UPDATE 1-Canada's Flaherty reveals skin disease, explains bloating
* Flaherty taking steroids to treat rare skin condition
* Side effects include weight gain, bloating, sleeplessness
* Spokesman says Flaherty's ability to do job not affected
OTTAWA, Jan 31 (Reuters) - Canadian Finance Minister Jim Flaherty revealed on Thursday he is suffering from a serious skin disease and is taking steroids that make him appear bloated and red-faced, but that the problem is not preventing him from doing his job.
Flaherty's health has been a source of speculation in Ottawa for months because of his changed appearance.
The minister, 63, has had the rare condition, called bullous pemphigoid, for nearly a year, his office said in a statement.
"This treatment has in no way impacted Minister Flaherty's ability to do his job," Flaherty's chief spokesman, Dan Miles, said in the statement. "The minister says the condition is clearing up and he is hopeful his appearance will return to normal in the near future."
The condition causes blisters on the skin and usually affects people older than 60, according to the Mayo Clinic.
Flaherty's doctor has prescribed a steroid called prednisone, which has side effects such as bloating, weight gain, redness in the face and bouts of sleeplessness.
In an interview with the Globe and Mail newspaper, published on Thursday, Flaherty said he has fielded questions about videotaped interviews in Davos, Switzerland, on Jan. 25 in which he had appeared to be slurring his speech.
He attributed his speech to the effects of the medication, which can cause dry mouth and mouth sores, and said he was exhausted from an overnight flight before his meetings in Davos.
Asked about his alcohol consumption, he said: "Since I've been on my medication, I drink less because I have to listen to what my doctor tells me when he says it's okay to have a glass of wine or two, or a beer or two, but that's it."
Flaherty told the newspaper he had informed Prime Minister Stephen Harper about his health problems late last year.
He said he intends to remain finance minister until the government's budget is balanced, a goal set for 2015.