Jan. 7 (Bloomberg) -- Venezuelan Finance Minister Rafael Isea said the government is committed to cutting inflation in half this year, while conceding it will be a ``difficult job.''

Ending food shortages will be a priority in slowing price gains to 11 percent this year, Isea said today at a ceremony, without providing more details about specific anti-inflation measures. The government won't curb spending on social programs to reduce the amount of liquidity in the market, he said.

Isea, a former lawmaker and president of Venezuela's state-owned Social and Economic Development Bank, takes office as the government struggles with shortages of milk and eggs, the highest inflation in Latin America and a decline in oil output. There's ``little hope'' of meeting the inflation goal without a slowdown in public spending, said Alberto Ramos, senior Latin America economist at Goldman Sachs Group Inc.

``The government fails to grasp the essence of the inflationary pressures in the economy -- overheated domestic demand amid dwindling local supply,'' Ramos wrote in a note to investors today.

Consumer prices rose 22.5 percent last year, as surging government spending fueled a consumption boom.

``Inflation has became our primary objective,'' Isea said during a ceremony to commemorate his first day on the job.

Venezuelans have faced shortages of food staples as production lags behind demand. Isea said the government will address such shortages, again without providing specifics.

Producers ``don't have the capacity to expand in the short term to meet increased demand,'' he said.

State-Owned Banks

Part of the solution will be strengthening state-owned banks and creating a ``socialist financial system'' that can offer credit to manufacturers and food producers, he said.

The finance ministry's other goals for this year include ensuring dollars provided by the government at the official exchange rate are directed toward the country's priorities, which include food, medicine and machinery imports, Isea said.

Venezuela pegs the bolivar at 2.15 per dollar, and exchange controls require citizens who want to obtain dollars at the official rate to get them from the government.

To contact the reporter on this story: Matthew Walter in Caracas at mwalter4@bloomberg.net.

Last Updated: January 7, 2008 15:47 EST