Chavez takes measures to counter crisis | World News - Hindustan Times
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Chavez takes measures to counter crisis

Reuters | By, Caracas
Mar 22, 2009 07:00 AM IST

Venezuelan President Hugo Chavez on Saturday almost tripled his government's borrowing plan and trimmed the budget to offset a slide in oil revenues, but resisted pressure to devalue the local bolivar currency.

Venezuelan President Hugo Chavez on Saturday almost tripled his government's borrowing plan and trimmed the budget to offset a slide in oil revenues, but resisted pressure to devalue the local bolivar currency.

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Chavez, a socialist who rails against capitalism, had been widely expected to announce a package of measures to counter the impact of the global economic crisis, which has battered demand for the OPEC nation's vital petroleum exports.

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"These are anti-crisis measures in the socialist spirit to protect social programs, the people and the workers," the former army officer said.

Chavez cut the 2009 budget by 6.7 per cent to $72 billion, raised the minimum wage 20 per cent and increased planned government financing to $16 billion from $5.6 billion. He increased a sales tax to 12 per cent from 9 per cent.

He also reduced Venezuela's budgeted oil price estimate to $40 per barrel from $60 and lowered the oil output estimate to 3.17 million barrels a day from about 3.67 million.

The measures need congressional approval but Chavez loyalists dominate the legislature.

More than half of government spending is financed by crude oil revenues.

Chavez, who won a referendum last month allowing him to stay in office as long as he keeps winning elections, is popular for spending oil cash on health and education programs for the poor majority.

Some economists had expected him to devalue the bolivar from its current fixed rate.

Chavez recently complained that subsidies on water, electricity and gasoline -- which is among the cheapest anywhere in the world -- unfairly helped the rich, suggesting price rises.

Chavez may tap into investment funds offered by China and Japan to stimulate the economy, which slowed to 4.8 per cent growth in 2008 after many years of rapid expansion.

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