Jaime Lusinchi - Presidency

Presidency

Lusinchi started his presidency at the age of 59, promising to govern with fairness, transparency, social sensitivity and austerity in the use of public funds, presenting himself as a moderate president.

The first three years of his presidency were characterized by efforts to achieve economy stability, the paying off of the foreign debts, the reduction of public spending, the implementation of social programs benefiting the people and the promotion of industrial growth. These goals were not accomplished. However, agriculture and the iron mining industry were developed during his administration, the country achieved positive growth rates at the end of 1984, with a growth rate of 6% in GDP, but the official rate of unemployment inherited from Herrera´s government was 20%.

During this period, the government started negotiations to restructure interest payments and amortizations of the foreign debt, which in 1985 was 36 billion dollars (of which 28 were from the public sector), contracted with the international private banking and multilateral agencies. The first positive result of this serious effort was that Venezuela regained a credit-eligibility rating. In addition, Lusinchi took initiatives to increase oil prices via OPEC.

However, Lusinchi was not successful at crucial goals for the development of the country. The oil market was too unstable due to price fluctuations and thus unpredictable, the oil prices were low, and the Venezuelan economy was too oil-dependent. This led to a dismal situation due to an excessively high government fiscal budget, depleting financial reserves for the payment of debt, an important pledge made during Lusinchi's presidetial campaign.

1985, was characterized by a relative social peace and the absence of labor disputes and strikes, in part due to the support of the government by the largest trade union of the country, the Confederation of Workers of Venezuela, which had traditionally been closely linked to Acción Democrática. During this year, Lusinchi welcomed John Paul II, the first Pope ever to visit Venezuela. But in the second half of his presidency, the social malaise grew, and the government was pressed to change the direction of its policies. In December 1986, the government decided to devalue the official exchange of the national currency bolivar by 93%, culminating with three years of depreciation of the national currency from February, 1983, also introduces a system of multiple currency changes. In 1987, Lusinchi finally stopped the economic program carried out from the beginning of his term in office, and gave up his attempts to pay off the external debt, control the fiscal deficit and restrain public spending.

After that, he decreed salary increases, price controls, emission of currency and compensatory bonds for subsidies. These measures tried to appease social tensions, that from 1987 appeared with more intensity. The consequences of this economic program were, more inflation and budget deficits.

The return to economic populism like previous administrations safeguarded Lusinchi's popularity, although currency devaluation, corruption, media criticism and unsatisfactory results at the Presidential Commission for State Reform (COPRE), established on 17 December 1984 and whose work encountered the same bureaucratic problems and administrative inefficiency, which it attempted to solve.

During Lusinchi's presidency some repudable incidents also occurred, such as the Yumare massacre, in Yaracuy, on 8 May 1986 carried out by the DISIP (political police of Venezuela), executing nine members of the subversive group Punto Cero; and the massacre of El Amparo, in Apure State, on 29 October 1988, in which 14 fishermen were mistakenly assumed to be guerrillas and killed by the army.

Lusinchi supported the former minister and political leader Octavio Lepage in his bid to be AD's candidate for the 1988 elections, but Lepage was defeated in the internal elections of the party on October, 1987, by the former president Carlos Andrés Pérez. Pérez was elected for a new period at the presidency in 1988. Lusinchi finished his term in office on 2 February 1989.