Lectura y Escritura de datos

The performance of the Venezuelan economy during this period was shaped mainly by the IMF agreed programme of stabilisation and structural reform launched by the government in April 1996 and by the continuation of favourable conditions in the oil market.

The programme was meant to be applied in two phases. The first phase was aimed at establishing a sustainable fiscal situation, to get the prices "right", to reduce inflation and to redress the country’s international economic standing. The second phase sought to create conditions for sustainable growth through structural reforms with emphasis in the market economy (OPAM, 1997).

To this end, the exchange and price controls of some products established in 1994, were eliminated, the bolivar’s international value now being determined through a floating rate within a band system. Price increases for privately provided services such as electricity and telephone were matched by increases in gasoline and fuel products (aimed at reducing the fiscal deficit), public goods and service prices and the ICSVM (luxury and wholesale tax) was also raised. The privatisation process was restarted, most notably with the re-privatisation of banks that were nationalised during the financial crisis, while the government maintained a restrictive monetary policy aimed at controlling inflation. In order to diminish the negative impact of this programme on the lowest income group, food and transport subsidies to workers belonging to that income group were approved (based on the same social

programmes described earlier), public sector wages were increased and a general increase in bonuses was agreed at the end of 1996. However, as discussed earlier, these social policies are likely to leave a relevant proportion of the population outside of the coverage and, as a consequence, are expected to have little impact on the distribution of income, given the increasing proportion of informal workers in the economy (Chapter 6) who are unable to benefit from subsidies, bonuses or minimum wage regulations.

However, in 1996, the results in terms of inflation, economic growth, real wages and unemployment reflected, in part, the economic deterioration that still prevailed during the first quarter of the year. Despite the oil sector growing at 5.8 percent, the GDP decreased by 0.4 percent due to a reduction in non-oil activities, particularly those of the private sector. Meanwhile, the inflation rate reached a record level (103.2 percent), real wages were depressed at the second highest rate (negative) since 1980 and unemployment grew to reach 12.4 percent (Table 5A.1.3). This situation may have yielded income deterioration given both the effects that high rates of inflation have on groups less endowed with income assets (as discussed earlier), and the fact that only the petroleum sector experienced growth, as this sector is capital intensive and absorbs mainly skilled labour.

The above figures show a poor performance of the Venezuelan economy by 1996 in comparison with other Latin American countries. For instance, inflation had become a persistent problem. During the 1960s and 1970s the country had price stability. Even during the 1980s when inflation started to increase significantly it was still below the average in Latin America. By 1990 the rate of inflation in Argentina and Brazil was greater than 2,000 per year, while Nicaragua and Peru were struggling with rates over 7,000. However, by 1996 Venezuela showed the highest rate of inflation among Latin American countries, which was more than six times the average in the region, while most of Latin American countries seemed to have controlled inflation as a problem (Table 5A. 1.7)^®. Similarly, when most of Latin American countries seem to have recovered and stabilised their economic growth

In Table 5A .1.7 the inflation in Venezuela reported is 99.9 percent which is the figure provided by the lA D B . H owever, the figure provided by the B C V was even higher (103.2).

after the deep recession of the 1980s, Venezuela showed again a negative rate of growth by 1996 (Table 5A.1.8)^\ This situation was aggravated by the fact that Venezuela has continuously been diminishing its share within the total world exports. From sharing almost 2 percent of the world exports up to the 1960s, this share dropped to only 0.39 by 1996 (Table 5A. 1.6).

The country’s international reserves rose however as increased exports along with a decrease in imports due to the economic recession increased the surplus in the current account. The deficit on the capital account also fell as capital flowed in to the oil sector.

By 1997 the economy starts recovering within a more open economic environment created by the programme launched in 1996. The increase in the volume of oil exports, without a significant change in oil prices, implied an increase of the GDP in the petroleum sector by 8.8 percent (BCV, 1997, p. 15) as a result of the progress achieved in opening up the sector. As a consequence of this capital inflow into the oil sector, the international reserves expanded and the capital account reduced its deficit even further while surplus was recovered in the government account. The surplus in the current account was still significant although lower than that in 1996 due to the expansion of imports as a result of the reactivation of the economy. The GDP grew at 5.1 percent while inflation reduced to 37.6 percent (Table 5A. 1.3). As an increase in both the general minimum wage and nominal wages in the public sector was approved along with the rise of transport and food subsidies for workers in the private sector, real wages recovered for the first time since 1992, with a rise of 25.9 percent, the highest annual rate of growth since 1980 (Table 5A. 1.3). However, if it is proven that the informal workers are over-represented at the lower end of the distribution, given the limited coverage of transport and food subsidies, discussed earlier, this improvement in real wages is expected to have little impact on the economic position of the lowest-income groups. Finally, it is important to point out that, once again, this positive performance of the economy, described above, has been strongly linked to the progress achieved in the petroleum sector.

The rate o f growth reported for Venezuela in 1996 in Table 5 A .I .8 is -1.6 (lA D B ), while BCV reported -0.4.