Teetering Venezuelan economy prepares for elections

Acting President Maduro pledges to continue Hugo Chavez’s ‘socialist revolution’ A customer entered Gustavo Arbelo's grocery store in a blue-collar Caracas neighborhood, asking if he had any rice or flour. No, he said, pointing to bare shelves. Toilet paper? He once had two months' worth of it stocked up. "Today I don't even have one roll," the bespectacled, mustachioed shopkeeper said, checking his books behind the counter in the hillside Petare neighbourhood.
"We've had shortages of every product," Arbelo, aged 55, said. "There's no rice; there's no detergent; there's no soap."
Such chronic shortages of basic goods plagued Venezuelans for years under late leader Hugo Chavez, who was in power for 14 years until he died last month.
And it will be one of the slew of economic problems that will be inherited by whomever wins the presidential election on Sunday, with his political heir, acting President Nicolas Maduro, favored to defeat opposition leader Henrique Capriles.
Through popular social programmes funded with petrodollars, Chavez was able to drastically reduce poverty in his country of 29 million people.
But despite an oil bonanza, with the country sitting on the world's biggest proven reserves of crude, the economy remains fragile.
"As long as we have the same price for oil, the government will have wiggle room," Jesus Casique, economics professor at Preston University, told AFP. "Venezuela is vulnerable. It's an economy that depends on black gold."
Chavez imposed currency controls in 2003 to stop capital flight. Price controls were also set.
But analysts say the measures failed to solve the problem and made Venezuela rely on imports to fill supermarket shelves.
On top of that, sporadic power outages affect Venezuelans, inflation remained high at 20.1 percent last year, public debt reached $150bn, or half the country's gross domestic product.
The head of the Venezuelan chamber of commerce, Jorge Botti, said 200,000 companies shut their doors in the past decade while 1,600 others were expropriated by the state.
"I think the biggest defect of Chavismo was that it stifled Venezuelan creativity," Botti told AFP last week, adding that the next president should encourage dialogue between the government and business leaders.
A report by investor services firm Ecoanalitica said that the economy would either contract or grow by two percent this year, well below the government's six percent target.
The government took action in February, devaluing the national currency, the bolivar, by more than 30 percent from 4.3 to 6.3 to the dollar, a move that allowed Venezuela to slash its public deficit by half to 7.0 percent of GDP.
At a campaign rally on Tuesday, Maduro promised to raise the monthly minimum wage -- which stands at 2,047 bolivars, or $325 -- by up to 45 percent this year if he is elected. Capriles has proposed a 40 percent wage hike.
But in the streets of Caracas, Venezuelans complain that food shortages continue while prices have soared in stores.
"Things are tough. Everything is very expensive. If we can't afford chicken are we going to have to eat sardines?" said Hervi Blanco, a 50-year-old motorcycle taxi driver who supports Maduro.
Maduro has pledged to continue his mentor's self-styled socialist revolution, blaming the problems on an "economic war" waged by the opposition with the backing of the United States.
Capriles, governor of Miranda state, has suggested that he would follow Brazil's moderate socialism, progressively dismantle the price and currency controls, stop expropriations and attract private investments.
"Price controls have caused high inflation and exchange rate controls have sparked capital flight," Casique, the professor, said. "They did not generate the planned benefits or goals."
The government, he added, must also clean up its finances and stop spending more than it generates in revenue.
"Chavismo saw social achievements, but they were partial," Asdrubal Oliveros, head of the investor services firm Ecoanalitica, told AFP. "If corrective measures are not taken, its accomplishments will be lost in this crisis that is beginning."