Mérida, January 14, 2009 (venezuelanalysis.com)-- On Tuesday President Hugo Chavez spent 7 hours giving his annual report for 2008 to the National Assembly, where he detailed country growth indicators, development projects, advancement of the agricultural revolution, and plans for the next 4 years.
According to the Venezuelan constitution, the government’s management report must be given within the first continuous 10 days that the national assembly is in session for the New Year, personally by the president. His address was also transmitted live to national television and radio.
In the last ten years, Chavez said 2.7 million Venezuelans have come out of poverty, and of those 437,000 stopped being classed as poor in 2008. He then calculated that that was 1,190 people per day. In the second half of 2008 extreme poverty was at 9.1% of the population, while in the 1990s it was 42%.
Consumption and inflation
In 2008, Chavez said, 62.9% of Venezuelan families bought at least something from the Food Market Network (Mercal), where the state offers products at subsidized prices. Chavez noted that inflation in Mercal is very low or at zero, and attributed the inflation of food prices in general to the speculation that results from the capitalist economic model.
Chavez said there had been large steps taken in 2008 in the agricultural revolution. Seven laws were passed to drive agricultural development, including the law of food sovereignty and the law of integral agricultural health. The financing of the sector, especially with credits, was facilitated and debts restructured, while the percentage of large landowners over the last ten years has gone down by 32%.
That is, a total of 2,134,000 hectares were recovered from large landowners in that time period, or 247,000 hectares covering 304 properties in all 24 states were recovered in 2008.
“The day will arrive when there isn’t even one large landowner in Venezuela,” he said.
The government is increasing production of black beans and corn, as well as plantain, avocado, tomatoes, yucca, oranges, and bananas. Chavez reaffirmed the decision to recreate the farming culture that had been lost, quoting Che Guevara who defined the countryside as the best place to create new men and women.
Distinct breeds of livestock have been brought from Cuba, Argentina, and Nicaragua, which are being bred in various parts of Venezuela and other native breeds that were being lost are being also being recovered.
In the past three years since its launch, the National Seed Plan has created 4,839,987 kilos of seeds for planting. Before that, “there weren’t any seeds here, well all the seeds were imported,” said Chávez.
Tractors from Argentina, Brazil and Belarus were distributed across the country, agricultural land improved using low levels of irrigation, socially owned plants for processing and packing were created, and 276 million bolivars (US$ 128 million) until now have been spent on farming subsidies.
During 2008 the levels of corn production increased by 17% (or 205% over the last 10 years), sugar cane by 13%, coffee by 8%, milk by 11%, beef by 22%, chicken by 82% and eggs by 44%.
Oil and Energy
Chavez informed the assembly that in 2008 under the “Sowing the Oil Plan,” 55 billion barrels of crude oil were incorporated into certified Venezuelan reserves, and he predicted that within a few years Venezuela would be the country with the largest oil reserves in the world.
Owing to the chaos produced by such a large number of private electric companies, Chavez said it was necessary to nationalize them and “we created the National Electric Corporation in 2007 and in 2008 we had to struggle against a range of factors, including sabotage.”
US$ 7 billion have been invested in equipment, centres, transmission, and distribution networks and a maintenance plan. Electric consumption remained at 118,000 gigawatts per hour, while generation capacity was increased by 1,384 megawatts per hour in 2008. 98% of the population was receiving electricity, an increase of 4.3% since 2007.
Incandescent light bulbs were replaced by energy saving bulbs, and in 2008 over 10 million such bulbs were installed. An agreement was signed to construct an energy saving light bulb factory in Venezuela.
Industry and manufacturing
Polyurethane plants have been inaugurated or are still in construction, allowing for the production of plastic bags and cups that previously had to be imported.
Eight factories, creating 6,000 jobs, were launched in 2008, including a syringe factory (making 144 million syringes annually with a saving of 40% on the price, and these go directly to Venezuelan hospitals), a utensil factory of which the total cost of the products is 60% less, a sack factory and a tap factory among others.
Eleven factories are also under construction, including four for making low cost houses from oil residues, wood factories, and others. The products of such factories do not go to the market, in general, but are distributed by the corresponding ministries, Chavez assured.
The government took control of three gold mines, revoking a concession to the El Callao Gold Mining Company and took control of the Remenin mine previously in the hands of private company Cristallex. Chavez predicted gold production would almost double this year compared to last year and said that the mine takeovers had resulted in better working and living conditions for the miners and their families.
The government took over the diamond mines of El Guaniamo, made an agreement with a Chinese company to build kaolin processing plants in Venezuela, and the nationalization of the Sidor last year also saw the consolidation of the steel industry.
Chavez acknowledged that there has not been a lot of advancement with aluminium companies and that “there is a critical situation in the aluminium companies but the important thing is that we diagnose this and work with our workers [and on] new projects to recover not only the basic companies but also the processing ones.”
International reserves and debt
International reserves have quadrupled from $10 billion in 1998 to $43 million in 2008 and public debt has decreased by 70%, relative to GDP, he said. Venezuela’s per capita currency reserves are among the highest in the world, at $1,700, which he compared to some other “developed countries” who have per capita reserves of $500.
“The monetary reserves of Venezuela today are sufficient to sustain 2 years of imports, [whereas] there are countries like England whose reserves could only sustain 15 days of imports,” he said.
The economy in a global context
GDP growth for 2008 was 4.9% and community and social services grew by 9%. For 2009-2013, the government is planning oil-based investments of $125 billion and non-oil investments of an additional $100 billion, for a total of 209 projects.
Chavez dispelled any idea that the government was preparing to implement any kind of economic adjust program, such as what was implemented by President Carlos Andres Perez (known as CAP) in 1989, in response to the world financial crisis.
“If they think that I’m going to follow the politics of CAP, of [President] Caldera, or of Bush, to provide millions of dollars to the financial bourgeoisie, they are wrong. If the impact of world capitalism arrives here in a severe way, it is going to hit the sectors of national capitalism hard. But it won’t be the people, nor the revolution!” he said.
“We have a way to resist and a way to advance, it won’t be the people. The people have already paid a hundred and one times.”
He explained that in Venezuela no banks are insolvent, there’s no housing bubble and that the funds of the financial institutions aren’t supported by “garbage paper.”
“We in Venezuela don’t over-spend, we spend what we have to.”