Chavez cuts budget over oil price

Venezuelan President Hugo Chavez has unveiled a series of measures to offset falling oil revenues that account for about 50% of the national budget.

He proposed to cut the 2009 budget by 6.7% and increase sales taxes.

Mr Chavez also pledged salary cuts for senior public officials, but a 20% rise in the minimum wage.

His announcement came shortly after the government had sent army to take control of the country's key airports and sea ports.

The government says the move - which was rubber-stamped by parliament a week ago - centralises the running of the country's main transport hubs.

Opponents say the move is unconstitutional, accusing Mr Chavez of consolidating power.

Government spending cuts

In a televised address on Saturday, President Chavez said that the revised 2009 budget would be based on oil prices at $40 (£28) a barrel, not a $60-a-barrel forecast when the budget was drafted.

"We are preparing a decree to eliminate luxury costs - the acquiring of executive vehicles, redecorating, real estate, new headquarters, promotional material and unnecessary publicity, corporate gifts"
Venezuelan President Hugo Chavez

Venezuelan military seizes ports

"The budget is reduced by 6.7%... which is 11bn Bolivars ($5bn; £3.5bn)," Mr Chavez said.

He said the government now expected an income of about $72bn (£50bn).

Mr Chavez also pledged to trim salaries for high-level public officials to help balance the books.

"We are preparing a decree to eliminate luxury costs - the acquiring of executive vehicles, redecorating, real estate, new headquarters, promotional material and unnecessary publicity, corporate gifts."

But he vowed to raise the minimum wage by 20%, as the collapse in oil prices threatened his high spending social programmes that had made him popular amid the poor majority.

President Chavez said the economy was in good shape to weather the storm it was facing.

But one opposition leader called the package of reforms a "smokescreen", designed to hide deeper problems in Venezuela's oil-dependent economy.

Mr Chavez's proposals are expected to be easily approved by the congress, which is dominated by presidential loyalists.

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