Chavez's olive branch for firms

Hugo Chavez is fighting rising inflation in Venezuela's economy

Venezuelan President Hugo Chavez has announced a plan to help the country's businesses as rising inflation threatens the economy.

Under a stimulus package unveiled on Wednesday, Mr Chavez scrapped a tax and eased currency controls that made it harder for Venezuelan firms to operate.

He also announced a $1bn fund to help key industries such as food and oil.

Economic growth in Venezuela has slowed this year as inflation jumped to more than 31% last month.

The tax was stopping the productive process and boosted inflation President Hugo Chavez

Growth slowed to a four-year low of 4.8% in the first quarter of 2008, a sharp fall from 8.8% the previous year.

Mr Chavez wants to make it easier for Venezuelan companies to operate and has scrapped a 1.5% tax on foreign transactions.

He said: "We will eliminate the tax on foreign transactions. Really the tax was stopping the productive process and boosted inflation."

VENEZUELA'S BUSINESS BOOST Eliminate foreign transaction tax Ease currency exchange controls $1bn fund for food, oil & manufacturing

He has also made it easier for firms to trade in US dollars, companies that import goods worth $50,000 or less will not have to complete complex paper-work or get permission from authorities.

Analysts have said these controls damaged corporate Venezuela making it harder for firms to compete and make a profit.

Companies have criticised the Venezuelan leader's anti-business stance, while investors have also been put off by his government's nationalisation of industries such as electricity, steel and cement.

Other measures announced included a $1bn fund for private-public sector projects in areas such as food, oil and manufacturing.

Mr Chavez wants to maximise oil revenues which make up 90% of the country's total exports. Venezuela is the world's fifth-largest oil exporter.