Economists see painful cuts coming for Venezuela [View all]

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As perishable foodstuffs rotted on cargo ships that had waited three weeks to unload at Venezuela's largest port, unsettled consumers this week found shelves at Caracas' main downtown market devoid of rice, cooking oil, sugar and other items.

Widespread scarcities and chaos at the nation's main ports, including Puerto Cabello, are just some of the problems Vice President Nicolas Maduro will face as he takes the reins of power in the absence of President Hugo Chavez.

Other pressing issues include a 20% inflation rate, a ballooning government deficit and price controls that have created a thriving underground market in food staples. Despite an oil bonanza, U.S. dollars are scarce and worth four times the official rate on the foreign-currency black market.

Economists say Maduro will be forced to institute several unpleasant economic measures, possibly including spending cuts that would be especially hard on the poor, the Chavez government's chief beneficiaries. Alejandro Grisanti, head of Latin America research at Barclays in New York, said sharp spending cuts were necessary after an "unsustainable" 2012 budget deficit inflated by Chavez's election year giveaways, including apartments and appliances, that helped him to a resounding reelection victory in October.

http://www.latimes.com/news/nationworld/world/la-fg-venezuela-economy-20130112,0,7119438.story

Time to pay the piper in Venezuela