Chavez Calls for Fixed Interest Rates
A sign reading "We pray for peace," center, is displayed along with Venezuelan flags at a gathering to pray for peace in Caracas, Venezuela, Sunday, Feb. 16, 2003. Thousands of Venezuelans gathered on a Caracas highway to pray for peace in their bitterly divided nation.
CARACAS, Venezuela (AP) -- President Hugo Chavez said Sunday interest rates should be fixed to reverse Venezuela's deteriorating economic situation, just days after he imposed exchange controls and price controls for the same reason. "I want interest rates to be lowered," Chavez said. "I want the interest rates to be fixed ... and I call on the Central Bank of Venezuela to fix them." Chavez suggested a maximum rate of 30 percent for commercial banks' lending rates, compared with well over 40 percent at present. This would give small companies and farmers better access to credit, he said. The central bank's current lending rate is 37 percent. Chavez, speaking on his weekly TV and radio program, also threatened to send troops to seize food-processing plants that have threatened to stop producing because of newly imposed price controls. To slow rising prices, the government last week slapped price controls on more than 220 goods ranging from powdered milk to beef and rice. Some producers say their businesses will not be profitable if they sell at the new prices. Opposition leaders predict shortages of many goods. "If they close the plants I'll take them away from them again," Chavez roared. "Here and now I order the armed forces and the defense minister ... to start drawing up plans to seize the plants." Last month, troops raided two bottling plants that had closed in support of a national strike against Chavez, seizing drinks to distribute among the population. Chavez accused the companies - a local bottler of Coca-Cola and Venezuela's largest food and drink producer, Empresas Polar - of hoarding basic necessities. The two-month strike was called by a coalition of labor unions, business chambers and opposition political parties to force Chavez into resigning or accepting a vote on his rule. On Feb. 3, the strike was lifted in all areas, except the oil industry, to protect businesses from bankruptcy. Inflation topped 30 percent last year, fueled by a rapid devaluation of the bolivar currency. The bolivar lost another 25 percent in January, prompting the government to introduce exchange controls which peg the currency at 1598 per dollar. Chavez has fired over 10,000 workers from the state oil monopoly, Petroleos de Venezuela S.A., since the strike began, and used only government sympathizers to bring oil production up to around half of pre-strike levels. Chavez said Sunday production had exceeded 2 million barrels a day; fired oil executives say the figure is around 1.3 million barrels. Venezuela's Central Bank is, by law, an autonomous institution but has worked closely with Chavez's government in drawing up the recent price and exchange controls. Chavez, a former paratrooper, was first elected in 1998 and re-elected in 2000. He promised to wipe out the corruption of previous governments and redistribute the country's vast oil wealth to the poor majority. His critics charge he has mismanaged the economy, tried to grab authoritarian powers and split the country along class lines with his fiery rhetoric.
Created: 2/17/2003 10:41:19 AM Updated: 2/17/2003 10:45:15 AM © 2003 Associated Press All rights reserved. This material may not be published, rewritten, or redistributed.