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***SPOTLIGHT: Power cuts, political problems add to Venezuelan woes

February 09, 2010 - 09:37 GMT Location: São Paulo

KEYWORDS: Venezuela , aluminium , alumina , bauxite , steel , HBI , nickel , Sidor , Alcasa

The first months of 2010 have proved testing for Venezuelan industry, particularly its ferrous and non-ferrous sectors

The year began with the implementation the country's power-saving programme – announced just before Christmas – which has reduced industrial output and restricted energy supplies. President Hugo Chávez then devalued the local currency, which had been fixed for almost five years at 2.15 Bolivares per US dollar, and introduced two rates of exchange: one at 2.60 to be used for essential imports, such as food and medicine; and the other at a rate of 4.30 to be used for non-essential imports, such as metals, cars, and chemicals. The goal is to begin a process of imports substitution and to stimulate productivity in local industry, according to the president. But critics say Chávez wants to gain more money from oil exports and that these policies will undoubtedly increase the country’s rate of inflation – which stood at 25.1% for the whole of 2009, according to figures from the Venezuelan central bank....

All material subject to strictly enforced copyright laws. © Euromoney Institutional Investor PLC.

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