To enthusiastic Latin America boosters, last February's abortive military coup in Venezuela offered a chilling warning of just how fast a stable economy can be destabilized.

The coup attempt, plus either food riots in which hundreds were killed, and more recent student riots offer a timely reminder that many benefits of Latin America's vaunted economic reform have failed to trickle down to the man in the street.

"While Venezuela has shown substantial growth in the past two years, average real income is still well below levels prevailing at the onset of the debt crisis in 1982," Salomon Brothers noted in a recent report.

Weak Incomes Spur Unrest

Most of the political discontent in Venezuela can be attributed to slow growth in income.

"Venezuela is the one country we are least comfortable with," said Geoffrey Dennis, senior vice president and head of Latin America research for James Capel in New York. "The economic performance has not been inferior to other Latin American countries, but Venezuela has not done as much as the others."

Bankers are quick to play down analysts' fears.

"Analysts who say Venezuela hasn't moved fast or far enough are both correct and wrong," said Thomas J. Charters, country corporate officer for Citicorp in Venezuela. "They're correct in saying Venezuela hasn't gone far enough but incorrect in not acknowledging that Venezuela has done more in a shorter period . . .than any other Latin American country."

1991: A Very Good Year

Indeed, 1991 proved to be one of the best years ever for Venezuela. Gross domestic product rose 10% and the inflation rate fell to 30, from 40% a year earlier.

Meanwhile, foreign capital in flows and $2 billion worth of privatization swelled the country's hard-currency reserves to $10.5 billion, up from about $8 billion a year earlier.

Estimates that Venezuela's economy grew by more than 10% in the 1992 first quarter show that the expansion is continuing.

The impressive gains are the fruits of changes initiated after President Carlos Andres Perez took office in 1989.

Mr. Perez moved immediately to introduce a two-part economic reform.

The first part floated Venezuela's currency, the bolivar, and restricted growth in the money supply.

The second introduced a broad program to diversify the economy, lift trade restrictions, and privatize government-owned companies.

Privatizations, public and private bond issues, and other borrowings and direct investments helped attract a record $4.8 billion flow of foreign capital into Venezuela in 1991, nearly triple the $1.8 billion recorded in 1990 and nearly five times the $1 billion that came in in 1989.

Proceeds from the privatizations amounted to $2.2 billion in 1991 alone, contributing significantly toward turning a government budget deficit into a $650 million surplus.

More sales of government-owned companies are planned this year.

Debt Reduction Helped

At least part of the momentum for growth came after March 1990 when Venezuela and its foreign creditor banks agreed on a debt reduction covering nearly $19.7 billion in Venezuelan borrowings.

Venezuela also profited handsomely from the sharp surge in oil prices after Iraq invaded Kuwait in August 1990. With 60 billion barrels of proven reserves, Venezuela holds nearly 6% of the world's known oil reserves.

But the country remains heavily dependent on oil revenue, which accounted for nearly 86% of its foreign currency earnings in 1991. Nonoil export earnings, such as from metal ores and light manufactured goods, accounted for only 15% of export earnings.

In an effort to reduce the country's heavy reliance on oil exports, the Venezuelan government is encouraging companies to diversify, using international capital markets to fund growth and to expand abroad.

Among the most active is Petroleos de Venezuela, the state-owned oil company - the world's fourth-largest - which has been steadily expanding abroad with investments in refineries in Germany, the United States, Belgium, and Sweden.

Judging by the latest results, Venezuela appears to be mastering economic change.

Its first-quarter growth rate was 10.7%, and Venezuela officials predicted that growth for the full year would be 4% to 5%.

Inflation in June totaled 2.7%, or 34% at an annual rate, and inflation for first six months was 14.4% compared with 13.5% a year earlier.

But Venezuela has a hard slog ahead.

"Cautionary notes remain," Salomon reported. "The economy is likely to show slower growth in the months ahead; complaints about the openness of the political system, corruption, and crime remain unresolved; and Perez' term as president may yet be shortened."

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