Why is Venezuela’s economy such a mess?

  • Years of massive government overspending under Chavez (budget deficit of over 17% of GDP).
  • Even though oil price was high then, government spending was way beyond its means - this unsustainable system remains in place.
  • Now that oil price has fallen, entire economy is out of control, but China keeps lending money (in exchange for oil) which has masked the need for urgent reform.
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