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News from the Caribbean as of
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Venezuela announces anti-inflation measures
Monday, February 12, 2007
CARACAS, Venezuela (Reuters): Venezuela unveiled on Sunday measures aimed at curbing inflation, which surged to 17 percent last year amid an oil-driven economic boom and heavy government spending.
Venezuela, the fourth-largest crude exporter to the United States, saw consumer prices rise last year in part because of soaring government spending by leftist President Hugo Chavez whose social development crusade helped him win an overwhelming re-election victory in December.
Among the news measures, Vice President Jorge Rodriguez told a news conference that the government would cut the nation's 14 percent sales tax on products like beef and pork to ease inflation.
Finance Minister Rodrigo Cabezas added authorities would ease currency controls, in place since 2003, by increasing dollar sales to consumers traveling abroad in an effort to reduce the amount of local bolivar currency in the economy.
"The national (government) together with the people ... is taking on the urgent task of defeating any inflationary pressures in the country," Cabezas said.
He also said state oil company PDVSA would pay taxes, dividends and royalties to the government in dollars rather than in bolivars, which he said would reduce pressure on prices.
Critics say the Chavez government's heavy spending has distorted the nation's economy and led to runaway inflation that has been particularly noticeable in increased food prices.
The announcements came several days after beef disappeared from supermarket shelves following conflicts between authorities and producers over government-imposed price controls.
Producers and distributors have said they cannot comply with the price controls because they have not been adjusted to compensate for double-digit inflation.
Government leaders accuse producers and distributors of hoarding goods to increase prices, and last week they carried out high-profile seizures of goods like sugar.
Vice President Rodriguez warned on Sunday that the government would take control of meat production and distribution if business leaders did not comply with government regulations.
Chavez last month rattled markets with announcements that the government would take over the electricity sector and the top telecommunications firm as part of renewed push toward a Cuba-inspired socialist society.
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