Alejandro Grisanti, a Venezuela expert at Barclays Capital in New York, said he understood that officials in the government who favor an early devaluation would present a formal proposal to the president soon.

"They are going to deliver it and I think a devaluation is possible," Grisanti told Reuters.

"We didn't think that there would be a devaluation soon because of the election, but the difference is the importance of this election, which is a heavyweight fight."

A devaluation would boost funding for social programs that are popular with voters. But most analysts had expected Chavez to postpone any new devaluation until after the Oct. 7, 2012, vote because it would also hit the pockets of Venezuelans already saddled with one of the world's highest inflation rates.

Local and Wall Street experts say the bolivar currency remains overvalued, even though it was devalued twice during 2010. Devaluations are painful because they boost the cost of imported goods, on which Venezuela is highly dependent, notably food.

Chavez is recovering from cancer, and a newly-united opposition coalition sees next year's as its best chance to unseat the socialist leader of his 13 years in power.

"Inflation is higher than expected, (the government) needs more cash, and they are being more inefficient in their spending," Grisanti said, adding that it was entirely up to Chavez if or when the government would decide to devalue.

Venezuela's inflation quickened to 2.2 percent in November alone, and its annual rate was an eye-watering 27.6 percent.

Barclays Capital believes the Chavez administration has enough revenue to support its planned pre-election spending increases given high global oil prices.

But it thinks Chavez might decide to devalue again as a "preventative strategy" ahead of any oil price decline, and/or Chavez was highly confident of winning another six-year term.

Barclays Capital calculates the government could order a 40 percent devaluation of the official exchange rate to 6 bolivars versus the dollar, and a 32 percent devaluation of the Central Bank's SITME rate for dollar sales to 7 bolivars.

That would translate into just over $20 billion in new funds for the public sector at the start of the election year.

"It is a completely personal calculation, but we see these as reasonable amounts," Grisanti said.

The government mostly receives payment for its main export, about 2.3 million barrels of oil a day, in hard currency.

Chavez has already ramped up pre-vote spending on his signature social projects, including a massive house-building program for millions of poor shantytown dwellers who have long been a bastion of his support.

The last devaluation, at the end of 2010, eliminated the strongest exchange rate of 2.6 bolivars per dollar of a complex, multitiered exchange system. That left two official rates: 4.3 and the SITME rate, of around 5.3.