Venezuela prepares an anti inflation package

Venezuela is preparing a package of measures to contain inflation which begun 2007 with a 2% in January, announced Ricardo Sanguino chairman of the Congressional Finance Committee.

“The package have begun to be jointly drafted with Finance Minister Rodrigo Cabezas and will be announced in the coming days”, said Sanguino.

The measures are targeted to contain the surge in the cost of living index and will cover the “economic, financial and industrial fields”, added Sanguino.

The package is to be discussed in the coming meeting of the economic cabinet and then the Executive will be making the official announcements.

However Sanguino denied the Venezuelan government was planning to eliminate exchange rate controls system enforced since February 2003, even when market analysts consider the strict management of foreign currency by the Central Bank as the cause behind the scarcity of many goods.

The legislator did admit however that expenditure, procurement and fiscal “adjustments” policies can be expected.

Inflation in January was 2% following 17% in 2006 when the President Chavez administration had targeted a one digit figure.

Although the open hand policy with the budget is blamed for inflation by local economists, the Venezuelan government refuses to admit it.

Sanguino also announced that Venezuela, through its gigantic government owned oil corporation PDVSA is planning to issue 5 billion US dollars in bonds, (Bonos del Sur) probably to help absorb the surplus liquidity.

Although no dates were advanced Sanguino said the bonds will “most probably” be issued in local currency, Bolivar, at the official US dollar exchange rate.

The Venezuelan economy boosted by international oil prices has been among the fastest growing in Latinamerica.