Venezuela to slash public spending

Yesterday we mentioned that one of the obstacles to Hugo Chavez’ possible bid for a third presidential term could be the global economic slowdown. In the aftermath of Venezuela's referendum to drop term limits for political offices, the country’s government said that it would take steps to cut public spending. The aim: preventing domestic economic problems.

Venezuela relies on oil for 94 percent of exports and nearly half the government budget. Finance Minister Ali Rodriguez said the government has enough savings to avoid serious problems this year but nevertheless plans cutbacks.

The world financial crisis "keeps brewing darker clouds that are affecting us through oil prices," he told Union Radio.

Rodriguez did not provide specific figures but said the government will be "more rigorous" with tax collection to help balance the budget. Some "unnecessary imports" will be eliminated to conserve foreign currency, he said.

On Sunday, Rodriguez said that he was unsure of what other economic steps the Chavez administration would take until crude oil prices stabilized. Meanwhile, energy minister Rafael Ramirez warned said that OPEC may have to institute new output costs next month.

Image- BBC News
Online Sources- Bloomberg, IHT, The Latin Americanist