CARACAS, Venezuela (CNN) -- As 16 heads of state and delegations
                  from 45 other countries arrived for his inauguration, former coup leader
                  Hugo Chavez promised Monday to lead a democratic revolution in Venezuela.

                  The ex-paratrooper, who stormed the presidential palace in 1992 in a
                  bloody attempt to seize power, told a news conference that he would
                  undertake "a peaceful revolution, a revolution in democracy" during his
                  five-year term.

                  "My government will be revolutionary," he said as he announced the
                  remaining members of his Cabinet. Venezuela has entered "a true
                  revolutionary process that allows no turning back," he added.

                  Chavez, who was elected with a mandate to overhaul the oil-rich but
                  financially strapped nation, is to be sworn in as president on Tuesday. Two
                  days later, Venezuela marks the seventh anniversary of Chavez's attempted
                  coup.

                  Among those attending the inauguration will be Cuban leader Fidel Castro,
                  Spain's Prince Felipe and the presidents of Argentina, Peru, Colombia,
                  Ecuador and Bolivia. Representing the United States, which imports more oil
                  from Venezuela than any other country, will be Energy Secretary Bill
                  Richardson.

                  Castro, wearing his trademark green army fatigues, was shuttled Monday to
                  a Caracas hotel where supporters waved Cuban and Venezuelan flags. On a
                  highway overpass a sign read, "Comandante, we're proud that you are with
                  us."

                  "I know that Venezuela is living moments of great expectation and hope. I
                  want to share those hopes with the people of Venezuela," Castro said upon
                  arriving. After his release from prison in 1994, Chavez visited Cuba and
                  gave a speech -- widely criticized by his opponents -- praising Castro's
                  communist revolution.

                  New Cabinet members, and a get-tough message

                  Chavez, 44, takes over from an aging, unpopular leader and inherits an
                  economy in shambles. The core of his program is a popular Constituent
                  Assembly empowered to rewrite the 1961 constitution and revamp a
                  political system that he and many Venezuelans consider inept because
                  of entrenched cronyism and rampant corruption.

                  While Chavez sees the new assembly as key to the success of his reforms --
                  and had threatened to dissolve Congress if it blocked the assembly's
                  creation -- legislators have accused Chavez of riding roughshod over the
                  constitution and planning a virtual coup d'etat.

                  On Monday, Chavez unveiled more of his governing plan, saying he would
                  impose tough taxation policies to clamp down on tax evasion and corruption
                  in the customs service. He announced that the taxation superintendency
                  Seniat would now report to him instead of to the finance ministry and
                  declared "war on the corrupt mafias."

                  Chavez also promised to overhaul the way the huge state oil monopoly,
                  Petroleos de Venezuela, is run. He appointed Roberto Mandini as its new
                  president. Mandini is a former top official of the U.S.-based oil distribution
                  consortium Citgo.

                  Other cabinet appointments announced Monday include the ex-president of
                  the country's largest left-wing party, Gustavo Marquez, to head the industry
                  ministry; native Wayuu Indian activist Atala Uriana to head the environment
                  ministry; and Carlos Fermin Castillo, an attorney who defended Chavez
                  against coup charges in 1992, to head the National Technical Police.

                  Chavez had earlier appointed the aging Luis Miquilena, the former head of
                  the Communist Party, as interior minister, and journalist and three-time
                  presidential candidate Jose Vicente Rangel as foreign minister. Other
                  Cabinet appointments include active duty and retired military officers, as well
                  as labor leaders.

                  Economy on the skids presents tough choices

                  Chavez, whose initial populist, anti-establishment stance has softened
                  considerably as president-elect, takes over from veteran conservative Rafael
                  Caldera, who at 83 was Latin America's oldest head of state.

                  Armed with strong popular support, Chavez must live up to high
                  expectations for political and social change among the masses who were
                  largely responsible for his sweeping election victory two months ago.

                  He faces a daunting task, in particular on the economic front.

                  "The president is going to receive more of a disaster than a crisis," said Ali
                  Rodriguez, one of his key Cabinet appointments as energy minister.

                  As the world's second largest exporter of crude, Venezuela has been
                  severely hit by the worst oil price crash in more than a decade. Inflation runs
                  at around 30 percent, and the state is virtually broke, with a fiscal deficit
                  estimated at 9 percent of gross domestic product.

                  The combination of high inflation and runaway interest rates has dragged
                  millions below the poverty line in the past decade. Roughly 80 percent of the
                  23 million person population now live in poverty, and Venezuela's
                  once-flourishing middle class has almost disappeared.

                  Official unemployment figures of 11 percent mask that roughly half the work
                  force, around 4.3 million people, barely scratches out a living in the
                  unproductive, informal sector.

                  While Caldera's government did not see the violent demonstrations of his
                  predecessor's, mounting social tension was made plain by a bout of
                  ill-tempered strikes last year.

                  Finance Minister Maritza Izaguirre, whom Chavez has reappointed, said
                  Sunday that Chavez will announce an inflation-busting economic plan in his
                  inaugural speech Tuesday.

                  But tough measures risk alienating Chavez from the millions of ordinary
                  Venezuelans who swept him to power in December with the largest majority
                  in the country's democratic history.

                  As soon as he starts his five-year term, the former coup leader will come
                  under pressure to raise the minimum salary and provide generous new public
                  sector labor contracts. The current minimum salary is 100,000 bolivars a
                  month ($175), and union leaders have said they hope to double this.

                  After his inauguration Tuesday, Chavez will lay a wreath at the tomb of
                  South American liberation hero Simon Bolivar, whose teachings are the
                  basis of Chavez's Fifth Republic political movement. Later, he will give a
                  speech to tens of thousands of supporters expected to converge on a wide
                  avenue in downtown Caracas.

                       The Associated Press and Reuters contributed to this report.