Venezuela: New measures to confront crisis

March 28, 2009

On March 21, President Hugo Chavez announced a series of economic measures designed to strengthen the Bolivarian revolutionary process in Venezuela, in the face of the challenges posed by the international financial crisis.

Chavez proposed the measures in a speech to the national media, asking the National Assembly to change the budget law for 2009.

"The measures are a formula to safeguard our strength, which has allowed us to keep the process of social development advancing.

"They will safeguard the jobs of all Venezuelans; look after the incomes and working conditions of the workers; keep the process of social revolution moving forward; maintain the redistribution of income through the social missions; and continue with the [policy of public] investment, so that the economy keeps developing", Chavez said, according to March 22 Diario Vea.

The measures propose a revision of the 2009 national budget, based on lowering the estimated price of oil for the budget's figures from US$60 to a more realistic $40. As a result, Chavez's plan calls for a reduction in budget expenditure of 6.7%.

Chavez said that in order to deal with the gap left by the decrease in the price of oil, the government would increase internal debt. The decision was also taken to increase the value added tax from 9% to 12%.

This has created some public discussion about the need to reconsider the tax in future, as it disproportionately affects the poor.

Chavez also announced a campaign to eliminate government bureaucracy, saying he would shortly publish a decree to reduce the salaries of high public officials.

"We will eliminate spending on luxury vehicles, the construction of new offices, on gifts, and unnecessary technical equipment, overseas trips, promotional material and publicity", Chavez said, according to the March 22 Ultimas Noticias.

Chavez said that the minimum wage would be increased by %, benefiting more than 2.6 million people.

Rodrigo Cabezas, a vice-president of the United Socialist Party of Venezuela (PSUV), which is led by Chavez, said the measures contrast with the economic policy recommendations of the International Monetary Fund (IMF) that Venezuelan presidents implemented during the decades before Chavez was elected in 1999, reported on March 25.

"The IMF packages were aimed at preserving capital, and the measures that the Venezuelan government has implemented are aimed at preserving the purchasing power of the workers", said Cabezas.

"The measures preserve the social element as the basis of the revolution for the Venezuelan people", Cabezas said. He said that spending on social programs known as "missions" would be kept intact.

Chavez assured the public that these measures would not affect social spending, nor the missions, pensions or social security. He also said there would be no devaluation of the national currency.

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