Economy weighs hard ahead of Venezuela elections

As the economy deteriorates, Venezuelan may change their colors and vote for the opposition in upcoming legislative elections [Xinhua]

The deadline for nominating candidates to run in Venezuela’s upcoming parliamentary elections has been extended to Friday, electoral officials have said.

On June 22, Venezuelan President Nicolas Maduro announced that elections for the 167-seat parliament will be held on December 6.

But analysts are predicting that Maduro’s ruling Socialist Party, which currently holds the majority of seats, is likely to suffer at the ballot as voters turn to opposition parties amid a spiraling economic crisis.

Maduro’s government has banned a number of key opposition figures from standing for election, however, and leading anti-government pundit Leopoldo Lopez has been in jail for 18 months on charges of arson and public incitement.

On Wednesday, Maduro’s cabinet rebuffed US calls to release the opposition figures and accused Washington of meddling in Venezuela’s electoral politics.

It also said it will bar international observers from monitoring the ballot.

But it’s economics, not politics, that threaten the Socialists’ hold on the country.

Since Maduro won an April 2013 election by a margin of only 1.5 per cent, the inflation rate has skyrocketed. When he became president, it stood at 48 per cent.

By February 2014, it jumped to over 58 per cent; with food prices quickly rising street protests broke out.

Deficiency in domestic production, coupled with strict controls over US dollar rates has also affected the imports-based market.

With Venezuela’s scarcity index pointing to more than 20 per cent (according to the Venezuelan National Bank), the black market has flourished.

Citizens have complained of a lack in basic amenities such as sugar, milk, and toilet paper, as well as some medicines, saying they have had to stand in long queues or buy overpriced products on the black market. Riots broke out, which Maduro blamed on opposition figures.

The drastic drop in oil prices – by more than 48 per cent in the past year – has exacerbated Maduro’s problems as exports of the energy commodity account for 95 per cent of Venezuela’s economy.

With less cash in its coffers – the strategic foreign reserves have fallen from $24 to $20 billion in recent months – the government has imported less and less commodities.

Venezuela’s inflation today is at 68.5 per cent, with some analysts predicting that it will hit three-figure rates by the end of 2015.

Real wages cannot meet the pace of currency devaluation. In government exchanges, the dollar buys 6.35 bolivars (VEF), down 50 per cent since 2013.

But most markets depend on the black market, where the dollars buys more than 680 bolivars.

The depreciated value of the bolivar has led to increased crime; supermarkets are looted, while theft and petty crime has skyrocketed. Carjackings and kidnappings have become every-day occurrences.

There are fears that Venezuela could even default on its $6.4-billion service debts within the next six months.

Maduro has dismissed default rumors as an opposition plot and said Caracas is able to meet all its debts.

The BRICS Post with input from Agencies