Chavez Orders Venezuela Economic Plan as Health ImprovesJose Orozco and Nathan Crooks
Venezuela’s government said President Hugo Chavez has recovered sufficiently from a cancer operation in Cuba to make economic policy decisions and that his plans to boost exports will be outlined soon.
A respiratory infection Chavez contracted after the operation last month is under control and the former paratrooper is making domestic and foreign policy decisions again, Information Minister Ernesto Villegas told reporters yesterday in Santiago, where he was attending a meeting of regional and European leaders. The day before, Vice President Nicolas Maduro said Chavez, 58, had approved a new economic plan.
“Chavez reviewed the budget, financing, economic development and the theme of promoting exporters,” Maduro said Jan. 26 on state television, after returning from Havana. “We’re going to develop the export capacity of our economy, and not just through our great oil enterprise.”
The comments sparked speculation that the government may be preparing to devalue the currency to help Venezuela trim the world’s second-largest budget deficit, according to Asdrubal Oliveros, the director of Caracas-based financial consulting firm Ecoanalitica. Economists at banks including Goldman Sachs Group Inc. and Barclays Plc have said a devaluation is inevitable in order to boost revenue in bolivars from oil exports.
“Clearly, when you talk about stimulating the export market, you’re talking about the exchange rate,” Oliveros said in a phone interview Jan. 26. “For political reasons, the government won’t talk about a devaluation.”
The measures will allow the government to manage its budget in a way that will ensure the implementation of social and development policies this year, Maduro said, without providing details. He said the plan would be announced over the weekend, though no statement was released by Sunday night.
The government may employ a “timid” devaluation to get them through 2013, said Oliveros. A weaker bolivar would risk pushing up consumer prices that are already rising 20 percent a year, he said.
Barclays’ Alejandro Grisanti, Goldman Sachs’s Alberto Ramos and HSBC Holdings Plc’s Ramiro Blazquez predicted earlier this month the government would weaken the bolivar as much as 50 percent by March 31. Still, they said the power vacuum created by Chavez’s absence could delay the decision.
Chavez called for unity in Latin America, condemned the U.S. trade embargo on Cuba and made a plea for better regional energy integration and increased spending on social programs in a letter read today by Maduro at the regional summit in Santiago. He made no mention of economic measures.
The Venezuelan leader, who is being treated for an undisclosed type of cancer, hasn’t been seen in public since his fourth surgery on Dec. 11.
“He has a smile and a face full of light,” Maduro said in his midnight speech Jan. 26. “He’s optimistic and full of faith.”