Venezuela to Slash Budget after OPEC Steadies Output
Venezuelan President Nicolas Maduro ordered his government on Friday to slash the budget of his oil-dependent and economically-weak nation, as crude prices plunge after OPEC held output steady.
The leftist leader called for a "substantial reduction" of the salaries of senior government officials, from state firms to ministries and his own wages.
While insisting that Venezuela "has the conditions to resist the falling oil price," Maduro announced a commission tasked with cutting public spending.
Maduro said his economy minister, Rodolfo Marco Torre, would travel to China next week to "deepen economic and financing agreements" that would help Venezuela cover the oil revenue shortfall.
The Chinese government has already loaned $40 billion to Venezuela, whose public deficit amounted to 16 percent of gross domestic product last year.
Oil sales are crucial for Venezuela to get dollars in a country with rising debt and struggling with shortages of basic goods and high inflation.
Maduro vowed that the government would not cut popular housing programs and food subsidies that were already staples of the government policies under his predecessor, Hugo Chavez, who died of cancer last year.
Chavez supporters are a vital base for the government, which will face legislative elections in late 2015.
Maduro's popularity has fallen to 30 percent, while inflation soars at 63.4 percent.
Maduro had previously assured that falling prices would not affect the country and could even drop to $40 per barrel.
But he said Friday that world market prices should not fall under $100.
- OPEC ignores Venezuela's plea -
The value of Venezuela's oil has dropped by a third in the second half of this year. Caracas gets 96 percent of its hard currency from oil sales.
The government has imposed price and currency controls, which critics say has contributed to a soaring black market dollar exchange rate.
Venezuela, a member of the 12-nation Organization of Petroleum Exporting Countries with the world's largest proven oil reserves, had urged the cartel to lower production in order to make oil prices rise.
But Saudi Arabia and other Gulf monarchies refused.
OPEC opted Thursday to maintain its collective output ceiling at 30 million barrels per day, where it has stood for three years, despite oversupply, sending prices plunging.
Analysts have warned prices could yet fall further.
U.S. benchmark West Texas Intermediate for delivery in January closed at $66.15 a barrel on the New York Mercantile Exchange, down $7.54 from the closing price Wednesday. It was the lowest WTI close since September 2009.
The NYMEX was closed Thursday for a holiday.
As the New York market closed in an abbreviated session Friday, in London, Brent oil for January delivery sank below $70 for the first time in four and a half years, to $69.78 a barrel. Brent settled at $70.15 a barrel, down $2.43 from Thursday's close.