• by IPS Correspondents (caracas)
• Tuesday, December 27, 1994
• Inter Press Service

CARACAS, Dic 27 (IPS) - The Venezuelan economy decreased by 3.3 percent, inflation hit 70.8 percent and the fiscal deficit was 15.2 percent of the Gross Domestic Product (GDP) for 1994, the Central Bank announced on Monday.

The country is in the worst economic condition in Latin America, the only positive factor being the trade balance, with exports rising 12 percent and imports decreasing 30.7 percent.

Central Bank president Antonio Casas said exports brought in 15.695 billion dollars - 11.16 billion from petroleum - while 7.709 billion dollars was spent on imports.

Casas attributed the positive trade balance to "a more stable political environment," following the two military uprisings in 1992 and the removal of former President Carlos Andres Perez on corruption charges in 1993.

However, the bank crisis which resulted in the state taking control of 52 percent of the sector cost nine percent of the GDP of 31.5 billion dollars.

The recession was primarily due to a decrease of 5.3 percent in sectors other than petroleum, Casas said.

The second half of the year in Venezuela was marked by the imposition of the economic emergency decree, which suspended several economic and civil rights, strictly controlled the exchange rate and regulated prices.

The economic decrease of 3.3 percent was second only to the fall of 8 percent in 1989, before the structural adjustment was put into effect. The following three years, the economy grew by an average 5.6 percent.

Casas considers the most damaging statistic to be the 70.8 percent inflation - second only to the 81 percent of 1989 - following 45.9 percent in 1993.

The 80 percent currency devaluation until controls were imposed in June, excessive liquidity, and the fall in interest rates were the major causes of inflation, he said.

While he refused to make concrete predictions for 1995, Casas said the stabilisation of Venezuela's economy will not only require anti-inflationary measures but strutural measures, the removal of the controls imposed under the economic emergency, and an increase in gasoline prices, which will doubtlessly have a political cost.

© Inter Press Service (2014) — All Rights Reserved. Original source: Inter Press Service

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