basic necessities. Price controls and withholding dollars from importers disrupted supply chains. As a result, Venezuelans struggled to find affordable food, sometimes scavenging in garbage or going hungry. Previously, Venezuela had a strong economy based on oil exports, but populist policies and high spending increased inequality and inflation, which reached 800% in 2016. Soaring prices due to monetary policies and economic mismanagement worsened poverty and malnutrition for many Venezuelans.

1. SUBJECT :
MONEY AND BANKING
CASE STUDY ON:
Venezuelan Food Shortage, By WILLIAM NEUMAN
SUBMITTED TO:
SIR ZAHID CHANNA
SUBMITTED BY:
VARDA SHAIKH (1310-BBA027)

2. Q1. Problems in Venezuela.
A. Shortages in Venezuela have been prevalent during the economic policy of the
Hugo Chávez government. Under this economic policy, greater shortages occurred
due to the Venezuelan government's policy of withholding United States dollars from
importers with price controls. Shortages are occurring in regulated products, such as
milk, meat, coffee, rice, oil, precooked flour, butter prices and other basic necessities
like toilet paper, personal hygiene products and medicines. As a result of the
shortages, Venezuelans searched for food, occasionally resorting to eating wild fruit
or garbage, wait in lines for hours and sometimes settle without having certain
products.
Q2. Previous status of Venezuela.
A. Venezuela has the world's largest known oil reserves and has been one of the
world's leading exporters of oil. Previously it was an underdeveloped exporter of
agricultural commodities such as coffee and cocoa, then oil quickly came to
dominate exports and government revenues.
The Venezuelan government established populist policies that initially boosted the
Venezuelan economy and increased social spending, significantly reducing
economic inequality and poverty.
Q3. Venezuela’s inflation rate in last year.
A. Inflation Rate in Venezuela averaged 32.42 percent from 1973 until 2017, reaching
an all time high of 800 percent in December of 2016 and a record low of 3.22
percent in February of 1973.
Q4. Impact of food shortage on price.
A. Food shortages and soaring prices have led to troubling results. The average
Venezuelan living in extreme poverty lost about 19 pounds due to the lack of food.
Many of its citizens had to skip meals, according to a national poll. In March, a
basket of basic grocery items -- including eggs, milk and fruit -- cost 772,614
bolivares, or close to four times the monthly minimum wage.
Q5. Reason behind inflation that stated by government.
A. Price inflation at the national level occurred from a variety of sources including
central bank actions, (increases in the money supply or interest rate policies)
government actions (higher taxes, excessive regulation, minimum wage laws, tariffs
or mandates) or for economic reasons that may or may not be caused by central

3. bank or government actions. Venezuela currently has a potent mix of nearly all of
the above factors.