Chavez Expected to Announce Effort to Shore Up Economy

CARACAS, Venezuela — Venezuelan President Hugo Chavez is expected to unveil an economic plan on Saturday that includes steps to raise revenue to help his government navigate a financial crunch brought on by the global crisis and declining oil prices.

Speculation grew on Friday that the program could include a devaluation of Venezuela’s currency, the bolivar, which would help the government narrow a growing gap between spending and income by making each dollar of oil revenue worth more in local currency.


Venezuelans who can’t buy dollars at the official 2.15 bolivar exchange rate are paying almost three times that in the black-market, where — amid devaluation fears — a dollar rose Friday to 6.4 bolivars, a level not seen since late 2007.

Venezuelan officials have been tight-lipped about the program’s details, which could include tax increases and rises in public-sector prices like gasoline. Venezuela has some of the cheapest gas in the world, at $0.17 per gallon. Economists say Venezuela needs to devalue the currency and rein in government spending to prevent worse problems down the road.

WSJ