June 13, 2008
President Hugo Chávez' economic stimulus package offers an Olive Branch to business leaders by introducing currency controls and eliminating a 1.5 percent tax on financial transactions for businesses.
CARACAS -- President Hugo Chávez is trying to fight inflation and boost Venezuela's economy with a package of incentives for businesses, including the elimination of a tax on banking transactions.
Inflation has been accelerating in the South American oil-exporting country while growth dipped to a four-year low of 4.8 percent during the first quarter -- down from 8.8 percent in the same time period a year earlier.
Announcing his economic stimulus package Wednesday, Chávez said he will create a $1 billion fund to encourage joint public-private projects in sectors such as food, oil and manufacturing.
The socialist leader has clashed often with Venezuelan business groups. Critics say the economic slowdown is partly due to price and currency-exchange controls that make it difficult for companies to operate, as well as nationalizations in the electricity, steel and cement sectors that have made investors wary.
But in his speech to hundreds of business leaders, Chávez offered an olive branch: ''We want to work with you,'' he said.
Chávez said he is introducing a ''new era of currency controls'' and all pending requests for $50,000 or less from businesses importing primary materials or capital assets would be expedited. He said that loosening restrictions will be ''an experiment,'' warning that if big businesses ''begin to divide up requests'' to obtain a larger sum, he would end the exception.
Chávez also eliminated a 1.5 percent tax on financial transactions for businesses, drawing applause from the audience. ''It's truly a tax that puts the brakes on the productive process'' and contributes to inflation, Chávez said.
Chávez proposed a ''strategic alliance'' between his government and businesses.
With the new measures, Chávez said, ``I hope to be able to motivate them -- from the largest businesses to the smallest.''
Chávez said the government also will support small food producers by increasing subsidies and helping them to pay their debts.