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Venezuela is currently going through a difficult period both economically and politically. Water and electricity shortages across Venezuela have worsened, with cuts of up to five hours per day in the states of Táchira, Mérida, Falcón and Bolivar. Caracas, which has been deliberately spared, is now also affected by water cuts, particularly in the barrios. There are genuine concerns that electricity supplies to Caracas will be severely affected too. The Guri dam, which supplies more than 70 per cent. of Venezuela's electricity, is at its lowest level for years and Venezuela is only in the first of a six-month 'dry season'. Most of this reflects lack of investment, not helped by the highest per capita energy and water use in the region resulting from economically distorting subsidies and price controls.
Although oil prices have recovered, the economy contracted around 1.5 per cent. in 2009, which in turn has limited the Government's ability to sustain previous levels of social spending. With subsidies reducing, important social "missions" such as Mercal, the subsidised food programme, have had to increase prices (by as much as 80 per cent. on some lines). The weekly consumer basket remains about 30 per cent. higher than the minimum wage. Inflation remains high at, officially, 27 per cent.
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