Venezuela's Finance Minister the worst has already passed despite -10.7% GDP 2003 projections

<a href=www.vheadline.com>Venezuela's Electronic news Posted: Sunday, June 22, 2003 By: David Coleman

Finance Minister Tobias NobregaFinance (Hacienda) Minister Tobias Nobrega says Venezuela's economy is expected to contract 10.7% by year's end adding to last year's negative GDP 8.9% drop.  The figures are said to be the worst in Venezuela's recent financial history and come on the heels of a punishing 2-month national labor stoppage and continuing efforts by opposition elements to sabotage the nation's economic life.

Central Bank of Venezuela (BCV) figures published this weekend have prompted the Finance Minister to tell El Nacional "the bad news is that it will be a year of recession ... but the good news is that the worst has already passed."

Venezuela's economy buckled 29% during Q1 2003 compared with the same period 2002 as the December-January stoppage failed to achieve its unilateral purpose to force President Hugo Chavez Frias to step down.  Nobrega admits that the economy has been slow to pick up since February because of high inflation ... currently at 35% ... as the government fights to control its crippled finances with strict foreign exchange controls and already seriously depleted foreign currency reserves.

Restrictions have forced Venezuelan industries to turn more to abundant domestic sources of raw material over imports which had accounted for some 60% of consumables.

Foreign currency transactions have traditionally been used as a convenient cover for money-laundering operations with a monthly demand in the neighborhood of $1.2 billion.  Nobrega says $230 million has been released by the government and, against a background of industry unwillingness to submit to certification procedures that could expose them to endemic tax fraud, he says the controls will not be abolished anytime soon, although the government is willing to evaluate modifications.