Venezuela's oil-reliant economy faces hard times ahead, and not least because so many manufacturing companies closed down during the severe recession half a decade ago, according to the industrialists' organization, Conindustria.
Unofficial estimates show that between 40% and half of Venezuela's industrial capacity shut down for good during the slump. Many of those companies were in the manufacturing sector.
The loss of domestic productive capacity and its replacement by imports would result in a "more severe" crisis for the economy and the country, warned Conindustria President Eduardo Gómez Sigala.
What was coming would demonstrate that the government's "economic model" wasn't working, and the cost of that would be paid by the Venezuelans, he continued. The global financial crisis would show up deficiencies in the government's management of the economy.
"It's obvious that no country can develop solely with imports," he said, adding that this would show up the weaknesses of the economic policy during coming months. His message was that the good times fueled by high world oil prices were most definitely over.
"Venezuela has been able to be very well because it has had very high petroleum incomes, but from the point of view of the indicators, it's one of the countries with less competitiveness, it has a high level of corruption, a very high dependence on imports, it has the highest rate of inflation and the highest rates of interest in Latin America," he said.
Carlos Berrizbeita, who as an opposition deputy at the National Assembly earlier this decade regularly made allegations about wrong-doing in high places, alleged that corruption within the government was made possible by institutions such as the legislature, the Comptroller General's Office and the Attorney General's Office.
These institutions didn't investigate cases of corruption "because it's evident that they don't do anything because they're paid off and look the other way," Berrizbeita claimed in an interview published on Wednesday by the daily newspaper 2001. It was notable, he said, that advertisements for bid processes for public sector contracts were absent from the pages of the daily press, he added.
In the meantime, analysts warned that Venezuela had yet to feel the real impact of the gathering global financial upheaval because oil delivery contracts were based on 90 days payment terms.
While the state oil corporation, Petróleos de Venezuela (PDVSA) is still receiving payments at more than $100 a barrel, the average price of Venezuela's mix of medium-grade and heavy crude closed at $40.68 a barrel last week.
Finance Minister Alí Rodríguez Araque's 2009 budget, which is based on the assumption that Venezuelan oil prices will average $60 a barrel next year, has yet to be remade by him or parliament.
In theory, the budget is supposed to be approved by two debates and a final vote, and then signed into law by the head of state by or before December 15. Analysts warn that the government is running out of time and that the much-needed revamp of the budget will have to be extensive.
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