Venezuela’s President Nicolas Maduro said on Friday he and other government officials should take salary cuts as part of budget reductions in response to the lower price of oil.
The South American member of OPEC derives 96 per cent of its export revenues from oil, so the drop in prices to multiyear lows on the global market has hit hard, exacerbating a national economic decline, foreign currency shortage and scarcity of basic goods. “This is a test for me,” Mr. Maduro said in a speech on state TV, reiterating that Venezuela would lobby within the Organization of the Petroleum Exporting Countries cartel as well as among non-OPEC producers for an oil price target of $100 per barrel.
U.S. crude tumbled 10 per cent on Friday in its biggest one-day drop in more than five years, with benchmark Brent breaking below $70 a barrel.
Venezuela’s petroleum export basket, which averaged $103.42 in 2012 and $98.08 in 2013, dropped to a four-year low of $68.08 on Friday, the government said.
The Venezuelan President, who last year won election to replace late socialist leader Hugo Chavez, has seen his popularity fall in part due to the economic crisis. He said he was decreeing a new committee to recommend public spending cuts. “This commission is going to take an axe and chop wherever we need to,” he said, adding that various budget cuts were needed.
Mr. Maduro reiterated his assertion that global oil prices would eventually bounce back, and scoffed at his political foes who say the fall in revenues could be a final nail in the socialist government’s coffin.
