Hugo Chavez raises Venezuelan minimum wage 25 percent

CARACAS, Venezuela (AP) - President Hugo Chavez announced a 25-percent increase in Venezuela's minimum wage Friday to try to blunt the effects of soaring inflation, and defended his handling of an energy crisis and other domestic problems.

Chavez challenged opponents' predictions that his popularity could take a dive due to measures such as last week's currency devaluation and rolling blackouts imposed by the government.

"They say the country is collapsing ... that Chavez is going to fall," he said in his annual state-of-the-nation address to the National Assembly. "They are going to be disappointed."

Chavez's opponents are looking to capitalize on a range of vulnerabilities as they try to regain control of the National Assembly in September elections: energy shortages, 25-percent inflation, a banking scandal involving businessmen with ties to the government, rampant crime and heaps of trash lining potholed city streets.

"They say everything is Chavez's fault. But with so much repetition, which is what they do, some people end up believing them," he said. "There's a government here that knows what it's doing."

Chavez said the minimum wage will increase 10 percent in March and 15 percent in September, bringing it to nearly 1,200 bolivars, or $521 at a new preferential exchange rate set last week for priority goods such as food. Inflation is widely expected to surge higher this year after last week's devaluation.

Chavez's government also began power outages of up to four hours a day throughout the country this week. But a day after the measures took effect, Chavez suspended the outages in the capital of Caracas, saying the rationing plan was riddled with mistakes.

Critics say Chavez backtracked in response to widespread anger among the city's estimated 6 million residents. Venezuelans have also been coping with water rationing, and the government turned to power outages to prevent an electricity collapse. Drought has drained water to near-critical levels behind Guri Dam, which supplies most of Venezuela's electricity.

"We're used to living with problems in Venezuela, but now they are accumulating and reaching intolerable levels, and everything indicates that they are going to get worse," opposition politician Ramon Muchacho said in a telephone interview after Chavez's speech.

"Even though I recognize the president as an excellent campaigner," Muchacho said, "I'm sure the opposition can capitalize on this and regain political ground that it's lost."