Falling oil prices are forcing Venezuela to boost sales taxes and nearly triple domestic debt sales to make up for an expected 6.7 percent decrease in public income this year, Venezuelan President Hugo Chavez said on Saturday.
The socialist leader said he would ask lawmakers to increase sales taxes on goods and services to 12 percent from 9 percent to help make up for plunging oil revenue in the oil-rich nation.
The government now expects US$72.7 billion in fiscal income.
PHOTO: AP
This year’s revised budget anticipates crude prices of US$40 a barrel — not US$60-a-barrel as forecast by lawmakers last year — Chavez said in a televised speech.
Venezuelan crude reached about US$43 a barrel last week.
Venezuela will also sell an additional 22 billion bolivars (US$10.2 billion) in local-currency bonds to raise cash this year, bringing internal public debt to 64.5 billion bolivars by year’s end, Chavez said without giving details on the issue date, term or interest rate the debt would carry.
The government may be forced to reign in years of steep increases in public outlays, he said, promising that salaries and spending by high-level public officials would be reduced.
“The privileges are over,” he said, vowing to send a revised budget to the legislature, which is controlled by his allies, in the coming days.
Soaring crude prices have fueled years of record public spending in oil-rich Venezuela, winning Chavez support among millions of the country’s poor. The government has not run a budget deficit since 2003.
But Venezuela depends on oil for 93 percent of exports and nearly half its federal budget, and crude prices have slipped 65 percent since their peak in July, cutting off a key source of income.
Chavez has insisted the country can avoid steep spending cuts by tapping some of the nearly US$100 billion in currency reserves and development funds that his government says it has collected in recent years.
Yet public spending has fueled 29.5 percent annual inflation in Caracas — Latin America’s highest.
Chavez on Saturday vowed to increase the minimum wage by 10 percent in May and another 10 percent in September to help salaries keep pace with price gains.
That move, along with the sales tax hike and bond sales, will only fuel further inflation, said Pavel Gomez, an economist at the IESA business school in Caracas.
The new measures “aren’t attacking the source of the problem,” which is an over-reliance on oil income, said Gomez, who advocates steep public spending cuts instead.
Analysts warn that falling oil income and shrinking reserves may also push Venezuela to devalue its currency, which has been fixed by the government since 2003 but now trades at nearly three times the official rate on the black market.
A devaluation would likely fuel inflation, and Chavez insisted again on Saturday that no such move was being planned.
Meanwhile, his government seized seaports and airstrips in at least four states on Saturday, a move critics said was meant to limit the powers of anti-Chavez mayors and governors.
The takeover, backed by legislators this month, prohibits states and municipalities from collecting tariffs or tolls, cutting off a key source of funding for local projects that could otherwise compete with federal handouts, Caracas-based economist Abelardo Daza said.
Chavez last week said that any governors who challenged the takeover could end up in prison.
BLOODSHED: North Koreans take extreme measures to avoid being taken prisoner and sometimes execute their own forces, Ukrainian President Volodymyr Zelenskiy said Ukrainian President Volodymyr Zelenskiy on Saturday said that Russian and North Korean forces sustained heavy losses in fighting in Russia’s southern Kursk region. Ukrainian and Western assessments say that about 11,000 North Korean troops are deployed in the Kursk region, where Ukrainian forces occupy swathes of territory after staging a mass cross-border incursion in August last year. In his nightly video address, Zelenskiy quoted a report from Ukrainian Commander-in-Chief Oleksandr Syrskyi as saying that the battles had taken place near the village of Makhnovka, not far from the Ukrainian border. “In battles yesterday and today near just one village, Makhnovka,
The foreign ministers of Germany, France and Poland on Tuesday expressed concern about “the political crisis” in Georgia, two days after Mikheil Kavelashvili was formally inaugurated as president of the South Caucasus nation, cementing the ruling party’s grip in what the opposition calls a blow to the country’s EU aspirations and a victory for former imperial ruler Russia. “We strongly condemn last week’s violence against peaceful protesters, media and opposition leaders, and recall Georgian authorities’ responsibility to respect human rights and protect fundamental freedoms, including the freedom to assembly and media freedom,” the three ministers wrote in a joint statement. In reaction
BARRIER BLAME: An aviation expert questioned the location of a solid wall past the end of the runway, saying that it was ‘very bad luck for this particular airplane’ A team of US investigators, including representatives from Boeing, on Tuesday examined the site of a plane crash that killed 179 people in South Korea, while authorities were conducting safety inspections on all Boeing 737-800 aircraft operated by the country’s airlines. All but two of the 181 people aboard the Boeing 737-800 operated by South Korean budget airline Jeju Air died in Sunday’s crash. Video showed the aircraft, without its landing gear deployed, crash-landed on its belly and overshoot a runaway at Muan International Airport before it slammed into a barrier and burst into flames. The plane was seen having engine trouble.
REVELRY ON HOLD: Students marched in Belgrade amid New Year’s events, saying that ‘there is nothing to celebrate’ after the train station tragedy killed 15 Thousands of students marched in Belgrade and two other Serbian cities during a New Year’s Eve protest that went into yesterday, demanding accountability over the fatal collapse of a train station roof in November. The incident in the city of Novi Sad occurred on Nov. 1 at a newly renovated train facility, killing 14 people — aged six to 74 — at the scene, while a 15th person died in hospital weeks later. Public outrage over the tragedy has sparked nationwide protests, with many blaming the deaths on corruption and inadequate oversight of construction projects. In Belgrade, university students marched through the capital
RSS