Maduro admits Venezuela economy in crisis

Venezuela’s recession-hit economy has shrunk 2.8 percent in 2014 while inflation topped 64 percent, the country’s President Nicolas Maduro has said.

In his annual address to parliament on Wednesday, the successor to Hugo Chavez blamed political foes and an “economic war” for Venezuela’s financial crisis.

“In 2014, we again faced the script of destabilisation and violence,” Maduro said, referring to four months of protests that caused major disruption and killed 43 people, including demonstrators, government supporters and security officials.

Opponents say 15 years of misguided socialist policies and corruption since Chavez took power have wrecked Venezuela’s economy and heaped suffering on its 30 million inhabitants who are facing unprecedented shortages of basic products.

“They have destroyed production,” opposition leader Henrique Capriles tweeted while Maduro spoke. “That’s the cause of the queues, not the lies they’re telling.”

Maduro had promised to make announcements on economic changes during his address, and economists have speculated he may decide to devalue the local bolivar currency.

They expect a reduction or suspension of dollar sales at the strongest rate of the three-tier currency controls, currently 6.3 bolivars, to help state coffers amid tumbling oil revenues and black market price for the greenback 27 times higher.

Maduro said on Wednesday Venezuela’s crude, which trades at a discount to other benchmarks due to its greater heavy-oil content, was at $38 a barrel – compared with $99 in June.

Parliamentary vote looms

With his popularity falling and a national parliamentary election looming later in the year, Maduro has so far steered clear of taking socially risky measures, including increasing the price of the world’s cheapest gasoline.

Amid the highest inflation in the Americas, the government still maintains popular Chavez-era welfare programmes, such as subsidized food and free health clinics that benefit millions.

And Maduro said unemployment was at a new low of 5.5 percent “despite the economic contraction of 2.8 percent and a very high inflation, above 64 percent” last year.

According to UN estimates, Argentina is the only other country in Latin America whose economy was seen contracting last year, though by less than Venezuela.

In one of the grimmest forecasts yet, the IMF estimated earlier on Wednesday that Venezuela’s economy will contract seven percent this year, in part due to the oil slump, according to a blog post by its western hemisphere department director Alejandro Werner.

Venezuela’s opposition coalition called on people to bang pots and pans in a traditional form of protest during Maduro’s speech. That could be heard in some neighborhoods of Caracas, though not as loud as on occasions last year.

The Democratic Unity coalition has also called for a peaceful protest march on Saturday.

Government supporters are to rally on Friday.