Economic policy,

Venezuela is a major producer of oil products, which remains the keystone of the Venezuelan economy. Chávez has gained a reputation as a price hawk in OPEC, pushing for stringent enforcement of production quotas and higher target oil prices. At a June 2006 meeting, Venezuela was the only OPEC country calling for lowered production to drive oil prices higher.

Chávez has attempted to broaden Venezuela's customer base, striking joint exploration deals with other developing countries, including Argentina, Brazil, China and Russia. Record oil prices have meant more funding for social programs, but have left the economy increasingly dependent on both the Chávez government and the oil sector; the private sector's role has correspondingly diminished.

Chávez has redirected the focus of PDVSA by bringing it more closely under the direction of the Ministry of Energy and Petroleum. He has also attempted to repatriate more oil funds to Venezuela by raising royalty percentages on joint extraction contracts that are payable to Venezuela. Chávez has also explored the liquidation of some or all of the assets belonging to PDVSA's US-based subsidiary, Citgo. Citgo, whose profitability made many Venezuelans skeptical, has been paying record dividends to the government of Venezuela. Chávez said that "Venezuela had not received a penny from this enterprise for 20 years". According to Finance minister Nelson Merentes, the Venezuelan 2006 budget would get more income from taxation than from the oil industry, unlike formerly. A key non-oil related poverty reduction policy has been the application of the concept of the microcredit pioneered by Nobel peace prize laureate Muhammad Yunus of the Grameen Bank.

During Chávez's presidency from 1999 to 2004, per-capita gross domestic product (GDP) dropped 1–2%, but with the help of rising oil prices, the end of the oil strike, and strong consumption growth, recent economic activity under Chávez has been robust. GDP growth rates were 18% in 2004,[145] 9% in 2005,and 9.6% in the first half of 2006, with the private sector growing at a 10.3% clip. From 2004 to the first half of 2006, non-petroleum sectors of the economy showed growth rates greater than 10%. Datos reports real income grew by 137% between 2003 and Q1 2006. Official poverty figures dropped by 10%. Some economists argue that this subsidized growth could stop if oil prices decline, but the government argues its budget uses US$29 a barrel and 60 billion dollars in reserves as a cushion for a sudden drop.

Some social scientists and economists claim that the government's reported poverty figures have not fallen in proportion to the country's vast oil revenues in the last two years. The president of Datos said that, although his surveys showed rising incomes because of subsidies and grants, the number of people in the worst living conditions has grown. "The poor of Venezuela are living much better lately and have increased their purchasing power... [but] without being able to improve their housing, education level, and social mobility," he said. "Rather than help [the poor] become stakeholders in the economic system, what [the government has] done is distribute as much oil wealth as possible in missions and social programs."

According to government figures, unemployment has dropped by 7.7% since the start of Chávez's presidency. It dropped to 10% in February 2006, from the 20% high in 2003 during a two-month strike and business lockout that shut down the country's oil industry. According to the government, an unemployed person is a citizen above the age of 15 who has been seeking employment for more than one week. But, according to The Boston Globe, critics say that the government defines "informal workers, such as street vendors, as employed, and exclud[es] adults who are studying in missions from unemployment numbers." Critics also point to figures released by the president of the Venezuelan National Statistics Institute, Elías Eljuri, which showed that poverty had risen by more than 10% under Chávez (to 53% in 2004). Chávez called for a new measure of poverty, a "social well-being index". Under this new definition, poverty registers at 40%.[153] Eljuri denies changing the statistic and claims it is entirely income excluding social programs. The World Bank calculated a 10% drop in poverty.

A January 10, 2006 BBC article reported that since 2003, Chavez has been setting price controls on food, and that these price controls have caused shortages and hoarding. A January 22, 2008 article from Associated Press stated, "Venezuelan troops are cracking down on the smuggling of food... the National Guard has seized about 750 tons of food... Hugo Chavez ordered the military to keep people from smuggling scarce items like milk... He's also threatened to seize farms and milk plants..." On February 28, 2009 Chavez ordered the military to temporarily seize control of all the rice processing plants in the country and force them to produce at full capacity, which he alleged they had been avoiding in response to the price caps. The country's largest food processor, Empresas Polar, said that the regulated price of (plain) rice was well below the cost of production, and as a result 90% of its rice output was flavoured rice not subject to price controls. It also said that its plant was operating at 50% capacity due to raw material shortages; the government however claimed to have found 2 months' worth of raw rice in storage at the plant. On March 4, 2009, the BBC reported that Chavez had set minimum production quotas for 12 basic foods that were subject to price controls, including white rice, cooking oil, coffee, sugar, powdered milk, cheese, and tomato sauce. Business leaders and food producers claimed that the government was forcing them to produce this food at a loss.

A January 3, 2007 article in the International Herald Tribune reported that Chavez's price controls were causing shortages of materials used in the construction industry. According to an April 4, 2008 article from CBS News, Chavez ordered the nationalization of the cement industry, in response to the fact that the industry was exporting its products in order to receive prices above those which it was allowed to obtain within the country.

In December 2006, the Venezuelan Ministries of Finance and Light Industries and Commerce instituted a 15% tax on imported toilet paper, which it described as being a "luxury."

According to the Banco Central de Venezuela, inflation dropped from 29.9% in 1998 to 14.4% in 2005.[168] During 2005, imported goods were cheaper than commodities made in Venezuela; variability in the price of goods was linked to import performance and exchange stability. In the second quarter of 2006, gross fixed investment was the highest ever recorded by the Banco Central de Venezuela since it started tracking the statistic in 1997. However, the BBC reported on February 15, 2007 that Venezuela's inflation rate rose to a two-year high in January, with consumer prices rising 18.4% in 12 months.

While the Venezuelan Government enjoys a windfall of oil profits, the business environment is risky and discourages investment, according to El Universal. As measured by prices on local stock exchanges, investors are willing to pay on average 16.3 years worth of earnings to invest in Colombian companies, 15.9 in Chile, 11.1 in Mexico, and 10.7 in Brazil, but only 5.8 in Venezuela. The World Economic Forum ranked Venezuela as 82 out of 102 countries on a measure of how favorable investment is for institutions. In Venezuela, an investor needs an average of 119 days and must complete 14 different proceedings to organize a business, while the average in OECD countries is 30 days and six proceedings.

Public spending in Venezuela has reached unprecedented highs, as measured by local currency Central Bank debt, which could increase inflation.

Chávez announced Venezuela's withdrawal from the IMF and World Bank after paying back all his country's debts to both institutions; he charged them with being an imperial tool that aims to exploit poor countries, news sources reported. But as of March 2008, Venezuela is still a member of both institutions. In June 2007, the Bank for International Settlements forecast an economic growth of 7% and a 18.9% inflation rate for Venezuela. In January 2008, Hugo Chávez stated that Latin American countries needed to begin their withdrawal of money from United States-based banks. His statement went on to say, "We should start to bring our reserves here," Chávez said. "Why does that money have to be in the north? You can't put all your eggs in one basket." and "imperialism is entering into a crisis that can affect all of us" and said Latin America "will save itself alone."