Chavez ally: economic adjustments being considered

AP News
Posted: Jan 22, 2013 10:25 AM

CARACAS, Venezuela (AP) — An ally of President Hugo Chavez says the government is considering economic adjustments to combat Venezuela's 20 percent inflation.

Former Finance Minister Rodrigo Cabezas told the Venezuelan station Union Radio on Monday that he understands the government is considering decisions relating to anti-inflation measures and "adjustments in some prices."

Cabezas, a well-connected mid-level leader within the socialist president's movement, is currently president of the Latin American Parliament, a regional organization. Cabezas also said that officials who are in charge of economic policies are to make decisions relating to currency exchange. He didn't give details about what the measures could include.

Venezuela maintains strict currency exchange controls as well as price controls on many foods and other items.

Sporadic shortages of some foods, such as flour, cooking oil, chicken and coffee, have worsened in recent months. Causes include insufficient domestic production of such items, bottlenecks at ports and a reduction in the supply of dollars being granted by the government to import businesses.

Following months of heavy spending leading up to the country's October presidential vote, the government starting in November reduced the amounts of dollars provided at the official exchange rate, putting new pressures on the country's currency, the bolivar.

There have been growing rumors of a possible devaluation in recent months as the value of the dollar in black market currency trading has shot up to more than four times the government-set rate of 4.30 bolivars to the dollar.

Some analysts have said they expect the government may put off difficult economic decisions such as a potential devaluation while Chavez recovers from cancer surgery.

Chavez hasn't been seen or spoken publicly since before his Dec. 11 operation in Cuba for an unspecified type of pelvic cancer.